No Consent, No Sale bill 'should be no-brainer'

Protections for mortgage holders will dramatically diminish if the sales of non-performing loans to so-called "vulture funds" continues, campaigners have claimed.

Members of the Free Legal Advice Centres (Flac) and the Irish Mortgage Holders Organisation (IMHO) were appearing before the Oireachtas Finance Committee, where they voiced support for the proposed No Consent, No Sale bill, which would prevent banks from selling customers' home loans without borrower approval.

The bill has been vigorously opposed by banks as well as the Central Bank and Department of Finance, who say it would provide no extra protection for customers but would have unintended consequences such as driving up interest rates for all.

The bill, which was proposed by Sinn Féin finance spokesman Pearse Doherty, was approved in the Dáil by TDs and is now under further consideration.

Flac chief executive Eilis Barry said the blurred definition of a non-performing loan had contributed to banks selling customer loans to vulture funds even if they had approved restructuring in place with banks.

"The latest Central Bank figures suggest that there are currently 111,504 restructures of primary dwelling home mortgages in place...86% are classified by the bank as meeting the terms of the arrangement.

"Are these considered non-performing loans or not? A key question, however, is why loans with such long term restructure arrangements in place would be sold on in the first place," Ms Barry said.

Legal protections also had to be enhanced for consumers whose loans have already been sold to funds, Ms Barry said.

Human rights also had to be taken into account when selling loans onto vulture funds, she said.

"We have very little information about the people in long-term arrears in terms of gender or age, the extent to which they have disabilities and caring responsibilities...Has there been any assessment as to the likelihood of borrowers being exposed to acute deprivation such as homelessness or extreme poverty?"

Senior policy analyst at Flac, Paul Joyce said there was a real worry about how vulture funds would treat vulnerable customers.

"A lot of loans now in difficulty are where the households have financial incapacity.

A lot have repayments in place for up to 10 years, and that is the difficulty -- those households won't have the financial capacity to make the kind of payments that we feel vulture funds soon or later will be looking for.

Pillar banks had a different approach to dealing with vulnerable customers because of the potential for public outcry, but vulture funds had no such reputational worries, Mr Joyce said.

"The most difficult part is being shovelled on to someone else to deal with, who won't have the same commercial scruples around it. That is the danger," said Mr Joyce.

David Hall of the IMHO claimed the Central Bank's code of conduct on mortgage arrears was a "spectacular failure and fudge" because it did little to protect consumers.

He claimed his organisation was "wasting time" engaging with vulture funds on solutions for customers because these funds "just don't do them".

Mr Hall said the No Consent, No Sale bill should be a "no-brainer".

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