Simon Harris (Wicklow, Fine Gael) | Oireachtas source

It is important to mention the positive news announced today about the initiative between AIB and the Irish Mortgage Holders Organisation, IMHO. Deputy Joan Collins referred to this. The partnership initiative has resulted in more than 1,300 sustainable restructures being put in place over the past 12 months. That is also welcome news. The initiative demonstrates that where there is real engagement between borrowers and lenders, sustainable restructures can be agreed to the benefit of the lenders and borrowers. Any practical initiative that can help people in genuine mortgage arrears difficulties and facilitate and improve the quality of engagement between the bank and the borrower is to be welcomed. In that regard, I commend the IMHO on its role.

With regard to repossessions, the Government has made it clear that repossession of a family home should be the last resort. The Central Bank code of conduct on mortgage arrears, CCMA, places an onus on the banks in respect of co-operating borrowers to explore all the options for an alternative repayment arrangement offered by the lender to address a primary dwelling mortgage difficulty before any legal action is considered. The CCMA provides that lenders may only commence legal proceedings for repossession where they have already made every reasonable effort to agree an alternative arrangement with a co-operating borrower. Any bank proceeding to legal recourse with co-operating borrowers in circumstances where an alternative sustainable arrangement is feasible and can be agreed is not acting in a manner consistent with the mortgage arrears resolution process or with the CCMA. These efforts can only achieve positive results in circumstances where there is real engagement between borrowers and lenders. This is an example of how the engagement between AIB and the IMHO has worked well. Perhaps lessons can be learned from it. Where this does not happen, the lender may have no other option but to go down the legal route to deal with an arrears case. If that course of action leads the borrower to commence a constructive engagement, this can lead to a more favourable conclusion for both parties and may allow the borrowers to remain in the family home. It should also be noted, however, that even if the mortgage arrears resolution process has concluded and where legal proceedings have commenced, the Central Bank's code requires that a lender must continue to maintain periodic contact with the borrower and-or his nominated representative to see if an alternative repayment arrangement can be agreed even at that late stage.

The CCMA is an important consumer protection mechanism. Monitoring compliance with CCMA continues to be a core part of the Central Bank's work programme and is also an enforcement priority for the bank. The code was reviewed, revisited and revised to strengthen consumer protection and force lenders to engage systemically with borrowers before proceeding with legal cases. The Central Bank will be commencing on-site inspections of a number of mortgage lenders in the coming months. This is an important development.

Even if a repossession case has commenced in the legal system, the Land and Conveyancing Law Reform Act 2013 provides a power to the court to adjourn a repossession proceeding on a principal private residence to enable the borrower to consult a personal insolvency practitioner, PIP, and, where appropriate, to instruct the PIP to make a personal insolvency arrangement proposal. In formulating a personal insolvency arrangement proposal, the Personal Insolvency Act 2012 places an onus on a PIP to do so on terms that shall not, in so far as is reasonably practicable, require the borrower to dispose of an interest or cease to occupy the house.

The strong view of the Government is that, in respect of co-operating borrowers under the mortgage arrears resolution process, repossession of a person's primary home should only be considered as a last resort. Every effort should be made to agree an acceptable arrangement as an alternative to repossession. The CCMA and mortgage arrears resolution process outlined provide a strong framework to ensure this happens.

Personal insolvency reform was a key recommendation of the Keane report. The Personal Insolvency Act 2012 was complex legislation that significantly modernised Ireland's insolvency regime. As with any such major reform, the Department of Justice and Equality is keeping the effectiveness of the legislation under review to ensure it achieves the objective of providing an efficient way of resolving unsustainable personal debt positions in a way that is as fair as possible for debtors and creditors. There have already been some amendments to the legislation during 2013, which were of a minor nature and primarily operationally focused. I welcome the decision by my colleague, the Minister for Justice and Equality, 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. The waiver was announced last month by the Insolvency Service of Ireland and takes effect until the end of 2015, when it will be reviewed. The ISI has also announced that, for the same period, it will provide a contribution of €750 to defray the cost of a PIP if a reasonable insolvency proposal agreed with a debtor is refused by creditors. This was emerging as an issue in many Members' offices. There is now the ability to defray some of the costs. The debtor should not be faced with a bill arising from the creditor's refusal in this situation.

The recent ISI quarterly statistics were published in July. In summary, during the second quarter, 67 debt relief notices, 30 debt settlement arrangements, and 27 personal insolvency arrangements were approved. In addition, 98 bankruptcy adjudications were made in the second quarter of 2014 following the reduction in the duration of bankruptcy to three years. In the first half of this year, there were 164 bankruptcy adjudications compared with 58 in 2013. It is hoped the welcome initiatives announced by the ISI on fees and PIP costs will increase the take-up of the ISI services and that more negotiated debt settlement arrangements will occur as a result.

