Oireachtas Joint and Select Committees

Wednesday, 25 September 2013

Joint Oireachtas Committee on Finance, Public Expenditure and Reform

Matters Relating to the Economy: Discussion with Governor of Central Bank

2:40 pm

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The reason I argue that Professor Honohan should withhold judgment is that we may be surprised at what the audits discover. For example, as the Chairman noted, the outstanding issue to emerge from the hearings we had with bank representatives three weeks ago was an extraordinary reliance on legal action or the threat of legal action to count towards mortgage arrears resolution targets. Professor Honohan gave an example of somebody in arrears of one or two years and not having made a payment, and nobody could make a reasonable objection to the bank at least threatening legal action in that case. We have all come across cases where people are in arrears of a few hundred euro and no reasonable effort has been made by the bank to formulate an alternative arrangement to restructure the mortgage, meaning the bank has gone straight to a threatening legal letter. I submit to the witness that such action is a breach of the code of conduct on mortgage arrears. Professor Honohan indicated in his submission that lenders may only commence legal proceedings for repossession where they have already made "every reasonable effort" to agree an alternative arrangement.

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