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

As statutory regulator of credit institutions, the Central Bank has the power, from both a prudential and consumer protection perspective, to require banks to meaningfully address mortgage arrears cases on their books. Durable long-term restructures will have to be applied having regard to the circumstances of individual cases. The Deputy will be aware that the Central Bank's mortgage arrears resolution targets, MART, announced last March set

time-bound and measurable targets for the main banks requiring them to systematically address their arrears book.

On the basis of its audit of the bank's mortgage arrears targets, the Central Bank has indicated that all six mortgage lenders covered by the MART process have reported that they met the 20% proposed sustainable solutions target for the second quarter of 2013 and also the 30% target for the third quarter in 2013. Under this rolling process, quarterly performance targets have now been set to the end of June 2014 to require the banks to propose and put in place durable long-term solutions to address individual cases of mortgage arrears of more than 90 days in arrears.

The subsequent targets set by the Central Bank will be the subject of further audit work to ensure consistency with the sustainability principle in respect of solutions being offered by the lenders. The Central Bank has informed me that a range of sustainable solutions have been utilised by each of the lenders to date, some of which are mentioned in the Central Bank's internal guidelines on sustainable mortgage solutions.

These solutions include but are not limited to the following - term extensions; split mortgages; capitalisations; and permanent interest rate reductions. It will no longer be acceptable for banks to apply short-term solutions to cases where there has been a fundamental and long-term change in the position of the borrower. Durable

long-term restructures will have to be applied having regard to the circumstances of individual cases.

The end December 2013 mortgage arrears data in respect of the six MART banks, which was published by my Department on 13 February, shows that an increasing number of permanent restructures are now being put in place by banks. I would expect that if banks need to introduce new innovative sustainable solutions, the Central Bank will be in a position to assess those products from a regulatory perspective.

Taken together, the necessary framework is in place to enable banks to work with distressed homeowners to reach sustainable solutions for dealing with their personal

indebtedness situations.

However, early and effective engagement between borrowers and lenders is key to resolving the cases of mortgage difficulty.  Where there is effective and meaningful engagement by all parties on a mortgage difficulty, the data show that an increasing number of durable long-term mortgage restructures are being put in place.  It is accepted, however, that it will be necessary for lenders and borrowers to continue to build on this.

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