Start Mortgages challenge puts 50 lenders' legal position in jeopardy
THE loans of almost 50 lenders are in jeopardy following legal actions by distressed homeowners who are challenging the authority of subprime lender Start Mortgages to lend into the Irish market.
The Central Bank has warned that the legal position of the credit institutions is under threat if the two homeowners fighting possession of their homes succeed.
The homeowners are claiming that Start is not legally authorised to make loans because it is not regulated by the State as required.
One of the borrowers, Robert Gunn, claims only the Central Bank has the power to prescribe any entity as a "credit institution" and the assumed delegation of that power to the consumer director of the Irish Financial Services Regulatory Authority is unconstitutional. The credit institutions potentially affected include the subsidiaries of major banks as well as subprime mortgage companies, car finance lenders and credit institutions that provide lease finance to borrowers.
The list has been circulated by the Central Bank of Ireland, which is being sued by Mr Gunn, who claims Start cannot repossess his home because it had no legal right to give him a loan in the first place.
Mr Gunn got a mortgage of €210,000 from Start Mortgages secured against his home at Lyre, Lisselton, Co Kerry, in 2007. Start began possession proceedings after he fell into arrears when he lost his job in 2008.
The case is set to be heard in March but Start, a notice party to the proceedings which are affecting hundreds of possession actions in the courts, is this week expected to ask the High Court to lift a stay on proceeding against Mr Gunn because of its affect on other cases.