Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I move amendment No. 1:

To delete all words after “Dáil Éireann” and substitute the following:“acknowledges that the Government inherited a severe mortgage arrears crisis from the previous Government;

accepts that the mortgage problem is a significant economic and social challenge for the State and that the Government is aware of the difficulties some homeowners are facing in meeting their mortgage commitments;

notes that the Government published the Report of the Inter-Departmental Mortgage Arrears Working Group in October 2011 and that the key recommendations of that Report have been adopted by Government as the most appropriate framework to address this major problem;

recognises that the Central Bank of Ireland’s interaction with mortgage lenders is key to addressing mortgage arrears and in particular to ensure that, where appropriate, lenders put more long-term and sustainable solutions in place for their customers in mortgage difficulty;notes that:— the Central Bank of Ireland has set performance targets for the six main lenders requiring them to ‘propose’ sustainable solutions to 85 per cent of their mortgages in arrears of greater than 90 days by the end of the year and to ‘conclude’ solutions with 45 per cent;

— the Central Bank of Ireland’s Code of Conduct on Mortgage Arrears sets out requirements for mortgage lenders when dealing with borrowers facing or in mortgage arrears;

— the Central Bank of Ireland published a revised Code of Conduct on Mortgage Arrears effective from 1st July, 2013 following approval by the Central Bank Commission and consultation with the Minister for Finance;

— the Central Bank of Ireland will commence a review of Code of Conduct on Mortgage Arrears compliance later this year; and

— the latest Central Bank of Ireland mortgage statistics show that the number of mortgage accounts for principal dwelling houses in arrears fell for the fourth consecutive quarter at the end of June 2014;welcomes the Minister for Justice and Equality’s decision to waive all fees previously payable to either the Insolvency Service of Ireland or the Courts by a debtor who applies for any of the debt solutions available under the Personal Insolvency Act 2012;

notes:— that a comprehensive mortgage advisory service and mortgage-to-rent scheme have been put in place; and

— the recent reductions in mortgage interest rates by certain financial institutions which will have a positive impact on the affordability for their customers;accepts that the vast majority of mortgage holders are meeting their repayment commitments;

further notes that:— the Government is committed to bringing forward legislation that protects consumers whose mortgages are sold to unregulated entities and that the Department of Finance has recently published the submissions it received in response to a public consultation process seeking views on this legislation; and

— it is anticipated that this legislation will be published by the end of this year; and calls on the Government to continue and intensify its work across the relevant Departments and Agencies to deal with the mortgage arrears problem.”

I wish to reassure Deputy Collins and other speakers that I also welcome this debate. I certainly do not view it as trivial and I accept the bona fides of those who have tabled the motion for an important and genuine discussion that we need to have in our national parliament. A lot of good work has been done on a cross-party basis at Oireachtas committees and in this Chamber on the issue of mortgage arrears in recent years.

Before being appointed as a Minister of State, I remember the bi-partisan way in which members of the Committee on Finance, Public Expenditure and Reform worked in questioning the chief executive officers of banks and in putting together reports and recommendations. I know there was an exchange on some of those recommendations with my colleague, the Minister for Finance, Deputy Noonan, during finance oral questions on the last occasion in this House.

I wish to convey the Minister, Deputy Noonan's regrets that he cannot be here for the opening statements this evening. I hope Members will understand that is because he is attending the Joint Committee on Finance, Public Expenditure and Reform.

I welcome the opportunity to speak on this important issue and to set out recent developments in the area of mortgage arrears. I look forward to the debate tonight and tomorrow. I think everybody in the House will agree that the Government inherited a severe mortgage crisis from the previous Fianna Fáil-led Government. Like the economic, fiscal and jobs crisis that we inherited, this Government resolved to tackle the issue head on and significant progress has been made. We have prioritised actions to deliver real and sustainable solutions to borrowers. That is not to say that the work is in any way complete so far.

There is no doubt that some families across the country are experiencing genuine difficulties in meeting their monthly mortgage repayments. This Government is fully aware of the impact that this is having on these families and their lives. The Minister for Finance has said previously that we cannot have a situation where some families are living under the stress of mortgage arrears, are unable to enjoy even a modest standard of living, and are excluded from participating in the economy - effectively from living their lives because of their debt situation.

The Government has developed a comprehensive cross-departmental strategy to support households in arrears in line with the main recommendations of the 2011 Keane report. The primary focus of this strategy is to support those home-owners in difficulty with their mortgage repayments rather than those who, while they may be experiencing negative equity on their homes, can still meet their mortgage repayments.

