Joe McHugh (Donegal North East, Fine Gael) | Oireachtas source

I move amendment No. 1:

To delete all words after “Dáil Éireann” and substitute the following:

"recognises:

— that the level of mortgage arrears is a significant economic and social challenge and the Government is aware of the difficulties some homeowners are facing in meeting their mortgage commitments;

— that the Government has already taken decisive action to address the mortgage arrears challenge and is committed to continuing to address this issue as a priority;

— that the resolution of mortgage arrears continues to be an ongoing issue which is being addressed by a range of different Government and financial institution-led initiatives;

— that the Statement of Government Priorities 2014-2016 recognises that high levels of personal debt continues to threaten to exclude thousands of individuals and families from the recovery, and commits to the completion of a review of the implementation of the Central Bank’s mortgage arrears targets and the operation of the Insolvency Service of Ireland (ISI), and to the strengthening of the independent advice service offered to distressed borrowers;

— that the vast majority of mortgage holders are meeting their repayment commitments;

— that the six institutions subject to the Central Bank’s Mortgage Arrears Resolutions Targets (MART) reported that by the end of Quarter Four 2014 they had met and exceeded the MART targets set by the Central Bank of Ireland (CBI);

— that the aggregate number of principal dwelling houses (PDH) accounts in Ireland in arrears over 90 days is continuing to fall and reduced by 7.4% during Quarter Four 2014;

— that the number of PDH accounts in arrears over 720 days remains a challenge, although Department of Finance February 2015 data showed that numbers of cases in this category declined month-on-month for the six banks covered by MART; and

— the low level of take-up of ISI services during last year;

acknowledges policy interventions that have been undertaken, including the:

— Personal Insolvency Act 2012 and subsequent waiving of ISI application fees in 2014;

— Code of Conduct on Mortgage Arrears (CCMA);

— Mortgage Arrears Resolution Targets (MART);

— provision of the Mortgage Arrears Information Helpline;

— provision of independent financial advice for borrowers on the terms of restructure arrangements offered to them by their lender; and

— provision of the mortgage-to-rent scheme for eligible candidates and recent changes to simplify the property valuation process;

welcomes:

— the 22.7% reduction in total PDH mortgage arrears levels from a peak of 142,892 accounts in June 2013 to 110,366 accounts, as indicated by the CBI December 2014 mortgage arrears data;

— the fact that engagement between borrowers and lending institutions has resulted in almost 115,000 sustainable restructure arrangements being put in place, as also indicated by the CBI December 2014 data;

— initiatives by lenders to provide borrower-focused debt restructuring solutions; and

— the improving take-up of ISI services in 2015 and the fact that the majority of ISI solutions result in successful outcomes for the borrower, as evidenced in the ISI statistical bulletin for Quarter One 2015;

notes that:

— the Government has put in place a broad strategy to address the problem of mortgage arrears and family home repossessions which has included an extensive suite of interventions designed to address the problem including specific Central Bank targets for the banks through the Mortgage Arrears Resolution Targets, the Code of Conduct on Mortgage Arrears, extensive recasting of the personal insolvency legislation, the provision of advice through Department of Social Protection-led initiatives and the mortgage-to-rent scheme; and

— given the personal distress caused by over-indebtedness, the effective management of the mortgage arrears issue remains, however, a policy area, by necessity, under continuous review and that more and concerted action by the banks can be undertaken to assist customers in arrears and to improve the uptake of personal insolvency solutions; and

calls for:

— the Government to continue, and intensify, its work across the relevant Departments and Government agencies to consider all options to strengthen the mortgage arrears framework in order to ensure that families can, where possible, remain in their home and to encourage all lending institutions to work with it to deal with the mortgage arrears problem, with a view to making an announcement on this issue in the coming weeks; and

— a Government announcement that will focus on initiatives aimed at reducing the number of mortgages in long-term arrears and will seek to facilitate borrowers remaining in their homes wherever possible."

I acknowledge the approach taken by the Technical Group in the motion. The tone, in particular, is conversational. While we have the jargon with respect to the technical nature of mortgage arrears and many new acronyms have been introduced in the past four years, we are all on the same page when it comes to the human stories behind these difficulties. I commend the Technical Group in that respect.

The Government resolved to tackle the mortgage arrears issue head on and significant progress has already been made. We have prioritised actions to deliver real and sustainable solutions to borrowers.

