Terence Flanagan (Dublin North East, Fine Gael)
Link to this: Individually | In context

Question 203: To ask the Minister for Finance the guidelines regarding the arrears figure a borrower has to be in before a home lone provider can issue repossession proceedings; and if he will make a statement on the matter. [36863/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The Financial Regulator's Consumer Protection Code (the CPC), which applies to all home loan providers operating in the State, requires mortgage lenders to undertake suitability assessments before offering a product or service to consumers and requires that a regulated entity must contact the consumer as soon as it becomes aware that a mortgage account is in arrears irrespective of the amount of the arrears. It also specifies that the regulated entity must have in place a procedure for handling accounts in arrears and the Financial Regulator's CEO has pointed out that the Financial Regulator considers this to include a requirement that lenders agree a remedial action plan with a borrower as soon as it detects arrears starting to emerge and to try to assist the borrower to manage his or her financial commitments and not allow the situation to worsen. (For details see www.financialregulator.ie).

The Deputy may wish to note that the provisions of the Scheme made under the Credit Institutions (Financial Support) Act, 2008, requires institutions covered by the guarantee in Ireland to confirm their compliance not only with the CPC but also with the Irish Banking Federation's (IBF) Code of Practice on Mortgage Arrears (the IBF's Code). In accordance with the IBF's Code borrowers are advised to contact their lender about any problems they may be experiencing regarding meeting their repayments schedule. It recommends that the borrower contact the lender after one missed scheduled payment (again irrespective of the amount) in order to prevent a situation of mounting arrears arising with negative consequences for both the borrower and lender. No value amount is set on the arrears.

Lenders are committed under the Code to facilitating the individual circumstances of each borrower, and assessing each case on its own merits. Once the borrower has contacted the lender, the latter will consider all viable options and develop a plan for clearing the mortgage arrears. In accordance with the IBF's Code, the lender may not issue a formal demand until three payments are missed. Home repossession should be the last resort for the lender and the preferred method of dealing with arrears cases should be early intervention.