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24 1995

CONSUMER CREDIT ACT, 1995

PART IX

Housing Loans made by Mortgage Lenders

Application of, definitions, Part IX .

115. —(1) This Part shall apply to a housing loan made by a mortgage lender.

(2) In this Part—

endowment loan” means a housing loan which is to be repaid out of the proceeds of an insurance policy on its maturity, other than a policy providing mortgage protection insurance only;

information document” means any document, leaflet, notice, circular, pamphlet, brochure, film, video or facsimile issued to the general public or to certain persons (whether solicited or not) for the purpose of giving information in relation to housing loans;

insurance commission” means a payment or other remuneration, reward or benefit in kind, paid or payable by or on behalf of the insurer to any person in connection with the insurance business of the insurer and includes the time allowed by the insurer to that person for the payment by that person to the insurer of premiums received by that person for the insurer for contracts of insurance entered into by the insurer;

insurance intermediary” means an insurance agent or insurance broker within the meaning of the Insurance Act, 1989 ;

insurer” has the meaning assigned to it by the Insurance Act, 1989 ;

mortgage agent” means any or all of the following:

(a) a mortgage lender,

(b) a mortgage intermediary,

(c) an insurer, or

(d) an insurance intermediary;

subsidiary” has the same meaning assigned to it by section 155 of the Companies Act, 1963 .

Mortgage intermediaries.

116. —(1) A person shall not engage in the business of being a mortgage intermediary unless—

(a) he is the holder of an authorisation (“a mortgage intermediaries authorisation”) granted for that purpose by the Director, and

(b) he holds an appointment in writing from each undertaking for which he is an intermediary.

(2) A holder of an authorisation shall only engage in the business of being a mortgage intermediary in the name specified in the holder's authorisation.

(3) An application for an authorisation shall be in writing and in such form as the Director may determine and shall contain—

(a) the true name of the applicant,

(b) the name under which the applicant trades,

(c) the name of any undertaking for which the applicant acts or intends to act as a mortgage intermediary,

(d) the address of any business premises of the applicant to which the application relates, and

(e) such other information that the Director may require.

(4) An application for an authorisation shall be accompanied by a fee of—

(a) £500 in the case of a company or a partnership, or

(b) £250 in the case of a sole trader.

(5) Any of the fees referred to in subsection (4) may by regulations be varied.

(6) A person shall not wilfully give any information which is false or misleading in respect of an application for an authorisation.

(7) An authorisation shall be valid for the period of 12 months commencing on the date specified therein and shall expire at the end of that period.

(8) An authorisation shall state—

(a) the true name of the holder,

(b) the name under which the holder is authorised to engage in the business of being a mortgage intermediary,

(c) the address of the business premises of the holder, and

(d) the name of any undertaking for which the holder acts as a mortgage intermediary.

(9) The Director may refuse to grant an authorisation on one or more of the following grounds, namely, that:

(a) the applicant does not satisfy the condition specified in subsection (1) (b),

(b) the applicant or any business with which he was connected was, during the previous 5 years, convicted of a criminal offence,

(c) the applicant is the holder of—

(i) a bookmaker's licence issued under the Betting Act, 1931 ,

(ii) a licence for the sale of intoxicating liquor granted under the Licensing Acts, 1833 to 1994,

(iii) a gaming licence issued under the Gaming and Lotteries Act, 1956 ,

(iv) a pawnbroker's licence granted under the Pawnbrokers Act, 1964 , as amended by this Act, or

(v) a moneylender's licence,

(d) the applicant has failed to provide a current Revenue tax clearance certificate in respect of himself or his business,

(e) the applicant is not or is no longer, in the opinion of the Director, a fit and proper person to carry on the business of mortgage intermediary, or

(f) the applicant has failed to comply with regulations made under subsection (10).

(10) Regulations may provide that the holder of an authorisation shall not act or hold himself out to be a mortgage intermediary unless he effects a policy of professional indemnity insurance in a specified form, indemnifying him to such sum, in such manner, in respect of such matters and valid for such minimum period as the Minister may prescribe.

