Denis Naughten (Roscommon-South Leitrim, Independent)
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To ask the Minister for Finance the steps being taken to address mortgage restructuring by the financial institutions; and if he will make a statement on the matter. [10492/13]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, the Government is conscious of the significant difficulties some homeowners are facing in meeting their mortgage obligations. It is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty. A special Government sub-committee is already in place since March of last year to address the mortgage arrears problem. This sub-committee, which is chaired by An Taoiseach and includes all other relevant Ministers, reflects the need for accelerated progress in this area. The Government’s strategy to assist those in mortgage difficulty is built around measures in four distinct areas - personal insolvency, a mortgage advisory service, the mortgage-to-rent scheme and engagement with the banks - and considerable progress has now been achieved across this agenda.

The Keane report indicated that, given the recourse nature of mortgages, personal insolvency reform and, in particular, the introduction of new and more accessible insolvency resolution frameworks were essential for resolution of the mortgage arrears problem. The Personal Insolvency Act is now law and the introduction of this Act should be a catalyst to incentivise banks to reach an agreed solution with individual borrowers in resolving mortgage arrears cases.

With regard to the mortgage advisory service, an extensive independent mortgage advice framework has been established by the Minister for Social Protection, comprising an enhanced website, a mortgage arrears information helpline and the provision of free, independent one-to-one professional advice to borrowers when considering a long-term forbearance or resolution offer from their lender.

In addition, the Minister of State with responsibility for housing and planning has put the mortgage-to-rent scheme on a nationwide basis. Protecting the homes of the most distressed mortgage holders through a mortgage-to-rent scheme, under which ownership of the house passes to an approved housing body, is a key housing support for those with distressed mortgages. The existing owner then becomes a social housing tenant. This option is now available in appropriate cases and will be of benefit to low-income families whose mortgage situations are unsustainable, allowing such families to remain in their homes.

Additional information not given on the floor of the House

The Central Bank, under its mortgage arrears resolution strategies project, MARS, has for some time been intensively working with lenders to ensure they can offer a range of longer-term options to their customers who are experiencing mortgage difficulty. These can include trade-down mortgages, split mortgages and sale by agreement, or other appropriate options as may be developed by lenders. It is important that banks have the capacity to implement these in an effective manner. While progress in this area has not been as rapid as desired, it is true to say that greater effort and resources are now being deployed across the banks on this issue and real engagement on resolution options should now be further enhanced. In this regard, the Governor of the Central Bank has very recently said that the Central Bank will shortly be setting out targets for effectiveness in achieving lasting solutions and is focusing in 2013 on the implementation of MARS by lenders.

In addition to the above measures, the Central Bank's code of conduct on mortgage arrears remains a key framework governing the relationship between mortgage holders experiencing difficulties and their banks, and it offers very worthwhile protections for distressed households. The code provides that each bank must establish a formal mortgage arrears resolution process to deal with its mortgage customers who are in arrears or pre-arrears and establish dedicated arrears support units and appeals processes to handle such cases. The Central Bank has commenced a review of the code of conduct on mortgage arrears, which will involve a public consultation process, to take account of recent developments such as the new personal insolvency legislation.

The Government is committed to building on the progress made and is further intensifying its efforts to address the mortgage arrears problem. In that context, we are proceeding on the basis of the recommendations of the Keane report. Ultimately, however, the Government is of the view that it is the regeneration of the economy, the restoration of employment levels and income growth that will provide the real social and economic improvements that will be required. That is why the Government is focused through its many new initiatives on fostering and generating economic growth. The successful achievement of this objective will restore consumer confidence and bring the tangible and sustainable recovery the country requires.

Michael McGrath (Cork South Central, Fianna Fail)
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In my experience of helping constituents - I deal with many individual cases, trying to help people to get mortgages restructured - is that it is fairly straightforward to get interest-only arrangements, arrears capitalisation and term extensions. Perhaps 99% of the restructuring arrangements that have been made use those traditional methods. However, to achieve more innovative solutions, such as split mortgages or mortgage-to-rent arrangements, is more difficult. Only 12 split mortgage arrangements have been established and two mortgage-to-rent transactions actually completed. To achieve such restructuring, including shared equity and so forth, is virtually impossible - it is like pulling teeth from the banks. I deal with a lot of cases and my experience has been that while people will obtain straightforward restructuring, they will not get the less traditional solutions over the line. The Minister will have to do something to ensure there is action on establishing proper long-term restructuring solutions so that people can try to work their way out of their difficulties.

