Michael McGrath (Cork South Central, Fianna Fail)
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To ask the Minister for Finance if he will provide details of the rules that apply to the split mortgage arrangements including details of the maximum percentage of the mortgage that can be parked; the eligibility criteria; and if he will make a statement on the matter. [16071/13]

Michael McCarthy (Cork South West, Labour)
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To ask the Minister for Finance if he will outline in detail the requirements on banks to facilitate distressed mortgage holders who need to renegotiate their current repayment arrangements with their lenders; if he will provide greater detail on the warehousing option; if he will confirm if it is his policy to allow banks to charge interest on the warehouses portion; and if he will make a statement on the matter. [17005/13]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 217 and 308 together.

On 13 March 2013 the Central Bank announced new measures to address mortgage arrears, including the publication of performance targets for the main mortgage banks.

Performance targets have been set for:

- ACC;

- AIB;

- Bank of Ireland;

- KBC Bank Ireland;

- Permanent TSB; and

- Ulster Bank.

The specific targets which have been set by the Central Bank, require banks to systematically work through their mortgage book to offer durable solutions to mortgage holders covering arrears cases that are 90 days or more overdue.

The Central Bank’s targets stipulate that:

- By end June 2013, the banks should have proposed sustainable mortgage solutions for 20% of mortgage loans that are over 90 days in arrears, and

- By end September 2013, 30%, and

- By the end of 2013, 50%.

The Central Bank will also, over the coming period, set targets for the conclusion of durable solutions and for the sustainability of such solutions. The targets should provide a better measure of progress on a more consistent basis and promote a movement away from ‘temporary’ forbearance measures which are not sustainable in the long term. In addition the banks will also be set specific, non-public, targets, principally in relation to handling of early arrears cases. The Central Bank is working with individual institutions to incorporate these measures which will be set in line with each institution’s capacity, processes and systems. These targets will be adjusted quarterly to ensure they are ambitious.

The banks will be required to publish their performance against the targets and make quarterly reports to the Central Bank. The Central Bank will consider each bank’s performance against the targets, including assessing whether the modifications provided are in fact sustainable solutions.

The split mortgage is one of a number of arrangements suggested by the Inter-Departmental Mortgage Arrears Working Group Report (the Keane Report). The Central Bank of Ireland has informed me that the majority of lenders have introduced, or are in the process of introducing, a split mortgage arrangement. The concept involves splitting a distressed mortgage into an affordable mortgage and warehousing the balance. While lenders have taken the broad approach set out in the Keane report, the product details vary from lender to lender. The most notable difference involves the interest rate charged on the warehoused element of the split mortgage varying from 0% up to the full mortgage interest rate. Also, the maximum amount that can be warehoused is dependent on each lender’s own internal criteria. The split mortgage, like all other forbearance and modification arrangements, is based on affordability and sustainability of the arrangement from both the borrower and the lender’s perspective.