Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

2. To ask the Minister for Finance if he is satisfied with the pace of resolutions for cases of mortgages in arrears by banks, especially the number of permanent solutions being implemented; and if he has any plans to bring forward additional measures to aid homeowners struggling with arrears, particularly those in danger of losing their homes in the coming months. [16462/14]

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

This question about mortgages comes up every month when we deal with finance questions. Later this evening we will begin to see the procession of senior bankers appearing before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform. I am sure they will expect the Minister to hand them gold stars because they all claim to have reached their targets. The Minister and I know that they have done so through repossessions and voluntary surrender. Is the Minister satisfied with the pace at which the banks are offering and agreeing long-term solutions to mortgage holders in serious distress?

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Government is aware of the significant difficulties some homeowners are facing in meeting their mortgage obligations, and the Deputy will know that a comprehensive strategy to tackle the problem is now in place.

 A key component of this is the Central Bank mortgage arrears resolution targets - or MART - framework, which set out quarterly performance targets for mortgage arrears resolution by the six main mortgage lenders. These lenders - AIB, Bank of Ireland, Permanent TSB, Ulster Bank, ACC Bank and KBC Bank Ireland - are required to meet targets for both proposed and concluded sustainable solutions in relation to their principal dwelling and buy-to-let mortgagees which are in arrears of more than 90 days. In that context, a sustainable solution has been defined in the Central Bank's published MART document as one of the following: an arrangement, concluded in accordance with the CCMA, in which the borrower is co-operating under the MARP process and the bank has satisfied itself that the arrangement provides a sustainable solution which is likely to enable the customer to meet the original or, as appropriate, the amended terms of the mortgage over the full remaining life of the mortgage; a personal insolvency arrangement effected under the Personal Insolvency Act 2012; or, if an arrangement could not be reached or is not appropriate having regard to the circumstances of the case, voluntary sale of the property securing the mortgage loan or, failing that, any situation in which the bank takes possession of the property, including by way of voluntary agreement with the borrower, or by court order or otherwise.

A range of sustainable solutions have been utilised by each of the lenders to date. These include but are not limited to term extensions, split mortgages, permanent interest rate reductions and voluntary solutions.

In regard to performance to date, lenders have reported to the Central Bank that they met the 20% proposed sustainable solutions target in the second quarter of 2013 and the 30% third quarter target.  In respect of the third quarter, lenders reported that they had issued proposals to 43% of mortgage accounts in arrears for more than 90 days. Furthermore, last December the Central Bank stated its expectations for the quarter ending June 2014 were that sustainable solutions offered to customers would reach 75% for accounts in arrears for over 90 days and that concluded solutions would reach 35%.

According to the latest information published by my Department, in the case of private dwelling homes, some 54,000 mortgage accounts in difficulty have been the subject of permanent restructuring following engagement between borrower and lender.  This is to be welcomed.  In our ongoing regular contacts with the banks my officials and I have clearly indicated that all possible restructuring options should be fully considered for co-operating borrowers who are in difficulty and that legal action to address a mortgage arrears case should only be used as a very last resort. It is accepted that the issue of mortgage arrears is a major problem that needs to be resolved not only for individual borrowers and lenders but also for the long-term benefit of the country.  The roll-out of the MART process is providing momentum to resolve mortgage arrears cases and the outcome of that process, as well as the wider strategy framework, will be kept under close review by the Central Bank and the Government.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am sure the Minister has not answered my question. I asked him whether he was satisfied with the pace of providing long-term sustainable solutions and, in particular, avoiding the danger that people would lose their homes in the coming months. We know that the rate of repossession has been ramped up. Last week the Joint Committee on Finance, Public Expenditure and Reform met representatives from agencies working on the front line with people in mortgage distress. To a person, they told us the system was not working. They were critical of the banks and the Government. Some were also critical of the target focused position that the banks had taken. On the face of it, the banks are reaching their targets, but the Minister is not telling the public that 21,000 of the 43,000 mortgage cases he cited involve legal letters or voluntary surrenders. I again ask him whether he is satisfied with the pace of provision of long-term solutions for people who want to stay in their houses. Between the four institutions in question, AIB, Ulster Bank, Permanent-TSB and Bank of Ireland, more than 50% of the actions taken to meet their proposed solution targets have involved either issuing legal letters threatening repossession or forcing homeowners to surrender voluntarily. These are family homes, not buy-to-let properties.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

We set targets and I am satisfied that the Central Bank has advised me that the targets are being met. The quantum of permanent restructuring is increasing each quarter. The latest information available to me indicates that 54,000 mortgagees have had proposals for permanent restructuring. That is progress. The details of whether the restructuring holds up when audits are carried out by the banks concerned obviously give rise to issues. The Deputy will have an opportunity to consider the details from the banks' perspective when their representatives come before the joint committee.

It is an exaggeration to say a primary tool of restructuring is repossession. For example, the Department of Justice and Equality has advised the Department of Finance that the number of new civil bills issued for the first two months of 2014 is 450. The latest Central Bank statistics for the quarter ending 2013 show that legal proceedings were issued in 1,491 cases to enforce the debt security on a principal dwelling house.

The strong view of the Government is that, in respect of co-operating borrowers under the MARP, repossession of a person's primary home should only be considered as a last resort, and every effort should be made to agree a sustainable arrangement as an alternative to repossession. I am not satisfied that legal letters threatening proceedings against borrowers are satisfactory solutions, if that is the key point of Deputy Pearse Doherty's question.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

It is a key point of my question. On 20 February, the Minister told me:

I have informed the Deputy previously that letters threatening repossession or legal action could not in my opinion be considered a sustainable solution under the mortgage arrears targets ... .

I have previously informed the House that letters threatening repossession or legal action could not, in my opinion, be considered a sustainable solution under the mortgage arrears targets process and should only ever be considered after every possible avenue for a solution has been exhausted.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

We have been over this ground several times previously, and Deputy Doherty will have an opportunity in committee to go through it on a line-by-line basis with the banks. What I have said to him is that we set targets and in any reasonable process over an extended period of time, once the targets are set by the Central Bank, I am reasonably satisfied if the bank informs us that those targets are being met. Of course we would like if it were moving at a faster pace, but it is moving at a satisfactory pace at present and significant progress is being made, with 54,000 mortgages having been restructured.

The amount of repossession taking place is very small. According to the last statistic I saw, it was a couple of hundred, and more than half of those were voluntary. This scare about people being put out of their homes in large numbers is simply not true.

It is true that if the possibility of repossession is not available in the legal system of a country, nobody in that country will ever get a mortgage, because the property is the security for the loan. If there is not a legal possibility of enforcement, then the mortgage sector moves out of that country.