(11) The Director may suspend or revoke an authorisation if he is satisfied that since becoming the holder of an authorisation, a mortgage intermediary or any business with which he is connected has been convicted of a criminal offence or a mortgage intermediary has become the holder of a licence referred to in subsection (9) (c) or has failed to comply with any regulations made under subsection (10).

(12) Whenever the Director proposes to refuse to grant, suspend or revoke an authorisation he shall notify the applicant or the holder of the authorisation, as the case may be, of his proposal and shall, if any representations are made to him in writing by such applicant or holder within 14 days of the notification, consider the representations.

(13) Whenever the Director, having considered any representations that may have been made under subsection (12), decides to refuse to grant, suspend or revoke an authorisation, he shall notify the applicant for, or as the case may be, the holder of, the authorisation of the decision and the grounds for such decision and such applicant or holder may, within 7 days of receipt of such notification, appeal against such decision to the judge of the Circuit Court within whose Circuit the business to which the authorisation relates is to be carried on.

(14) A notification referred to in subsection (12) or (13) shall be delivered personally or sent by pre-paid registered post to the business address of the applicant for an authorisation or the holder of the authorisation concerned, as the case may be.

(15) Where a notification under subsection (12) or (13) relates to a refusal to grant a second or subsequent authorisation or a suspension or revocation of an authorisation, the refusal, suspension or revocation shall take effect upon the expiration of the 7 days allowed for the appeal.

(16) Where an appeal is made under subsection (13) by an applicant for a second or subsequent authorisation in respect of a refusal to grant such authorisation or by a holder of an authorisation in respect of a suspension or revocation of an authorisation, the refusal, suspension or revocation shall stand suspended until the appeal is determined or withdrawn and, notwithstanding subsection (7), any authorisation held by the applicant at the time of the appeal shall continue in force until the determination or withdrawal of the appeal.

(17) On the hearing of an appeal under subsection (13) in relation to a decision of the Director to refuse to grant, suspend or revoke an authorisation, the Circuit Court may either confirm the decision or allow the appeal and, where an appeal is allowed, the Director shall grant the authorisation or shall not suspend or revoke the authorisation, as the case may be.

(18) A decision of the Circuit Court on an appeal under subsection (13) shall be final save that, by leave of that Court, an appeal from the decision shall lie to the High Court on a specified question of law.

(19) In an appeal under subsection (13) the Director shall not be awarded or ordered to pay costs.

(20) In this section “authorisation” means a mortgage intermediaries authorisation.

Obligation to display copy of mortgage intermediaries authorisation.

117. —The holder of a mortgage intermediaries authorisation shall display in a prominent position in any premises where the holder engages in the business of being a mortgage intermediary—

(a) an authorised copy of the authorisation, and

(b) a notice stating clearly the name of any undertaking for whom the holder acts as a mortgage intermediary.

Prohibition on alteration or falsification of mortgage intermediaries authorisation.

118. —(1) A person, other than the Director or an officer of the Director acting on behalf of the Director, shall not alter or attempt to alter a mortgage intermediaries authorisation or an authorised copy thereof.

(2) A person shall not falsify or attempt to falsify a mortgage intermediaries authorisation or an authorised copy thereof.

Amendment of mortgage intermediaries authorisation.

119. —Where the holder of a mortgage intermediaries authorisation ceases to act on behalf of any undertaking specified in the authorisation or commences to act as a mortgage intermediary on behalf of any undertaking not specified in the authorisation, the holder shall upon such cessation or commencement inform in writing the Director of the change and forward the authorisation to the Director, and the Director shall accordingly, as he sees fit, amend the authorisation or issue another authorisation incorporating the change.

Regulations.

120. —The Minister may prescribe that a person or class of persons shall not be regarded, for the purposes of this Part, as being a mortgage intermediary.

Redemption of housing loans.

121. —(1) Subject to subsection (3), a borrower may, at any time before the time agreed, repay to the mortgage lender the whole or any part of a housing loan and shall not be liable to pay any redemption fee in relation to the loan or any part of the loan.

