This issue was previously raised by Brendan Burgess in his commentary on the proposed Bill.
I feel that it is essential to highlight the shortcomings of this Bill in the context of dealing appropriately with those in mortgage arrears whose financial situation is unsustainable and should be dealt with under this legislation.
A PIA is not binding without the support of 75% (in value) of the secured creditors. This means that where a mortgage is greater than 25% of borrowings the mortgage holder can veto the PIA. For the vast majority of mortgagors, their mortgage will exceed this figure.
From the perspective of a mortgage holder a PIA is not attractive. Currently they are in a strong negotiating position with clients in arrears as most of them will prioritise mortgage payments ahead of other creditors. I can see no benefits to a Bank/B.Soc in co-operating with a PIA. The likely outcome therefore is that the legislation will fail at the first hurdle. I.e. Bank's/ B/Soc's will not support a PIA and therefore those in most need of protection will be excluded from the process.
I see this as being a fundamental flaw in the proposed legislation that must be addressed before it is enacted and would be interested to hear opinions to the contrary.
I feel that it is essential to highlight the shortcomings of this Bill in the context of dealing appropriately with those in mortgage arrears whose financial situation is unsustainable and should be dealt with under this legislation.
A PIA is not binding without the support of 75% (in value) of the secured creditors. This means that where a mortgage is greater than 25% of borrowings the mortgage holder can veto the PIA. For the vast majority of mortgagors, their mortgage will exceed this figure.
From the perspective of a mortgage holder a PIA is not attractive. Currently they are in a strong negotiating position with clients in arrears as most of them will prioritise mortgage payments ahead of other creditors. I can see no benefits to a Bank/B.Soc in co-operating with a PIA. The likely outcome therefore is that the legislation will fail at the first hurdle. I.e. Bank's/ B/Soc's will not support a PIA and therefore those in most need of protection will be excluded from the process.
I see this as being a fundamental flaw in the proposed legislation that must be addressed before it is enacted and would be interested to hear opinions to the contrary.