THE HEAD OF the Insolvency Service of Ireland (ISI) has said lenders are failing to engage with the personal insolvency legislation introduced in 2012 by the government to help keep families who are in financial distress in their homes.
Director of the ISI Lorcan O’Connor told the Oireachtas Justice Committee this morning that the rejection rate for proposals put forward to lenders by insolvency practitioners on behalf of distressed customers has risen. It is now just short of 45%.
O’Connor also said there is no evidence that creditors are using the part of the legislation that allows them to engage with personal insolvency practitioners (Pips) to let them know what they would like to see in any deal.
“The practice appears to be to wait for proposal for it and then for it to be challenged on as many fronts as possible.”
He said he would like to see the legislation amended to compel lenders to engage with the process before a proposal is put on the table.
David Hall, CEO of the Irish Mortgage Holders Association also addressed the committee this morning. The banks “don’t engage” with the personal insolvency process, or with his association in many cases, he said.
“At the core of this is power,” he told the committee, and said lenders treat the current legislation – and debtors – with contempt.
The committee was discussing Fianna Fáil TD Michael McGrath’s Mortgage Arrears Resolution Bill and Hall said the banks are not fans of this proposed legislation.
He expressed concern that lenders would sell loans to vulture funds sooner than expected and urged the committee to deal with the bill “quickly, speedily and without any hesitation before any vulture sets its hands or claws on home loans”.
Hall also suggested a 50% tax on any loans sold to vulture funds – something he said would “soften the cough very quickly.”
He told members that charities like his organisation should be allowed to buy these loans instead and to restructure them so families can stay in their homes and continue paying their debt at a manageable pace.
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