(2) The exemption from redemption fees in subsection (1) shall not apply to a housing loan in respect of which the mortgage or loan agreement provides that the rate of interest:

(a) may not be changed, or

(b) may not be changed over a period of at least one year, or

(c) may not, for a period of at least 5 years, exceed the rate applicable on the date of the making of the said agreement by more than 2 per cent.

(3) The exemption from redemption fees in subsection (1) shall apply at any time during the period of the loan at which the period referred to in paragraph (b) or (c) of subsection (2) have elapsed.

(4) The Minister may, by regulations, after consultation with the Director and the Minister for the Environment, vary—

(a) the period referred to in subsection (2) (b), or

(b) the period of years or the rate of interest referred to in subsection (2) (c).

(5) A mortgage agent shall, where a redemption fee is payable on a housing loan by virtue of subsection (2), ensure that a statement to that effect, specifying how the amount of such fee is to be calculated, shall be included in or attached to:

(a) any information document which refers or relates to such a loan,

(b) any application form issued for the purpose of applying for such a loan or, where application for the loan is made otherwise than by way of an application form, such a statement shall be sent to the applicant within 10 days of the receipt of the application,

(c) any document sent to the applicant approving the loan, and

(d) any communication in relation to a variation of, or any offer to vary, the terms of the housing loan which would have the effect of making the loan liable to a redemption fee in accordance with subsection (2).

(6) In this section “redemption fee” means, in relation to a housing loan, any sum in addition to principal and any interest due on such principal (without regard to the fact of the redemption of the loan) at the time of redemption of the whole or part of the loan.

Criteria for calculation of APR in relation to housing loans.

122. —(1) For the purpose of calculating the APR in relation to a housing loan the total cost of credit to the borrower shall be determined with the exception of the following charges—

(a) charges other than the purchase price which the consumer is obliged to pay whether the transaction is paid for in cash or by credit including Government duties or taxes on the purchase or acquisition of the property, and fees payable by the borrower to his own agent for the carrying out of legal and other procedures associated with the acquisition of the property,

(b) charges payable by the borrower for non-compliance with any of his commitments laid down in the credit agreement,

(c) charges for insurance on the life of the borrower or for insurance against property damage which are designed to ensure payment to the creditor of credit outstanding in the event of the death of the borrower, or insurable damage to the property the subject of the credit agreement, before termination of the agreement.

(2) In calculating the APR in relation to a housing loan, the following assumptions shall be made:

(a) the creditor and the prospective borrower fulfil their obligations under the terms of the contract,

(b) in the case of credit agreements providing for variations in the rate of interest or other charges which are unquantifiable at the time of calculation, the APR shall be calculated on the assumption that the future rates of interest or charges are the current variable rates which will remain fixed and will apply until the end of the credit agreement. In circumstances in which the initial or subsequent interest rate is fixed for a specific period or periods, the calculation shall assume that the fixed rate or rates shall apply only for the period or periods specified and that the rates applicable to other periods of the contract are the current variable rates which will remain fixed for those periods,

(c) that the borrower is not entitled to any income tax relief or any other benefit not granted by the creditor under, or relating to, the transaction,

(d) where charges are payable at an unspecified date after the agreement is signed it shall be assumed that they are payable at the beginning of the agreement,

(e) in the case of advertising, the calculation shall be based on a typical example.

(3) A mortgage lender shall comply with the requirements of this section in relation to the calculation of the APR in respect of a housing loan.

Valuation reports.

123. —(1) Where a mortgage lender—

(a) gives approval to the making of a housing loan; or

(b) refuses to make a housing loan,

the applicant for the loan shall, at the time he is notified of the approval of the loan or of the refusal to give such approval, be furnished by the mortgage lender with a copy of the report (“valuation report”) made to the mortgage lender on the value of the security.

(2) The mortgage lender shall attach to or include in every valuation report furnished to an applicant in accordance with subsection (1) a note stating clearly the nature and purpose of the report.

(3) There shall be no charge made to the applicant for a valuation report if the loan application is refused.

Insurance of mortgaged property.

124. —(1) Any insurance which a mortgage lender may require a borrower to effect and keep effected on property mortgaged to the lender may be effected by the borrower with any insurer and through any intermediary.

