Finian McGrath (Dublin North Central, Independent)
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Question 51: To ask the Minister for Finance the position regarding schemes to assist mortgage holders in negative equity; and if he is open to other solutions that assist the customer, the banks and the taxpayer. [38093/11]

Michael Noonan (Limerick City, Fine Gael)
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There is no scheme in place to assist mortgage holders who are in negative equity but who can meet their repayments and do not wish to move house. Trade down mortgages were recommended in the recently published report of the Inter-Departmental Mortgage Arrears Working Group in appropriate circumstances. In order to ensure that proposals in relation to such mortgages are consistent with the Central Bank's consumer protection and prudential policy objectives, a maximum loan to value ratio and other parameters would need to be agreed between mortgage lenders and the Central Bank.

The Central Bank has advised me that they wrote to all mortgage lenders to ascertain whether they were offering, or intended to offer, a mortgage product that would allow home owners to sell their existing home and transfer the negative equity portion of the original loan to the new loan. In response to the Central Bank's letter, only a small number of mortgage lenders said that they would consider offering such a facility. A trial period commenced in mid-2011 and was due to be assessed by the Central Bank and the institutions involved before the end of the year. However the low level of activity makes it difficult to conduct a meaningful review at this time and the proposed review will not take place until the first half of 2012. Any institution offering such a facility may only do so in accordance with criteria agreed in advance with the Central Bank and subject to a trial period. The Central Bank is concerned as to whether such products are in the long term interest of consumers as it could lead to indebtedness at a time when there is no certainty over the direction of future property values.