Enda Kenny (Mayo, Fine Gael) | Oireachtas source

The situation concerning distressed mortgages has improved from what it was just a couple of years ago. The Government then had to act to provide a range of opportunities both for lenders and borrowers in order that they could sit down to work out solutions to the problem of mortgage arrears. The central principle was that the loss of a home should be the very last resort. For instance, the Government put together the Personal Insolvency Act 2012 which introduced three new forms of non-judicial debt settlement arrangement. It also reduced the automatic discharge period for bankruptcy from 12 years to three. It is complicated legislation. The Insolvency Service of Ireland has been established to regulate these new debt settlement arrangements. It opened to accept applications in September 2013. As of September 2014, there were 141 personal insolvency practitioners. They develop either debt settlement arrangements or personal insolvency arrangements, two of the new debt solutions. There are also 94 individuals who are capable of acting as approved intermediaries and can develop a debt relief notice. The Insolvency Service of Ireland has indicated that there are hundreds of cases in the pipeline which are at varying stages of verification before they can be forwarded to the court for a decision. The court may issue a protective certificate which offers debtors legal protection for a period of 70 days, during which time an arrangement between the creditors and the insolvent debtor can be put together. To date, 172 debt relief notices, 59 debt settlement arrangements and 80 personal insolvency arrangements have been approved. There is, as yet, no definitive evidence of banks vetoing proposals. There is some evidence that banks are attempting to reach agreements with their clients short of entering into a formal insolvency process. Banks are becoming more focused in their attempts to reduce their mortgage arrears books. The existence of the Insolvency Service of Ireland is helping as a catalyst in this process.

Since March 2013, the Central Bank has set quarterly targets for six banks to make offers of sustainable solutions to customers in arrears for in excess of 90 days. They are Allied Irish Banks, Bank of Ireland, permanent tsb, Ulster Bank, ACC Bank and KBC Bank. The targets for 2014 were set as 70% in quarter 1, 75% in quarter 2, 80% in quarter 3 and 85% in quarter 4. There is considerable progress being made in meeting these targets. Banks have reported that they are satisfied with all of targets up to quarter 1 in 2014. An independent audit has confirmed the banks' progress up to quarter 4 in 2013.

Following the introduction of a mortgage-to-rent scheme which facilitates families in staying in their homes by the transfer of ownership to a local authority or an approved housing body, to date, 2,465 cases have been put forward by lenders, of which some 1,437 have been progressed, while 41 cases have been fully completed. The Department has acknowledged that the number of cases remains quite low and a review of the scheme is being undertaken. This has resulted in quite a number of changes to the process with the housing agency taking a much more managerial role in the scheme. It is expected that the changes will result in more cases being processed and concluded in the not too distant future.

Another development involved a mortgage arrears information and advisory service which included a website, a helpline and an advice service. There have been 238,000 visits to the website since June 2012. Some 11,500 telephone calls have been received by the helpline. Data provided by the Central Bank for lenders from quarter 4 in 2012 to quarter 1 in 2014 indicate that there were some 27,500 long-term forbearance offers, with just under 560 invoices being received by lenders. A review of the independent financial advice service has been completed. These reforms are being progressed, including the introduction of advice at an earlier stage, in order that borrowers in negotiations with their banks will know what is available. In addition, a special rate of mortgage interest relief for first-time buyers was introduced and available from 2004 to 2008. These are some instances in which conclusions have been reached.

As Deputy Joe Higgins is well aware, it is ultimately a case of lenders sitting down with borrowers to work out a solution that, in the circumstances, is best for those with a mortgage in order that a conclusion suitable to their needs and appropriate to their circumstances can be reached. It is not fully satisfactory by any means, but it is moving very much in the right direction. At the end of the day, the principal requirement concerns the safety of the family home.

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