Noonan says he will not legislate for IBRC mortgage holders

Thursday 20 February 2014 19.23
Michael Noonan pledges protection for IBRC mortgage holders after the sale of the mortgage book
Michael Noonan pledges protection for IBRC mortgage holders after the sale of the mortgage book

Minister for Finance Michael Noonan has ruled out legislating to protect 13,000 mortgage holders before the imminent sale of their mortgage loans by IBRC.

In the Dáil this morning, the minister said that if he were to attach additional conditions to the mortgages now, there is a possibility that he will be legally challenged.

But Mr Noonan did pledge protection for the mortgage holders after the sale of the mortgage book, which is expected to take place next month.

The Government has been accused of "economic treason" in relation to the protection of IBRC mortgage holders.

Independent TD Seamus Healy pointed out that Tánaiste Eamon Gilmore accused former Taoiseach Brian Cowen of economic treason in relation to the bank bailout when he was in government.

Minister for Social Protection Joan Burton said economic treason was "by those that brought in the bank guarantee resulting in the subsequent economic collapse".

Ms Burton said she understood and sympathised with people whose mortgage certainty collapsed with the bank guarantee.

She said there were two previous examples where groups of mortgages were sold. The interests of mortgage holders were treated consistently with code of conduct and other advice of the Central Bank, she said.

She added "that is what will happen this time".

Fianna Fáil finance spokesperson Michael McGrath earlier asked Minister Noonan if he will take any action to safeguard the interests of residential mortgage holders whose loans are sold to unregulated third parties.

These include the customers of IBRC in special liquidation.

Mr McGrath said the issue has come into focus because of the imminent sale of the IBRC mortgages.

Responding, Minister Noonan said he is fully aware of the mortgage holders' concerns.

He said the valuation process was completed in September and the mortgage book went up for sale in October.

The sale is expected to be completed next month, he added.

Mr Noonan said the ultimate purchase of these loan books by NAMA, or whoever buys them, will mean that the legal obligations of the original loan books will have to continue.

Mr McGrath asked what would happen if a mortgage holder believes that the company who buys their mortgage is not complying with the code of conduct? He wanted to know who they could complain to.

He said that as they cannot go to the Central Bank, who adjudicates if they are in difficulty with the new holder of the mortgage?

Minister Noonan said the process is complex and it is in the hand of an independent liquidator whose job is upholding the law.

He said that if he were to attach additional conditions to the mortgages now, there is a possibility that he will be legally challenged.

He said he is confident that as two books have been sold already and there has been no difficulty, he is sure that will be the case with the sale of those held by IBRC.

The minister said he is not going to allow things get to the point where people who bought the mortgages will be denied their rights.

He said it is unfair to be hyping this and frightening mortgage holders.

Socialist TD Joe Higgins said that the minister is supporting the sale of the mortgages to "vulture capitalists" whose aim is profit maximisation and said the mortgage holders are going to be left to their mercy.

Mr Noonan said that it is much better not to interfere with the process before the sale and get the buyers of the mortgage books to comply after the sale.

"If we have to legislate we will legislate afterwards," he stated.

He said the liquidator has to get the maximum value for the taxpayer and there is no need for being wildly emotional about this for people who are already in difficulty with their mortgages and telling them the sheriff is going to land at the door.

Mr McGrath said the standard contractual terms of a mortgage are stacked heavily in favour of the lender.

He said the minister has acknowledged that there is a problem and it could be solved with legislation or by a simple direction order from the minister and this would allay people's fears.

Mr Higgins asked why the loans for these people cannot be written down to today's values and that would sort the problem and free up hundreds of millions in the economy. He also called for the release of the PWC report into the 13,000 mortgages.

The minister said the liquidator's job by law is to recover as much money for the taxpayer as possible. He said the liquidator asked PWC to compile the report and said it is up to the liquidator whether the report is released or not.