The fact the ISI is in place has acted as a catalyst and can encourage debtors and creditors to reach bilateral deals to address their insolvency. In the absence of bilateral deals, the new statutory frameworks are a mechanism requiring all relevant creditors to engage with and respond to an insolvency arrangement proposed by a debtor. The spirit of engagement and bringing people together to look bilaterally at addressing debt is a welcome step and one that must be under constant review to ensure it is working as intended by the House.

On foot of the recommendations of the Keane report on mortgage arrears, the Government launched the mortgage-to-rent scheme nationally in June 2012, targeting low-income families whose mortgage situation is unsustainable and where there is little or no prospect of a significant change in circumstances in the foreseeable future. The scheme ensures the family remains in the home while ownership is transferred to an approved housing body that, in turn, rents it to the original owners. Eligibility requirements are in line with other forms of social housing support.

The Government accepts that the number of completed mortgage-to-rent cases remains low despite the increase I announced. More than 2,500 cases have been submitted to date by the lenders, however, and of these around 1,000 were ineligible or terminated during the process, of which 263 cases were not progressed because the household in question was deemed to be over or under-accommodated. A significant number of cases are currently with the lenders, who are seeking the consent of borrowers to share information and for the carrying out of an independent valuation. Some cases are being actively progressed. To date, some 50 cases have been completed, which means these 50 families have not had to move out of their homes. A review of the scheme was carried out recently by the Housing Agency on behalf of the Department of Environment, Community and Local Government. The review resulted in comprehensive changes to the process that have been agreed with all parties, with the Housing Agency taking more of a management role in the scheme. I hope this will see an increase in the roll-out of the scheme. A new protocol has also been introduced that will define how the process will work in the future. The protocol outlines the roles and responsibilities of all the stakeholders to the process, which should encourage greater numbers to participate in the scheme.

The Government has provided an enhanced range of information and guidance services for mortgage holders, including a dedicated information website, a mortgage arrears information and advice helpline, and the provision of independent financial advice to mortgage holders being presented with long-term mortgage resolution proposals by their lenders. This advice is provided by qualified accountants drawn from members of the main accountancy institutes in Ireland who have agreed to participate and support this independent service. When a lender is proposing longer-term mortgage resolutions, the lender will advise the borrower to obtain independent financial advice on the proposed arrangement and, if the borrower wishes to avail of this option, that the lender will pay €250 to an accountant of the borrower's choosing for the provision of this advice. The independent financial advice is available to all mortgage holders who have been offered long-term forbearance options by their lenders in respect of a mortgage secured on a primary residence. These are important supports introduced by this Government with the intention of ensuring the borrower is fully informed and understands the terms of the agreement being offered to him or her.

The Government is aware of the concerns of some mortgage holders whose mortgages have been sold to third parties. The Minister for Finance has informed the House previously that he is committed to bringing forward legislation that protects consumers whose mortgages are sold to unregulated entities. The Government has reiterated this commitment on several occasions. The Department of Finance undertook a public consultation process in July and August of this year seeking views on its proposed legislation to protect consumers whose loans are sold to unregulated entities.

The Department of Finance recently published submissions received from a range of respondents from the financial services industry, consumer groups, public representatives and individuals and other stakeholders. Officials in the Department are carefully considering the submissions and it is anticipated that legislation will be published by the end of this year.

This Government has put in place a wide range of initiatives to assist homeowners in mortgage arrears. The main banks have been set targets to propose and conclude sustainable solutions to mortgage holders in arrears, and they are meeting those targets. A new, innovative personal insolvency regime is in place, the mortgage-to-rent scheme has been rolled out nationwide, and the Government's mortgage advice and information service has been established. This Government is dealing with the mortgage crisis it inherited. It has now developed and provided a suite of measures designed to address the problem of over-indebtedness. This strategy will continue to deal with unsustainable debt positions and do so in a way that is as fair as possible to borrowers and lenders, but also in a way that seeks to minimise the costs involved for wider society. The statistics issued by the Department of Finance and the Central Bank demonstrate that the numbers in arrears are falling, the number of restructures is rising and much of the groundwork laid by the Government is having the desired effect in relieving families of the burden of debt and anxiety associated with being in arrears and putting them on a sustainable footing for the future. I look forward to the rest of the debate.

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