Seán Sherlock (Cork East, Labour)

I thank the Deputy for raising this important matter. Local authorities have traditionally been the lenders of last resort for low income households who could not access funds from commercial lenders. By definition, this cohort of borrowers is more susceptible to the economic downturn and external shock. In this context, it is unsurprising then that local authority mortgage arrears should exceed those in the commercial sector and the Department's most recent information puts the level of loans in arrears at almost 28%.

In 2009, the Department issued guidelines for the granting of local authority housing loans which applied stringent conditions and a more homogenous process across all 34 administrations. Credit checking of applications by the Irish Credit Bureau was a central component of this initiative, and loans advanced under the new regime are performing considerably better than pre-2009 ones.

However, it is important that households facing difficulties are treated fairly and consistently across all local authority areas. In that regard, the Department issued comprehensive guidance in 2010 based on the regulator's code of practice. This is to ensure that cases of local authority mortgage arrears are handled in a manner that is sympathetic to the needs of the particular household while also protecting the position of the local authority concerned.

Recognising the increasing difficulty with local authority mortgage arrears, the Department has been working in conjunction with the City and County Managers Association to produce a loans management manual, the publication of which is imminent. This will provide borrowers in distress with a suite of options under a mortgage arrears resolution process, MARP, to deal with their loans. It closely mirrors the Financial Regulator's revised code of conduct on mortgage arrears, which came into effect on 1 January 2011. It provides for a collaborative engagement between borrower and lender to either restructure the loan to a sustainable level, or else recognise its sustainability and act accordingly.

Whereas it would be hoped that as many home owners as possible could be facilitated under the MARP, it would be unrealistic not to accept the inevitability of a proportion of loans being deemed unsustainable. In these circumstances the local authorities and the borrower would need to face the inevitability of the loan being unsustainable and act accordingly in a collaborative and co-operative manner.

Local authorities will continue to deal with distressed borrowers with the same forbearance and sympathy they have exhibited in the past. They will facilitate where at all possible as many home owners as possible to retain their properties and service their debts until such time as we return to less challenging times.

I do not have a date in respect of the question the Deputy asked but respectfully suggest that if he were to table a parliamentary question or send me on note on it, I would be happy to try to oblige him. We do not have a definitive timeline for the publication of the guidelines but I will endeavour to come back to the Deputy on that.

The Deputy referred to 106 homes in the case of County Offaly. I am not sure if that is the rate of arrears, to what exact figure that would amount, or what it would be as a percentage of the loan book in the Offaly area. If there are issues pertaining to his specific area, I have an open mind in terms of engagement or at least I can refer them to the Minister of State, Deputy Jan O'Sullivan.

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