Michael Healy-Rae (Kerry South, Independent)
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Question 162: To ask the Minister for Finance in view of the fact that our banks are effectively State owned and that many young house holders are now under tremendous pressure by the banks as they have fallen into arrears with their mortgage payments, if he will introduce a scheme where persons will only pay what would be an acceptable similar sum to the rent that the property would make if it were put on the open market for letting, this rent could be taken off the mortgage over a period of time and the time of the mortgages could be extended in line with other European countries, where a much longer lifetime of mortgages are the norm in comparison to the usual time frame here; and if he will make a statement on the matter. [17611/11]

Michael Noonan (Limerick City, Fine Gael)
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I would like to inform the Deputy that there are a number of measures in place to assist mortgage holders who are in genuine difficulties with regard to the payment of their mortgages. The Deputy will be aware of the work of the Expert Group on Mortgage Arrears and Personal Debt. This Group published its final Report in November 2010. All of the Expert Group's recommendations are listed in Chapter 2 of the Report which can be accessed at www.finance.gov.ie .

One of the recommendations of the Group was that lenders should offer a Deferred Interest Scheme (DIS) to borrowers. Under this Scheme, borrowers are allowed, subject to certain criteria being satisfied, to pay at least 66% of their mortgage interest but less than 100%. Payment of the balance may be deferred for up to 5 years. Lenders representing the majority of the market have already indicated their willingness to implement the Group's proposals for a DIS or a variation of it. While the scheme is voluntary for all lenders, those who have signed up in support of the scheme will be monitored by the Central Bank to ensure compliance.

Since the publication of the Group's Report, the Code of Conduct on Mortgage Arrears (CCMA) has been revised by the Central Bank to reflect many of the recommendations, including key recommendations relating to the introduction by all regulated lenders of a standardised Mortgage Arrears Resolution Process (MARP). The most significant changes in the revised CCMA include:

·Penalty interest charges may not be imposed on borrowers in arrears who co-operate with the MARP,

·Harassment of borrowers through unsolicited communications is outlawed,

·Borrowers in financial difficulties, but not in arrears, are allowed to come under the MARP,

·When a lender is determining the 12 month period the lender must wait before applying to the courts to commence legal action, the lender must exclude any time period during which a borrower is complying with the terms of an alternative repayment arrangement, making an appeal to the internal appeals board or making a complaint to the Financial Services Ombudsman. The revised CCMA came into effect on 1 January 2011 and can be accessed at www.centralbank.ie. Lenders are required to comply with the CCMA as a matter of law but have been given a period of six months grace ending on 30 June 2011 to put in place the requisite systems and training of staff necessary to support the implementation of the MARP.

The recommendation of the Group to amend the local authority needs assessment process has been implemented by the Department of the Environment, Community and Local Government. Local authorities have been provided with guidance on the treatment of applicants for social housing support whose mortgages have been deemed unsustainable. Discussions are on-going between that Department and the Irish Bankers' Federation to enable borrowers, whose properties are to be repossessed to remain in their homes for a period of time, pending the sourcing of appropriate accommodation by the housing authority.

As regards the recommendations of the Group in relation to the Mortgage Interest Supplement Scheme (MIS), I have been informed by the Department of Social Protection that the implementation of these recommendations will require changes to both primary and secondary legislation. That Department is currently finalizing an implementation plan that will set out a framework for the future of the MIS.

I note the proposal made by the Deputy, whereby a borrower would pay an amount equivalent to the rent that the property could reasonably be expected to realise if put on the open market, in lieu of the actual amount of the mortgage due, thereby lengthening the time for full repayment of the mortgage. I have no plans to introduce such a scheme at this time. Finally, people in debt or in danger of getting into debt can avail of the services of the Money Advice and Budgeting Service. This is a national, free, confidential and independent service.