Michael McGrath (Cork South Central, Fianna Fail)
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227. To ask the Minister for Finance his views on reports that banks are refusing to restructure mortgages until customers stop paying the credit unions and other unsecured debts; and if he will make a statement on the matter. [18488/13]

Michael Noonan (Limerick City, Fine Gael)
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The Central Bank has informed me that it is aware that in many circumstances borrowers with mortgage arrears are being asked to assess their scope for increasing debt repayment capacity through prioritisation of their debts and adjustment of living expenses, noting the particular consequences of non-payment of a mortgage on the family home. Many borrowers with home mortgage arrears also have significant other debts (including investment properties and personal debts such as credit union, credit card or bank loans). Agreeing a restructure on a mortgage is often not sustainable unless the borrower’s full financial position is considered by all lenders.

Michael McGrath (Cork South Central, Fianna Fail)
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228. To ask the Minister for Finance his estimate of the proportion of mortgages held with institutions covered by the mortgage arrears resolution targets programme; and if he will make a statement on the matter. [18489/13]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that 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. The performance targets have been set for: ACC; AIB; Bank of Ireland; KBC Bank; Permanent TSB; and Ulster Bank. The targets are set in relation to both Principal Dwelling Homes and Buy to Let mortgages.

These institutions cover the vast majority of the mortgage book in Ireland, accounting for 9 out of ten of mortgages held. The Central Bank has and continues to engage with all mortgage lenders to ensure adequate mortgage arrears resolution strategies are in place. Also the Code of Conduct on Mortgage Arrears (CCMA) and Personal Insolvency legislation covers all lenders. However, the Central Bank will examine whether it should extend the targets to sub-prime lenders in due course.

Michael McGrath (Cork South Central, Fianna Fail)
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229. To ask the Minister for Finance his plans to assist people in difficulty when their mortgage is held with an institution not covered by the mortgage arrears resolution targets programme; and if he will make a statement on the matter. [18490/13]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that the Central Bank recently announced new measures to address mortgage arrears, including the publication of performance targets for the main mortgage banks. The targets are set in relation to both Principal Dwelling Homes and Buy to Let mortgages. Performance targets have been set for: ACC; AIB; Bank of Ireland; KBC Bank Ireland; Permanent TSB; and Ulster Bank. The Central Bank has advised that these institutions cover the vast majority of the mortgage book in Ireland, accounting for around 90% of mortgages held and that it will examine whether it should extend the targets to other mortgage lenders in due course. The Central Bank also continues to engage with all regulated lenders to ensure that adequate mortgage arrears resolution strategies are in place.

The Central Bank’s Code of Conduct on Mortgage Arrears remains a key protection for those cooperating mortgage holders who are in difficulty in meeting their mortgage commitments. The Code provides, inter alia, that mortgage lenders should allow for a flexible approach in the handling of arrears and pre-arrears cases and that they should aim, as far as possible, at assisting the borrower who is in genuine difficulty having regard to the specific circumstances in individual cases. In particular, the Code provides that a lender’s Arrears Support Unit (ASU) must base its assessment of the borrower’s case on the full circumstances of the borrower including:

- the personal circumstances of the borrower;

- the overall indebtedness of the borrower;

- the information provided in the standard financial statement (SFS);

- the borrower’s current repayment capacity, and

- the borrower’s previous history.

The Code, which applies to all mortgage lending activities of all regulated entities, except Credit Unions, operating in the State, is currently being reviewed by the Central Bank of Ireland. The public consultation process has been completed and the Central Bank expects to publish the revised Code before the end of May.

Separately from this Central Bank action, the new personal insolvency system, in particular the new resolution frameworks provided for in the Personal Insolvency Act, will also shortly be available to borrowers who are in significant difficulty in their mortgage repayments. Utilising this process, the borrower will be in a position to consult an independent personal insolvency practitioner and where necessary to make a formal and realistic personal insolvency arrangement proposal to all eligible creditors, including a mortgage lender. In such a situation the creditors will be obliged to formally consider and vote on the arrangement as proposed by the debtor. In the event of a refusal by creditors, the debtor will also have access to the reformed bankruptcy framework, which has significantly reduced automatic discharge period to three years. I would also remind the Deputy that, under the mortgage advisory service developed by the Department of Social Protection, independent financial advice is available to borrowers who have been offered a long term forbearance option by the lender and a panel of around 2,000 qualified accountants is now in place to provide this service.