(2) When the mortgage lender requires a borrower to effect such insurance for the first time as respects a mortgaged property, he shall, at the same time, notify him in writing that the insurance may be so effected and of the nature and extent of the required insurance.

(3) A mortgage lender shall not impose a requirement in regard to the nature and extent of insurance on mortgaged property which differentiates as between insurance effected through the agency of the mortgage lender and insurance otherwise effected.

(4) A mortgage lender shall not impose a condition on a borrower in relation to insurance on mortgaged property which would require the borrower to pay a fee to the mortgage lender or to incur a cost which, in either case, would not be paid or incurred by a borrower effecting insurance through the agency of the mortgage lender.

Costs of legal investigation of title.

125. —Any costs incurred by a mortgage lender in respect of, arising from or in connection with, the legal investigation of title to any property offered as security by a borrower shall be paid by the mortgage lender and shall not be recoverable from the borrower either as a fee specifically stated to be in respect of such costs or as part of any fee or other charge in respect of the loan.

Mortgage protection insurance.

126. —(1) Subject to the provisions of this section, a mortgage lender shall arrange, through an insurer or an insurance intermediary, a life assurance policy providing, in the event of the death of a borrower before a housing loan made by the mortgage lender has been repaid, for payment of a sum equal to the amount of the principal estimated by the mortgage lender to be outstanding in the year in which the death occurs on the basis that payments have been made by the borrower in accordance with the mortgage, such sum to be employed in repayment of the principal.

(2) Subsection (1) shall apply as respects all housing loans except—

(a) where the house in respect of which the loan is made is, in the mortgage lender's opinion, not intended for use as the principal residence of the borrower or of his dependants,

(b) loans to persons who belong to a class of persons which would not be acceptable to an insurer, or which would only be acceptable to an insurer at a premium significantly higher than that payable by borrowers generally,

(c) loans to persons who are over 50 years of age at the time the loan is approved,

(d) loans to persons who, at the time the loan is made, have otherwise arranged life assurance, providing for payment of a sum, in the event of death, of not less than the sum referred to in subsection (1).

(3) A person who does not belong to a class referred to in paragraph (b) of subsection (2) shall not be required by virtue of this section to undergo a medical examination as a condition of a policy but nothing in this section shall prevent a person belonging to such a class from being required to undergo a medical examination.

(4) A policy under this section may, in the case of a loan made jointly to two or more borrowers, apply to such of the borrowers as may be designated by the mortgage lender, due regard being had to the wishes of such borrowers.

(5) Where the proceeds of a policy under this section exceed the amount due to the mortgage lender on the loan, any such excess shall be payable to the surviving borrower or to the estate of the deceased borrower as the case may be.

Prohibition on linking of services.

127. —(1) A mortgage agent shall not make or offer to make to any person, or arrange or offer to arrange for any person, a housing loan which would be subject to a condition that any financial services, conveyancing services, auctioneering services or other services relating to land which that person may require, whether or not in connection with the loan, shall be provided by the agent or through a subsidiary or other associated body of such agent.

(2) Where, in connection with the making or arranging of a housing loan, more than one service is made available by a mortgage agent or one or more of his subsidiaries, the agent shall not, and shall ensure that each of his subsidiaries does not, make the services available on terms other than terms which distinguish the consideration payable for each service so made available; nor shall any of the subsidiaries make the services available on terms other than terms which make that distinction.

(3) Where a person is providing auctioneering services, or constructing houses for sale, and is also a mortgage intermediary, he, or a subsidiary or other associated body, shall not sell, offer to sell or arrange to sell a house which is to be purchased with the aid of a housing loan, on terms which differentiate as between a person who purchases the house with the aid of a housing loan arranged by or on behalf of such intermediary and a person who purchases the house with the aid of a housing loan otherwise arranged.

Warning on loss of home.

128. —(1) A mortgage agent shall ensure that—

(a) an information document,

(b) an application form for a housing loan, or

(c) any document approving a housing loan,

shall include the following notice:

“WARNING

YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP PAYMENTS ON A MORTGAGE OR ANY OTHER LOAN SECURED ON IT.”.

