Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 252: To ask the Minister for Finance the initiatives he will put in place in 2010 to provide assistance to homeowners struggling with negative equity and unrealistic mortgage repayments to stay in their houses. [2331/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Home repossession should be and generally is the last resort for the lender. The preferred method of dealing with cases of arrears should be early intervention and engagement.

In the revised Programme for Government we have stated that we will be:

· Introducing new measures to protect families having difficulties with their home mortgage payments;

· Examining ways of expanding the existing options available for dealing with debt situations;

· Examining ways of expanding existing state sponsored mortgage-support measures.

The commitments contained in the revised Programme for Government span the broad area of personal debt management and its legislative framework. As several relate to the responsibilities of several Government Departments, they will require close collaboration in the period ahead. In this regard, on foot of a Government decision, an interdepartmental working group has been established to look into possible options to assist mortgage-holders in arrears.

This Group will in time report back to me with recommendations for implementing commitments made in the revised Programme for Government. The Group's terms of reference include consulting with various external expert groups as well as examining options for improving state supports for home owners with mortgage arrears including schemes in operation in the USA and UK. These schemes are designed to address particular problems for particular groups of home owners and include options for refinancing mortgages, modifying the terms of existing loans, shared equity and purchase of mortgages for the purposes of renting back to the home owner.

Other matters to be considered by the Group will include the recommendations coming from the review of the Department of Social and Family Affairs Mortgage Interest Supplement Scheme when it is completed and any proposals that may emerge for improving the service provided by MABS.

The Law Reform Commission's (LRC) Consultation Paper on Personal Debt Management and Debt Enforcement has made an important contribution to policy formulation in this whole area. On foot of this publication an interdepartmental working group has been established to carefully examine the recommendations of the LRC, with a view to making speedy progress.

In relation to the position of mortgage holders generally, the Irish Bankers Federation published a Statement of Intent on 10 November 2009 which provides further reassurance to homeowners who find themselves genuinely unable to maintain mortgage repayments on their principal private residence. 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 include representation from the Money Advice and Budgeting Service (MABS).

This co-operative approach follows on from the IBF and the Money Advice and Budgeting Service (MABS) Operational Protocol on consumer debt, which was put into effect in September 2009. The Operational Protocol will enable MABS and the IBF to continue to work together effectively when dealing with debt problems of personal debtors who approach the MABS Service for assistance.

It should be noted that there are already other important arrangements in place to assist consumers who have fallen into arrears or are in danger of falling into arrears.

The Government provides support for payment of mortgages under the Mortgage Interest Supplement Scheme. This scheme is administered by the Community Welfare Service on behalf of the Department of Social and Family Affairs. It provides assistance where the mortgage relates to a person's principal private residence. Furthermore, people in difficulties with debt or in danger of getting into difficulties can avail of the services of the Money Advice and Budgeting Service (MABS). This is a national, free, confidential and independent service.

The Financial Regulator's Consumer Protection Code sets out requirements that a regulated entity must contact the consumer as soon as it becomes aware that a mortgage account is in arrears and that it must have in place a procedure for handling accounts in arrears.

The Financial Regulator also has in place a Code of Conduct on Mortgage Arrears. This Code applies to mortgage lending activities to consumers in respect of their principal private residence in the State and is mandatory for all mortgage lenders registered with the Financial Regulator. Under the code where a borrower is in difficulty the lender has to make every reasonable effort to agree an alternative repayment schedule and the lender has to give consideration, on a case-by-case basis, to alternatives such as deferral of payments, extending the term of the mortgage, changing the type of mortgage, or capitalising arrears and interest. Obviously cases will arise where the arrears persist despite newly agreed changes in repayment schedules. The Code provides that where such situations persist, the lender may reserve the right to enforce the mortgage agreement. However, it must wait at least six months from the time arrears first arise before applying to the courts to commence enforcement of any legal action on repossession of a borrower's primary residence. In the case of A.I.B. and Bank of Ireland, they must wait at least 12 months from the time arrears first arise.