There is no doubt that some families across the country are experiencing genuine difficulties in meeting their monthly mortgage repayments. The Government is fully aware of the impact that this is having on these families and their lives and continuously reviews the implementation of the various strands of mortgage arrears policy with a view to identifying ways to alleviate undue stress on indebted householders.

Addressing personal indebtedness is essential as our economy returns to strength. Since taking office, the Government has put in place a broad strategy to address the problem of mortgage arrears. This has included an extensive suite of interventions including specific Central Bank targets for the banks through the mortgage arrears resolution targets, MART, the code of conduct on mortgage arrears, CCMA, extensive recasting of the personal insolvency legislation, the provision of advice through Department of Social Protection-led initiatives and the mortgage-to-rent scheme which is designed to assist borrowers in an unsustainable mortgage position to remain in their homes through the involvement of social housing agencies.

Overall, I can agree with the sentiment of much of what the Technical Group has proposed, and I believe that current Government policy in this area is founded on these objectives, in particular, avoiding repossession of the family home where possible. The Central Bank's CCMA places an onus on the banks, in respect of a co-operating borrower, 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 Central Bank publishes comprehensive data on mortgage arrears on a quarterly basis. Its most recent publication was in March 2015 and covered data to the end of quarter 4 of 2014. This showed that the number of mortgage accounts for principal dwelling houses in arrears continued to fall, marking six consecutive quarterly declines.

According to data published by the Central Bank, at the end of 2014 there were 758,988 mortgage accounts outstanding. Of these, 648,622, or 85%, were not in arrears. It should be noted that the number of accounts does not directly translate into the number of homes as some properties have more than one mortgage outstanding on them. It has been estimated that the rule of thumb is that there are 1.3 mortgages to a property.

The number of principal dwelling houses accounts in arrears totalled 110,366 at the end of 2014, down from a peak of 142,892 accounts in June 2013. Of these accounts, at the end of 2014, 78,699 were in arrears of more than 90 days. While the arrears over 90 days remain high, they are down from a peak of 98,736 accounts at end September 2013. Indications are that the fall-off in numbers in arrears will continue. There are over 37,000 accounts with arrears of over two years. Based on the rule of thumb that there are 1.3 mortgages to every property, it can be estimated that the 37,778 accounts with arrears over two years relates to approximately 30,000 properties.

The published data also clearly show that many customers are finding solutions when they engage with their lender and the evidence to date is that restructures can be a very effective solution to the problem of mortgage arrears. In March 2013 the Central Bank set targets to require banks to take steps to progress the resolution of mortgage arrears on a sustainable basis. The Central Bank has reported that the banks continue to meet or exceed the MART set for them.

Central Bank data indicate that almost 115,000 principal dwelling houses mortgage accounts have been restructured - some of these may not have been in arrears - that is, almost one in seven mortgages have been restructured. Over the course of 2014, there was an increase of over 30,000 in the number of accounts that have been restructured. I am sure we can all agree that it is good news that such a significant number of mortgage accounts have been restructured and consequently large numbers of borrowers are able to remain in their homes.

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, MARP, or with the CCMA. These efforts can only achieve positive results in circumstances where the borrower co-operates with the lender and engages with the process. 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 MARP process has concluded and where legal proceedings have commenced, the Central Bank's code requires that a lender must continue to maintain contact with the borrower, and-or his nominated representative, periodically to see if an alternative repayment arrangement can be agreed even at that late stage. The CCMA is an important consumer protection mechanism and monitoring compliance with the CCMA continues to be a core part of the Central Bank's work programme. The Central Bank will continue to conduct on-site inspections of a number of mortgage lenders this year, as it did in 2014.

It is important to remind Deputies that 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 in relation to 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, PIA, proposal. In formulating a proposal for a PIA, 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.

However, this mechanism has not been widely used to date so it may be necessary to raise awareness about it with borrowers in advance of a repossession hearing.

It is important to repeat that the strongly held 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 be considered only as a last resort. Every effort should be made to agree an acceptable arrangement as an alternative to repossession. I believe the CCMA and MARP processes which I have outlined provide a strong framework to ensure this happens. Regretfully, however, it must be also accepted that due to individual circumstances, not all mortgages can be made sustainable and that in these limited circumstances, it will be in the best interests of both parties to resolve the situation in a fair manner.

