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

The Deputy will be aware that in March 2013 the Central Bank published the mortgage arrears resolution targets, MART, framework, which sets out performance targets for mortgage arrears resolution for the six main mortgage lenders. As I mentioned, these lenders are Allied Irish Banks, Bank of Ireland, Permanent TSB, Ulster Bank, ACC Bank and KBC Bank Ireland. They are required to meet targets for both "proposed" and "concluded" sustainable solutions for their principal dwelling home and buy-to-let mortgagees who are in arrears for more than 90 days.

In that context, a sustainable solution has been defined in the Central Bank's published MART, mortgage arrears resolution targets, document as one of the following: an arrangement, concluded in accordance with the CCMA, code of conduct on mortgage arrears, where the borrower is co-operating under the MARP, mortgage arrears resolution process, and the bank has satisfied itself that the arrangement provides a sustainable solution which is likely to enable the customer to meet the original or, as appropriate, the amended terms of the mortgage over the full remaining life of the mortgage; a personal insolvency arrangement, effected under the Personal Insolvency Act 2012; or, if an arrangement could not be reached or is not appropriate having regard to the circumstances of the case, that the property securing the mortgage loan has been voluntarily sold or, failing that, any situation where a bank takes possession of the property, including by way of voluntary agreement with the borrower or by court order or otherwise.

Regarding performance to date, the lenders have reported to the Central Bank that they met the 20% proposed sustainable solutions target in the second quarter of 2013 and also the 30% third quarter target. Regarding the third quarter, the lenders reported they had issued, in total, proposals to 43% of mortgage accounts in arrears of more than 90 days. Furthermore, last December, the Central Bank set its expectations for the quarter ending June 2014 which requires that sustainable solutions be offered to customers to reach 75% of over 90-day arrears and for concluded solutions to reach 35% by that date.

Additional information not given on the floor of the House

The CCMA applies to the mortgage loan of a borrower which is secured by his or her primary residence. The CCMA requires lenders to explore all of the options for alternative repayment arrangements offered by that lender. Such alternative repayment arrangements may include reducing the principal sum to a specified amount and-or an alternative modification of the mortgage such as interest only repayments on the mortgage for a specified period of time; permanently reducing the interest rate on the mortgage; an arrangement to pay interest and part of the normal capital amount for a specified period of time; deferring payment of all or part of the scheduled mortgage repayment for a specified period of time; extending the term of the mortgage; changing the type of the mortgage; adding arrears and interest to the principal amount due; equity participation; and warehousing part of the mortgage, including through a split mortgage.

However, it remains the case that it is at the discretion of each lender, including, as provided for in the relationship frameworks, those banks in which the State has a shareholding interest, which alternative repayment arrangements it offers to borrowers in arrears. These are operational decisions for the individual lender having regard to the circumstances of individual cases. In this context, however, the CCMA requires a lender to document its considerations of each option examined, including the reasons why the options offered to the borrower are appropriate and sustainable for his or her individual circumstances and why the options considered and not offered to the borrower are not appropriate and not sustainable for the borrower's individual circumstances.

In order to improve transparency for borrowers, provision 14 of the CCMA also requires that a lender must detail, in its MARP booklet, which is issued to borrowers in arrears of more than 31 days and must be published on its website, the alternative repayment arrangements offered by that lender, including how they work, their key features and an outline of the lender's criteria for assessing requests for alternative repayment arrangements.

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