(2) A mortgage agent shall ensure that, where the interest rate for a housing loan is variable—

(a) an information document,

(b) an application, or

(c) any document approving that loan,

shall, following the notice required under subsection (1), include the following:

“THE PAYMENT RATES ON THIS HOUSING LOAN MAY BE ADJUSTED BY THE LENDER FROM TIME TO TIME.”.

Notice of important information to be included in a housing loan agreement.

129. —(1) An agreement for a housing loan shall contain on the front page a notice in the form set out in Part II of the Third Schedule or such other form as may be prescribed.

(2) A mortgage lender who is a party to an agreement referred to in subsection (1) shall ensure that the agreement complies with that subsection.

Duties of mortgage lender to supply documents and information.

130. —A mortgage lender shall in respect of a housing loan, issue to the borrower:

(a) at the time the loan is made, or as soon as may be practicable thereafter a copy of the mortgage deed (including any contract relating thereto) which copy shall be additional to any copy of such mortgage deed issued to his legal representative, and

(b) a statement of the total amount outstanding on the loan on a specified date occurring not more than one year after the making of the loan and at intervals of not more than one year thereafter until the loan is fully repaid, such statement being issued as soon as practicable after the date specified.

Disclosure of charges, agency introduction fees, commissions and expenses.

131. —(1) The Minister may, after consultation with the Minister for the Environment, by regulations, make provision requiring the disclosure to the borrower of specified information relating to any insurance commission, introduction fee or other inducement, charge or expense that may be payable to any person or retained by any person on foot of an insurance policy taken out by the borrower in connection with the making of a housing loan, or on foot of the making of such loan.

(2) Regulations under this section may in particular specify:

(a) the nature of the information to be disclosed, including information on the manner in which any commission, fee, or other inducement, charge or expense is to be determined, the amount or value of same and the arrangements for the payment or provision of same,

(b) the circumstances in which and the time at which the information is to be disclosed,

(c) the manner of disclosure of the information.

(3) (a) Subsection (2) is without prejudice to the generality of subsection (1) and accordingly regulations under this section may make provision for matters other than those mentioned in subsection (2) or further provision as to any of the matters there mentioned.

(b) Regulations made under this section may:

(i) include such consequential, incidental, transitional or supplementary provisions as may be considered appropriate by the Minister to be necessary or proper for the purposes of this section;

(ii) apply either generally or by reference to a specified class or classes of loans, insurance, mortgage agents, or persons or by reference to any other matter that is considered appropriate by the Minister.

(4) Where, in connection with the making of a housing loan, a mortgage lender or mortgage intermediary acts exclusively for a particular insurer, he shall at the first reasonable opportunity and in any event before any commitment is made by the borrower, disclose this fact to the borrower.

(5) Where, in connection with the making of a housing loan, a mortgage intermediary acts exclusively for a particular mortgage lender, he shall at the first reasonable opportunity and in any event before any commitment is made by the borrower, disclose this fact to the borrower.

Disclosure of other fees.

132. —Where a fee is payable by an applicant for a housing loan in respect of any of the following matters—

(a) the making, accepting or administering of an application for a loan,

(b) the valuation of the security for the loan,

(c) legal services in connection with the loan,

(d) services provided by a mortgage agent in relation to the loan, or

(e) non-acceptance of an offer or approval of a loan,

the mortgage agent shall ensure that a statement of reasonable prominence that such a fee is payable and specifying the amount of the fee or how such amount is determined and the circumstances in which it may be refunded, if such is the case shall be included in or attached to:

(i) any information document issued by or on behalf of the mortgage agent which refers or relates to such a loan,

(ii) any application form issued for the purposes of applying for such a loan or, where application for the loan is made otherwise than by way of an application form, issued to the applicant within 10 days of the receipt of the application, and

(iii) any document sent to the applicant approving the loan, in relation to the matters specified in paragraphs (b), (c), (d) and (e).

Endowment loans.