The motion mentions mortgage to rent which, as Deputies will be aware, was introduced 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 those low income families whose mortgage situations are unsustainable and where there is little or no prospect of a significant change in circumstances in the foreseeable future. The scheme ensures that families remain in their homes while ownership is transferred to an approved housing body which, in turn, rents it to the original owners. Eligibility requirements are in line with other forms of social housing support. Up to the end of 2014 almost 70 cases have been completed which means those families have not had to move out of their homes. A review of the scheme was recently carried out by the Housing Agency on behalf of the Department of the Environment, Community and Local Government. The review has 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. In an effort to increase the numbers delivered under the scheme a new protocol between all parties in the process was agreed and came into operation in June 2014. The aim of the new protocol is to address acknowledged delays in the mortgage to rent process. Borrowers will be involved from the outset of the process and will be requested to give their consent to the sharing of their full information at the start of the process. This will ensure there is no ambiguity for stakeholders. The protocol includes a single independent valuation for the purpose of agreeing the purchase price, which should reduce price negotiation times. The valuation and condition surveys will be carried out earlier in the process to give more certainty to all parties, including the borrower. The Department of the Environment, Community and Local Government has targeted the completion of 250 mortgage to rent transactions during 2015.

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 who are being presented with long-term mortgage resolution proposals by their lenders. The Mortgage Arrears Information and Advice Service, MAIAS,was established to provide a comprehensive and co-ordinated approach to assisting people in mortgage arrears or pre-arrears in assessing their options. The service has three elements, the first of which is the website www.keepingyourhome.ie which is maintained by the Citizens Information Board and was developed as the key online access portal for general mortgage information advice. The website was launched in June 2012 and to date there have been almost 350,000 visits to the site. The second element of the service is the mortgage arrears information helpline established in August 2012, which provides general mortgage arrears information and signposting relating to the CCMA and other

supports available for those in mortgage arrears or pre-arrears. To date the helpline has dealt with over 13,000 calls. The third element is the service to provide independent financial advice to mortgage holders who are being presented with long-term mortgage resolution proposals by their lenders which was launched in September 2012. Advice is provided by a panel of accountants drawn from members of the main accountancy institutes in Ireland. A county by county panel with more than 1,500 participating accountants is in place and their contact details are available on the keepingyourhome.iewebsite. Borrowers are free to choose their own advisor from this panel and the lender will pay €250 to the accountant of the borrower's choice for the provision of independent financial advice. At the end of the fourth quarter of 2014, 1,509 borrowers had availed of the independent financial advice service.

I wish to emphasise the Government's determination to ensure that the personal insolvency legislation and support structures can work effectively to support a return to solvency for borrowers who are struggling with unsustainable debts. As I mentioned earlier, the Government's priority is to ensure that where an individual's debts include mortgage arrears on a family home, repossession is the last resort where all other avenues to resolve the arrears have been properly considered by the lender and have been exhausted. The Government is considering all options for improving the effectiveness of the range of solutions available to a person who is trying to resolve unsustainable debts, including the option of changes to bankruptcy.

The Insolvency Service of Ireland, ISI, established in 2013, has now been in operation for more than a year. While activity levels were lower than expected, significantly higher levels of applications have been evident since the launch of the "Back on Track" campaign in October 2014, which included the waiving of all ISI application fees. During 2014, 547 approved arrangements were concluded, including 251 debt relief notices, 97 debt settlement arrangements and 199 personal insolvency arrangements. The ISI reports that 75% of proposals are being supported by creditors. In addition, there were 448 bankruptcies in 2014,almost eight times the number in 2013. The fact that the ISI is now in place has acted as a catalyst and has encouraged debtors and creditors to reach bilateral deals to address their insolvency. In the absence of bilateral agreements, the new statutory frameworks are a mechanism requiring all relevant creditors to engage with and respond to an insolvency arrangement proposed by a debtor.

We are glad that the Technical Group shares the concerns of the Government regarding the level of family home repossession cases before the courts. The Department of Justice and Equality has indicated that the number of applications for repossession civil bills remains high but has levelled off following a sharp peak in quarter two of 2014. The number of repossession orders granted by the courts, however, is currently rising due to applications working their way through the system. As I have said already, 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 MARP or with the CCMA. For this reason, I would strongly encourage borrowers who are in a serious debt situation to seek independent professional advice through the Money Advice and Budgeting Service, MABS, or through the ISI in the first instance. That said, all lenders have indicated a willingness to engage with their borrowers at any stage of the process, even when the issue is before the courts. In fact the low level of repossessions we are seeing is related to the adjournments being sought, in many instances, by financial institutions as borrowers at that point are engaging. As we all know, more than 115,000 mortgage accounts have been restructured already and the majority of borrowers are able to adhere to the new arrangements and stay in their homes.

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