Thursday, 23 June 2016
Mortgage Arrears Proposals
5. To ask the Minister for Finance to provide a timeframe for the implementation of the mortgage resolution measures contained within the programme for Government; if funding has been allocated for these measures; and if he will make a statement on the matter. [17745/16]
I thank the Acting Chairman for the direction, which is very much appreciated. The new programme for Government contains very ambitious and laudable aims for the mortgage crisis. I and other members of the finance committee have looked for these changes for years and I am delighted to see included in the programme a new national service to standardise supports, changes to the thresholds for personal insolvency arrangements, a dedicated new court, amendments to the code of conduct on mortgage arrears, an information campaign and more. Critically, and obviously, this is time-sensitive, as arrears and repossessions are growing. I would appreciate a comment from the Minister on whether funding and a timeline for implementation are available. Have timelines been set and has funding been dedicated to meet this ambitious and laudable new aim for mortgage arrears?
The Deputy will be aware that the Government is very committed to reducing the level of mortgages in arrears and that significant progress has been made in this regard, as demonstrated by the latest Central Bank quarterly residential mortgage arrears and repossessions statistics for the first quarter of 2016. He may also be aware that the Cabinet committee on housing and homelessness and associated senior officials group are meeting on a weekly basis to identify solutions to the full range of commitments in the programme for a partnership Government relating to home protection and home ownership. This ongoing work will also consider what budgetary allocations are required to provide the mortgage resolution measures as set out in the programme for Government.
The Government attaches great importance to addressing the issue of mortgage arrears and wants to keep families in their homes and avoid repossessions in so far as possible. In this context, it is important to note that there are a number of protections already in place to protect borrowers in arrears, including the code of conduct on mortgage arrears, the Money Advice & Budgeting Service, a dedicated mortgage advisory service, and personal insolvency solutions, including the court review of sustainable proposals for a personal insolvency arrangements involving the principal dwelling home that have been rejected by a majority of creditors. Many of these initiatives are relatively new, having been introduced in the past 12 months, and I believe that they will generate increased borrower engagement and improved levels of resolution of mortgage accounts in arrears.
It is clear that where a borrower actively engages with his or her lender under the CCMA with a view to agreeing a sustainable arrangement to address mortgage arrears, it is more likely that an equitable arrangement will be found and that borrower will be able to remain in the family home. Data released recently by the Central Bank show that the number of mortgage accounts for principal dwelling houses in arrears has declined for 11 consecutive quarters. More than 120,400 principal dwelling house mortgage accounts have been restructured up to the end of the first quarter of 2016.
Other than the fact that some officials are now meeting to think about the measures, it all sounds like business as usual. Some 86,000 principal dwelling home mortgages remain in arrears. In the first quarter of 2016, almost 1,900 cases have been issued for possession against owner occupier homes. In the past six months, more than 300 repossessions have occurred. We know the figures are falling for arrears, which is very welcome, but it is still a huge issue. Proceedings are being issued very rapidly. The gap between the current situation and what is contained in the programme for Government is very big. While the programme is laudable, will the Minister consider reporting back to the House on when he thinks some of these initiatives may be in place for borrowers? They need to know when the new court and the new service will be in place and so forth. Will the Minister consider a moratorium on repossessions until the new regime is in place?
The Department of Justice and Equality is working on the proposals for the new court and on raising the threshold amounts for the personal insolvency arrangements insolvency legislation. The Department of Social Protection is working on a programme to increase the range and effectiveness of MABS and is being provided with additional funding to do so. I have had discussions with the Governor of the Central Bank to see if legislation is required to give additional statutory protection to persons whose loans have been transferred from an entity with a banking licence to an entity without a banking licence.
I reiterate that it sounds as though progress is being made but it would be very useful to have timelines against these proposals. I am sure the Minister has been contacted by people. I am being contacted by people from all over Wicklow and all around the State. They know big changes are afoot and ambitious targets and changes are being put into the programme for Government but they say to me, "I am in court on Monday so what should I do?", or "I am in court in two months time so will these measures be in place for me?". Perhaps the Minister will clarify if it would be possible to put some deadlines against these measures. We all know that things can drift and these issues are pressing for families all over the country right now. Will the Minister issue a statement to the House on his expected deadlines for implementation? Does the Minister believe it is reasonable - I hope he does - to issue a moratorium to the banks which would hopefully be just for a few weeks or a few months to say that as the new regime gets into place people who are currently in proceedings should be able to avail of those measures?
I cannot give deadlines for the work of other Departments. I can assure the Deputy that the work I have outlined is proceeding as a matter of priority in the Departments I spoke about. It is being engaged with as we speak.
The Circuit Court is where repossession orders are usually processed but they are not being actively pursued. To a large degree, the practice is to adjourn. The repossessions that are granted are usually for people who do not contest the repossession order, perhaps because the house is vacant and they have moved on or because it is a rental unit and they have moved on from it and there is no one pressing it. However, to announce a formal moratorium would, in my view, be quite risky for the mortgage market. The basis of mortgage lending is that money is given to somebody to acquire a home on the basis of the home being the collateral. If one removes collateral out of the system, and if the lender in theory and under law can no longer acquire the collateral, then there would be no lending. There would certainly be no new lending as it would just dry up. While the clear signal to the courts was that the policy is to keep people in their own homes, there would be risks if one were to formalise the position.