Michael Noonan (Limerick City, Fine Gael)
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I generally agree with what Deputy McGrath has said. The Central Bank is driving this through the deputy governor and the Financial Regulator, Mr. Matthew Elderfield. A schedule has been drawn up for each of the banks and the banks are co-operating. They have also trained many staff in the banks to deal specifically with this and to engage with customers.

I met the three main banks this morning. They seem to be making some progress, although I would like them to make more progress. There is no agreement about the statistics. One of the banks showed me statistics this morning that said it had made 46 restructuring arrangements of a certain type, rather than 12 - mind you, 46 does not make a lot of difference either. The banks are now talking about 1,500 a month - that kind of pace. They are moving it on.

It is one of the main priorities of the Government this year to make sure this is sorted out. I agree with the Deputy. More focused arrangements must be made by the banks and they have to be ready to make these arrangements.

Pearse Doherty (Donegal South West, Sinn Fein)
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Going back to what I said earlier, this is a serious, massive crisis. It was a crisis when the Minister came into office and the number of people in mortgage distress has doubled in the past two years. I want to focus on one bank in particular, AIB. The chief executive of AIB announced - I believe he is genuine - that it is writing to all 33,000 customers who are in mortgage arrears. This number does not refer to those who are in mortgage distress, because some of those people have had restructuring arrangements, although these are usually interest-only arrangements. I believe we can all agree that interest-only is not a long-term solution to the mortgage crisis; it is a short-term solution until something else changes - either the customers' circumstances change quite substantially or a more sustainable solution is found by the banks.

Perhaps the Minister can relieve my concern. Has AIB informed him what it intends to do with the 33,000 customers who are in arrears? Is it going to adopt the approach it has taken heretofore, which is basically to establish interest-only arrangements for the majority of those people, so they fall out of the group who are in arrears of 90 days and are into restructured mortgages, but paying interest only? If that is the solution from the banks five years into this crisis, it is not good enough. Hopefully, there will be a lot more. The backbone has to be more debt write-downs for people whose mortgages are unsustainable, including other options.

Mick Wallace (Wexford, Independent)
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I am sure most people are agreed at this stage that the failure of the banks to deal with the mortgage arrears problem has hindered recovery. It now seems to be having a knock-on effect on the rental market because many people who would have bought property if the waters had been a bit clearer have not done so. Rental properties are now becoming scarce, as many people have refused to buy because they are not sure where the bottom of the market is going to be.

Does the Minister consider that much of the renegotiating the banks are doing is short-term work rather than long-term? Maybe we are just kicking the can down the road a little and the problems will crop up again further down the line.

Michael Noonan (Limerick City, Fine Gael)
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There are huge differences among individuals with impaired mortgages. Many people simply want an interest-only arrangement while the main wage-earner is ill, while the second earner takes a year out to have a baby or while there is some crisis in the family. Many people are quite happy with an interest-only arrangement. Other people are happy if they get an interest-only arrangement and an extension of the mortgage. The standard mortgage in AIB is 20 years, and I am sure this is no different elsewhere. If we look at what is happening in other countries, extensions of maturity are viable because the average mortgage in Ireland is so short. A combination of an interest-only arrangement and moving out the maturity can help many people and is a viable option.

Although averages are always a bit misleading, the average arrears in AIB is €13,000, according to one of its directors, yet there are people who are spending €15,000 on their credit cards. When one looks at it that way, it is not huge. It might be huge for an individual couple but, overall, I cannot see any reason, if this is addressed systematically and in an organised way, the banks cannot work their way through this for the benefit of people with impaired mortgages. That is what is now being driven hard by both the Central Bank and my officials in the Department of Finance. Of course, there is a Cabinet sub-committee, chaired by the Taoiseach, that is overseeing all this work. I hope the situation improves rapidly.

Pearse Doherty (Donegal South West, Sinn Fein)
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Can I ask a further question?

Michael Kitt (Galway East, Fianna Fail)
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To be fair to other Deputies, we must move on.