Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

As the Deputy is aware, the Government is conscious of the significant difficulties some homeowners are facing in meeting their mortgage obligations. It is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty. A special Government sub-committee is already in place since March of last year to address the mortgage arrears problem. This sub-committee, which is chaired by An Taoiseach and includes all other relevant Ministers, reflects the need for accelerated progress in this area. The Government’s strategy to assist those in mortgage difficulty is built around measures in four distinct areas - personal insolvency, a mortgage advisory service, the mortgage-to-rent scheme and engagement with the banks - and considerable progress has now been achieved across this agenda.

The Keane report indicated that, given the recourse nature of mortgages, personal insolvency reform and, in particular, the introduction of new and more accessible insolvency resolution frameworks were essential for resolution of the mortgage arrears problem. The Personal Insolvency Act is now law and the introduction of this Act should be a catalyst to incentivise banks to reach an agreed solution with individual borrowers in resolving mortgage arrears cases.

With regard to the mortgage advisory service, an extensive independent mortgage advice framework has been established 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 or resolution offer from their lender.

In addition, the Minister of State with responsibility for housing and planning has put the mortgage-to-rent scheme on a nationwide basis. Protecting the homes of the most distressed mortgage holders through a mortgage-to-rent scheme, under which ownership of the house passes to an approved housing body, is a key 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 situations are unsustainable, allowing such families to remain in their homes.

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The Central Bank, under its mortgage arrears resolution strategies project, MARS, has for some time been intensively working with lenders to ensure they can offer a range of longer-term options to their customers who are experiencing mortgage difficulty. These can include trade-down mortgages, split mortgages and sale by agreement, or other appropriate options as may be developed by lenders. It is important that banks have the capacity to implement these in an effective manner. While progress in this area has not been as rapid as desired, it is true to say that greater effort and resources are now being deployed across the banks on this issue and real engagement on resolution options should now be further enhanced. In this regard, the Governor of the Central Bank has very recently said that the Central Bank will shortly be setting out targets for effectiveness in achieving lasting solutions and is focusing in 2013 on the implementation of MARS by lenders.

In addition to the above measures, the Central Bank's code of conduct on mortgage arrears remains a key framework governing the relationship between mortgage holders experiencing difficulties and their banks, and it offers very worthwhile protections for distressed households. The code provides that each bank must establish a formal mortgage arrears resolution process to deal with its mortgage customers who are in arrears or pre-arrears and establish 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, to take account of recent developments such as the new personal insolvency legislation.

The Government is committed to building on the progress made and is further intensifying its efforts to address the mortgage arrears problem. In that context, we are proceeding on the basis of the recommendations of the Keane report. Ultimately, however, the Government is of the view that it is the regeneration of the economy, the restoration of employment levels and income growth that will provide the real social and economic improvements that will be required. That is why the Government is focused through its many new initiatives on fostering and generating economic growth. The successful achievement of this objective will restore consumer confidence and bring the tangible and sustainable recovery the country requires.

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