Brian O'Shea (Waterford, Labour)
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Question 25: To ask the Minister for Finance his views on the rising level of home repossessions; if he proposes to introduce measures to help those at risk of losing their homes as a result of rising unemployment and more frequent instances of negative equity; if he will resource appropriate advisory services, particularly the Money Advice and Budgeting Service; and if he will make a statement on the matter. [38821/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy will appreciate that recent media attention to court proceedings for repossessions needs to be interpreted with caution, given the variety of circumstances that give rise to such cases. Although the number of cases involving applications for possession orders are up in each of the last two years it should be noted that orders are not always granted and do not always represent residential mortgages. Even when orders are granted they are not always followed through and levels remain low compared to historical averages and in comparison to similar jurisdictions such as the UK. In 2007, the number of orders granted by the High Court was a very small proportion — representing less than 0.2% — of the number of new mortgages issued in the same year. Furthermore, cases currently being heard are not confined to one particular year or time period.

Unfortunately, a small minority of borrowers develop debt problems. Anyone experiencing difficulty in repaying a mortgage or other loan should discuss the matter with the loan provider and seek appropriate advice without delay. The Money Advice and Budgeting Service (MABS), which falls under the remit of my colleague, the Minister for Social and Family Affairs, is a national, free, confidential and independent service for people in debt, or in danger of getting into debt. MABS offices, throughout the country, work with people in order to assist them with their financial planning and budgeting for the future. Funding for MABS in 2009 is €17.9 million. The Department of Social and Family Affairs also funds the demand-led Mortgage Interest Supplement scheme which provides short-term income support to those eligible who are unable to meet their mortgage interest repayments in respect of a house which is their sole place of residence. Support for this scheme was increased in the recent budget.

Non-financial supports in place include 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.

Once the borrower has contacted the lender, the latter will consider all viable options and develop a plan for clearing the mortgage arrears. Home repossession should be the last resort for the lender and the preferred method of dealing with arrears cases should be early intervention. In the light of all of the above I am satisfied that adequate safeguards are in place to address the issues raised by the Deputy.