Bernard Durkan (Kildare North, Fine Gael)
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Question 29: To ask the Minister for Finance the extent to which he has received any communications from the banking and lending sectors with a view to achieving a basis for addressing the ongoing and ever-increasing issue of mortgage arrears, which has been exacerbated by unemployment and negative equity; the extent to which agreement can or will be reached towards the elimination of compound interest, which in turn reduces the capacity of the borrowers to resolve a debt problem, increases the burden and reduces considerably the ability of the borrower to meet repayments; the degree to which progress has been or can be made towards putting in place a mechanism, incorporating aspects of the Keane report, that will at least give a householder with mortgage arrears a reasonable chance of regaining control over mortgage debt; and if he will make a statement on the matter. [5522/12]

Michael Noonan (Limerick City, Fine Gael)
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The Government is acutely aware of the increasing financial stress that some households are facing arising from difficulty in meeting their mortgage commitments. The Government, therefore, established an Inter-Departmental Working Group on Mortgage Arrears to consider what additional measures could be introduced to assist people experiencing mortgage difficulty. The Group's report was published last October and the implementation of its recommendations is a key part of the Government's ongoing efforts to tackle mortgage difficulty. The Central Bank revised Code of Conduct on Mortgage Arrears (CCMA) is the key framework that governs the relationship between lenders and borrowers who are in arrears, or facing arrears, on their mortgage and it provides a number of protections to borrowers. These include the establishment of a formal Mortgage Arrears Resolution Process (MARP) for handling such cases, the establishment of dedicated Arrears Support Units and a separate internal appeals process by lenders to deal with individuals on a case by case basis.

The Code also provides that a lender must not apply to the Courts to commence legal action for the repossession of a borrower's private residence until every reasonable effort has been made to agree an alternative arrangement with the borrower and that, where a borrower co-operates with the lender, the lender must wait at least twelve months from the date the borrower is classified as a MARP case before applying to the Court to commence legal action for repossession of a borrower's primary residence. This twelve month period does not include any time where the borrower is complying with the terms of any alternative arrangement agreed with the lender, or being processed by the internal Appeals Board, or any time during which a complaint against the lender against any aspect of the Mortgage Arrears Code is being processed by the Financial Services Ombudsman's Office. In addition, lenders are restricted from imposing charges and/or surcharge interest on arrears arising on a mortgage account in arrears to which the Code applies and in respect of which the borrower is co-operating reasonably and honestly with the lender in the MARP process. The Central Bank has published a guide for consumers on mortgage arrears 'Mortgage Arrears – A Consumer Guide to Dealing with your Lender' and this is available on the Central Bank website.

More recently, the Central Bank has also required licensed mortgage lenders to develop comprehensive strategies and implementation plans to deal with their individual mortgage arrears situations. The Central Bank is currently reviewing these strategies and plans to ensure that they are addressing the problem and that mortgage lenders are looking at appropriate longer term solutions, such as those recommended in the Inter-Departmental Mortgage Arrears Working Group report and other options that banks may develop themselves, for their customers who may have unsustainable mortgages. The Central Bank will continue to engage with lenders on the further development and implementation of these strategies and plans.

In addition, as part of the overall process of implementing the Inter-Departmental Working Group recommendations, other developments are in train to assist distressed mortgage holders. In that regard, the publication of a draft Personal Insolvency Bill by the Minister for Justice, Equality and Defence is a significant development. The Inter-Departmental report stated that reformed personal insolvency law is a central requirement for the resolution of the mortgage arrears problem and the draft Bill proposes a new Personal Insolvency Arrangement framework that would allow insolvent debtors and creditors to consider and reach formal agreements on proposal to address unsustainable mortgages in a non-judicial manner. This draft Bill is now open for consultation and the submission of views by interested parties for the further consideration by Government in advance of the finalisation of a Bill by end April.