The implementation of this strategy is overseen at Government level by the Construction 2020, Housing, Planning and Mortgage Arrears sub-committee, which is chaired by the Taoiseach, and at official level by a mortgage arrears steering group which is chaired by the Department of Finance. The Government's strategy is built around the four pillars for action as recommended by the Keane report. These are: engagement with the banks to develop appropriate measures for their customers in mortgage

arrears; personal insolvency law reform and implementation; mortgage to rent; and mortgage advisory function. A number of measures have been advanced in this regard.

The key indicator of success in dealing with mortgage arrears is the development and application, where appropriate, of long-term solutions. Short-term forbearance can be a worthwhile response to people experiencing temporary mortgage difficulty. The Keane report, however, made clear that this would not be a sufficient response to mortgage difficulty and that it would be necessary to develop sustainable restructuring responses to more long-term mortgage difficulty.

Lenders were encouraged to develop practical solutions tailored to individual circumstances for people in the most serious difficulty with their mortgage. In that regard, in March 2013, the Central Bank published the Mortgage Arrears Resolution Targets - or what is commonly known as the MART framework - which set out the performance targets for mortgage arrears resolution at six mortgage lenders. The six lenders are AIB, Bank of Ireland, Permanent TSB, Ulster Bank, KBC Bank Ireland and ACC.

Under this rolling process, quarterly performance targets have been set to require the banks to propose and put in place durable long-term solutions to address individual cases of mortgages in difficulty where the mortgage is more than 90 days in arrears. In that context, Deputies will be aware that the Central Bank set progressive targets in 2013 and throughout 2014 and has indicated that it expects that proposed solutions be made in respect of 85% of principal dwelling houses and buy-to-let arrears cases, and that concluded solutions be made with 45% of cases of greater than 90 days in arrears by the end of 2014.

The most recently published information from the Central Bank audit is in respect of the end December 2013, targets and proposed solutions. In that regard, the Central Bank has indicated that the December 2013 MART targets were achieved by all lenders. That is: at end December proposed solutions were issued to greater than the 50% target of mortgage accounts in arrears greater than 90 days; and concluded solutions were issued to greater than 15% of accounts in arrears greater than 90 days.

This MART initiative has resulted in significant numbers of long-term restructured arrangements being put in place. At the end of March 2013 when the MART targets were set, Central Bank statistics showed that 79,600 restructures were in place for principal dwelling houses. At the end of June 2014, this number had increased to 102,000 restructures.

Deputies will be aware that a monthly reporting regime on mortgage restructures and arrears for the six main lenders covered by the Central Bank's MART process has been put in place by the Department of Finance. The Department's latest publication, with data for the end of August 2014, shows that the number of principal dwelling home or PDH mortgage accounts in arrears of greater than 90 days has fallen by over 9,500 accounts when compared to the start of the year.

When the Department's series began in August 2013, the six lenders had 2,500 split mortgages in place. At the end of August 2014 there were over 16,000 split mortgages in place. Mortgage-to-rent has already been referenced in the Private Members' motion. It is important to note that this scheme is being reviewed by the Housing Finance Agency with two aims: first, to reduce the time it takes to process an application; and, second, to agree valuations of homes which are acceptable both to banks and borrowers.

During the same period, permanent restructures for family homes increased from around 41,000 to almost 80,000. Similarly, the Central Bank's latest mortgage arrears and restructures publication for the end of the second quarter of 2014 shows that the number of mortgage accounts for principal dwelling houses in arrears fell for the fourth consecutive quarter. Out of the 102,000 principal dwelling mortgage accounts classified as restructures, 81% were deemed to be meeting the terms of their current restructuring arrangement, which I think we can all agree is a significant achievement.

The data published by the Department of Finance, as well as the mortgage arrears and restructures data published by the Central Bank on a quarterly basis, demonstrate some success by lenders in addressing accounts in mortgage arrears, as well as measures to prevent borrowers from going into arrears.

It is important to publish these figures which are put on the website. In that way they are transparent so that the public can scrutinise them and hold people to account. I am conscious that we are all throwing around figures and I know Deputy Mathews sometimes gets concerned about percentages, but these restructures concern real individuals living behind the hall-doors of real family homes. With that in mind, it is worth looking at the Department of Finance's August 2014 figures that have been published, including what some of the permanent solutions consist of.

With the indulgence of the House I will cite the figures. To the end of August 2014, 15,048 mortgage accounts were offered a term extension. Some 1,833 were offered interest only, while 22,782 were offered arrears capitalisation. A further 11,047 were offered fixed repayments greater than interest only or interest modifications. Some 16,198 were offered a split mortgage, which I think people will accept is a significant increase.

See this speech in context