133. —(1) A mortgage agent shall ensure that an information document which refers or relates to an endowment loan, an application form issued to a person for the purpose of applying for such a loan, and any document approving such a loan shall contain in a prominent position the following notice:

“WARNING

THERE IS NO GUARANTEE THAT THE PROCEEDS OF THE INSURANCE POLICY WILL BE SUFFICIENT TO REPAY THE LOAN IN FULL WHEN IT BECOMES DUE FOR REPAYMENT.”.

(2) Where an application for an endowment loan is made, otherwise than by way of an application form, the applicant shall be supplied by the mortgage agent with a notice in accordance with subsection (1) within 10 days of the receipt of the application.

(3) Subsections (1) and (2) shall not apply where the insurer underwriting the insurance policy in respect of an endowment loan guarantees that the proceeds of the policy at the initial premium will be sufficient to repay the loan in full when it becomes due for repayment or where the mortgage lender undertakes to accept the proceeds in full and final settlement of the loan debt.

(4) Where there is a possibility that, during the lifetime of an endowment loan, the borrower may be required or advised by the insurer or mortgage lender to increase the amount of the premium payments on the insurance policy relating to the loan, in order to secure an increase in the proceeds of the policy on maturity, then the document sent to the applicant approving the loan shall contain a statement of this possibility in a prominent position.

(5) Where the possibility exists that early surrender of the insurance policy in respect of an endowment loan may result in a return to the consumer which would be less than he has paid in premia and other charges, any document refered to in subsection (1) shall contain a statement of this possibility.

(6) An insurer underwriting an insurance policy in respect of an endowment loan shall within 5 years of the policy being issued and every 5 years thereafter, until such time as the endowment loan is repaid, issue or cause to be issued to the borrower, a statement setting out the value of the policy as estimated by the insurer, at such date together with a comparison of this valuation to the valuation at such date projected at the time the policy was first written, and a revised estimate of its valuation at maturity.

Disclosure of interest rate and penalties to be applied to arrears on housing loans.

134. —(1) Where it is the policy of a mortgage lender to charge interest in respect of arrears on housing loans or on housing loans of a particular type the mortgage lender shall ensure that, any information document relating to, application form for, or document approving, such a loan and any communication in relation to arrears of payments due on such a loan shall state the amount of the increase in interest and other charges which a borrower may become liable to pay in respect of such arrears.

(2) Any communication issued by or on behalf of a mortgage lender to a borrower which refers to the possibility of possession proceedings being taken under the mortgage, shall contain an estimate of the cost to the borrower of such proceedings.

Advertising of housing loans.

135. —(1) The Director may, if he considers it expedient to do so give a direction to a mortgage agent in relation to the matter and form of any advertisement or information document displayed or published by or on behalf of such agent in relation to a housing loan and may direct that such advertisement or information document be withdrawn.

(2) Without prejudice to the generality of subsection (1), a direction under this section may do all or any one or more of the following—

(a) prohibit the issue by a mortgage agent of advertisements or information documents of any specified description,

(b) require a mortgage agent to modify advertisements or information documents of a specified description in a specified manner,

(c) prohibit the issue by a mortgage agent of any advertisements or information documents which are, or are substantially, repetitions of a specified advertisement or information document,

(d) require a mortgage agent to withdraw any specified advertisement or information document or any advertisement or information document of a specified description, or

(e) require a mortgage agent to include specified information in any advertisement or information document to be published by it or on its behalf or in any statement to the public made by it or on its behalf.

(3) Any mortgage agent so directed under subsection (1) shall comply with the direction.

(4) Where the Director intends to give a direction under this section in relation to a bank or building society he shall inform the Central Bank of his intention not later than the time on which the direction is given.

Protection of borrower on a winding-up.

136. —(1) Where a mortgage lender (being a corporate entity) is being wound-up, a borrower shall not be liable to pay the amount payable in respect of a housing loan except at the time or times, and subject (as may be appropriate) to the conditions, set out in the mortgage or other security.

(2) A liquidator in the exercise of his powers under section 231 (2) (a) of the Companies Act, 1963 , shall not dispose of any of the mortgage lender's assets constituting housing loans on terms as respects the loans other than terms which the High Court is satisfied are just and equitable and which the borrowers would have been reasonably entitled to expect if the mortgage lender had not been wound-up.