Michael Noonan (Limerick East, Fine Gael)
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Question 209: To ask the Minister for Finance if he has reached an agreement with the banks to allow persons to alter the terms of their mortgage to interest-only repayments for periods of 12 months; the way a person should proceed to avail of this agreement; and if he will make a statement on the matter. [4122/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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There is no agreement in place or being discussed as the Deputy suggests. The Deputy will be familiar with the Financial Regulator's Code of Conduct on Mortgage arrears which applies to all regulated lenders on a statutory basis. This Code applies only to mortgage lending activities to consumers in respect of their principal private residence in Ireland. The main features of the Code are early recognition of problems, active management of problems, examination of alternative solutions and repossession as a last resort. In addressing an arrears problem, the lender may explore alternative repayment measures with the borrower which can include deferring payment of all or part of the amounts due, extending the term of the mortgage, or changing the type of mortgage for example to an interest only mortgage for a period of time.

The Code will ensure that mortgage lenders can only commence legal action for repossession at least six months from the time arrears first arise. The two recapitalised banks, AIB and Bank of Ireland, have each committed that they will not commence court proceedings for repossession of a principal private residence until after 12 months of arrears appearing, where the customer continues to cooperate reasonably and honestly with the bank. As a further measure, I have written to the Financial Regulator requesting that consideration be given to extending the moratorium on mortgage arrears from 6 months to 12 months for all mortgage lenders.

In addition, the Irish Bankers Federation, representing the mainstream lenders, published a Statement of Intent in November 2009 which provides further reassurance to homeowners who find themselves genuinely unable to maintain repayments on their principal private residence. This Statement of Intent provides that the goal of IBF mortgage lenders is to work with their customers who face genuine difficulties in order to find solutions that do not involve legal action. The basis for such solutions is for the customer to talk to their lender at the earliest opportunity so that a mutually acceptable arrangement can be agreed, implemented and reviewed thereafter on a six-monthly basis. Provided the customer maintains this arrangement, IBF mortgage lenders will not initiate any form of legal action against them in relation to their mortgage. The Statement of Intent has been agreed and supported by all IBF members and is a welcome development. It is also welcome that the IBF Oversight Committee on the implementation of the Statement of Intent will also include a representation from the Money Advice and Budgeting Service.