Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

The Government is aware of the significant difficulties facing home owners in meeting their mortgage obligations and is committed to advancing appropriate measures to assist mortgage holders experiencing real and genuine difficulty. A special Cabinet sub-committee was put in place in March last year to address the mortgage arrears problem. This committee, chaired by the Taoiseach and including all relevant Ministers, reflects the need for accelerated progress in this area.

At official level, the Department of Finance is taking a lead role and in that context, a high level steering group, chaired by the Department's Secretary General, was established to drive the implementation of the recommendations contained in the Keane report. The Government's strategy to assist those in mortgage difficulty is built around measures in four distinct areas, namely, personal insolvency, a mortgage advisory service, the mortgage-to-rent scheme and engagement with the banks. Considerable progress has been achieved across this agenda.

The Keane report indicates that given the recourse nature of mortgages, personal insolvency reform and, in particular, the introduction of new more accessible insolvency resolution frameworks are essential for the resolution of the mortgage arrears problem. The Personal Insolvency Act 2012 is now law. This should be a catalyst to incentivise banks to reach an agreed solution with individual borrowers in resolving mortgage arrears cases. It is expected that the majority of agreements between borrowers and lenders can be made outside of the provisions of the Act as bilateral agreements between borrowers and lenders, without recourse to the new insolvency frameworks or the courts, would, in many cases, be in the interest of all parties. However, the new insolvency framework will be necessary for some cases and the insolvency service is now urgently preparing the ground to make them operation as soon as possible.

An extensive independent mortgage advice framework has also been put in place by the Minister for Social Protection, comprising an enhanced website, a mortgage arrears information helpline and the provision of free independent one-to-one professional advice to borrowers when considering a long-term forbearance-resolution offer from their lender. The Minister of State with responsibility for housing and planning has now put the mortgage-to-rent scheme on a nationwide basis. Protecting the home of the most distressed mortgage holders through a mortgage-to-rent scheme whereby the ownership of the house passes to an approved housing body is a key social back stop housing support for those with distressed mortgages. The existing owner then becomes a social housing tenant. This option is now available in appropriate cases and will be of benefit to low income families whose mortgage situation is unsustainable to allow them remain in their homes.

The Central Bank, under its MARS project, has been intensively working with lenders for some time to ensure that they have a range of longer term options, such as trade-down mortgages, split mortgages and sale by agreement or other appropriate options as may be developed by lenders for their distressed mortgage customers and that they have the capacity to implement these in an effective manner. While progress in this area has not been as rapid as desired, greater effort and resources are now being deployed across the banks to this issue and real engagement on resolution options should now be further enhanced.

In addition, the Central Bank's code of conduct on mortgage arrears remains a key framework to govern the relationship between mortgage holders experiencing difficulty and their bank and it offers very worthwhile protections for distressed households. The code provides that each bank must put in place a formal mortgage arrears resolution process to deal with its mortgage customers who are in arrears or pre-arrears and for the establishment of dedicated arrears support units and appeals processes to handle such cases. The Central Bank has commenced a review of the code of conduct on mortgage arrears which will involve a public consultation process. The review of the code will have to take account as appropriate of recent developments such as the new insolvency legislation.

The Government is committed to building on the progress made and further intensifying its efforts to address the mortgage arrears problem and in that context is proceeding on the basis of the recommendations of the Keane report. However, banks and other lenders also have a very significant obligation and responsibility to address mortgage holders experiencing genuine mortgage arrears. Given that lenders extended the credit in the first instance, they can be regarded as having the primary responsibility for addressing the debt problems now facing their customers and for resolving the position in a sustainable way for those customers experiencing genuine difficulty.

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