Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

Question 137: To ask the Minister for Finance the efforts being made to assist those with mortgage arrears and affected by negative equity and unemployment as indicated to Dáil Éireann during the passage of the National Assets Management Agency legislation; and if he will make a statement on the matter. [34255/10]

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

The Government is conscious of the high value Irish people place on owning their own homes and is currently providing support for a number of initiatives designed to assist homeowners who are finding it difficult to meet their mortgage repayments and to prevent home repossessions. I refer in particular to the Mortgage Interest Supplement Scheme (MIS) funded by the Department of Social Protection, the Money Advice Budgeting Service (MABS), and the Code of Conduct on Mortgage Arrears.

In addition to the above support measures, in my Budget speech in December I refocused mortgage interest relief on those who bought their homes at the peak of the market. Where a homeowner's entitlement to mortgage interest relief would expire in 2010 or after, they will now continue to receive it up to the end of 2017.

The Renewed Programme for Government sets out the Government's commitments for introducing new measures to protect families having difficulties with their mortgage repayments and personal indebtedness under the headings Protecting the Family Home and Helping Those in Debt. I have spoken extensively about the Government's intentions in this regard, including during the passage of the National Asset Management Agency legislation.

The Deputy will be aware that at the end of February, I announced the establishment of the Mortgage Arrears and Personal Debt Expert Group (Expert Group), under the chairmanship of Mr. Hugh Cooney an insolvency accountant, as a follow up to the Government's commitments to homeowners under the Renewed Programme for Government. Among the terms of reference of the Expert Group is a requirement to make recommendations to me on options for improving the current situation for families with mortgage arrears and personal debt, and also to take into account the ESRI report on negative equity.

Negative equity mainly applies to those homeowners who bought at high loan-to-value rates close to the peak of the market in 2006. The difficulty for the Government is that all estimates of the extent of negative equity appear to be based on very general economic assumptions, but it is very difficult to assess realistic price levels when property market activity remains low. Also, being in negative equity does not change the level of mortgage payments. The priority for Government is to ensure as far as possible that mortgage borrowers in arrears or facing into an arrears situation do not end up in legal proceedings for home repossessions. Home repossessions should be and generally have been the last resort for most lenders.

The Expert Group has completed the first phase of its work and submitted an Interim Report to me in July www.finance.gov.ie. The Interim Report's key recommendations address the issues of communication between householders in arrears and their lenders, and the need for a more consistent assessment process by lenders of borrowers in difficulty in the form of an industry-wide Mortgage Arrears Resolution Process (MARP) including a range of forbearance measures. The Expert Group in its Interim Report also includes a number of recommendations relating to the operation of the Mortgage Interest Supplement Scheme which is intended to support homeowners who are in difficulty in meeting their mortgage repayments due to being unemployed. The recommendations of the Expert Group have been accepted in full by the Government and action is being taken to bring them into effect.

The Expert Group is now in the process of addressing the more complex issues of homeowners who are facing long term difficulties in meeting their mortgage and personal debt commitments and will make recommendations to me at the end of next month.