Pearse Doherty (Donegal South West, Sinn Fein)
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179. To ask the Minister for Finance when the Central Bank will set demanding quarterly targets for the conclusion of sustainable solutions and for the subsequent performance of these solutions; and if he will make a statement on the matter. [39338/13]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, last March the Central Bank announced new measures to address mortgage arrears, including the publication of performance targets for the main mortgage banks. I would draw the Deputy’s attention to the Central Bank statement of the 17 September last which outlined details of the targets for concluded arrangements.

In the statement the Central Bank indicated that, in agreement with the Troika, it has now set its expectations of the banks in this regard and will require banks to have concluded arrangements with 15 per cent of their over 90-day mortgage arrears customers by end of December 2013. Furthermore, the Central Bank is now setting targets for end March 2014 for sustainable solutions offered to customers of 70 per cent for over 90-day arrears and for concluded solutions of 25 per cent.

The Deputy will be aware that the main lenders indicated to the Joint Committee on Finance, Public Expenditure and Reform recently that they have met and exceeded the 20% MART target for proposed solutions for end-June 2013. The Central Bank will commence an audit of the returns in September/October.

Pearse Doherty (Donegal South West, Sinn Fein)
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180. To ask the Minister for Finance if a letter threatening repossession or legal action constitutes a proposal for a sustainable solution under the mortgage arrears resolution targets. [39339/13]

Michael Noonan (Limerick City, Fine Gael)
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As I have stated on numerous occasions, it is a key responsibility of financial institutions to do more to assist those in severe financial difficulty. Letters threatening repossession or legal action could not in my opinion be considered as a sustainable solution under the mortgage arrears targets, and should only ever be considered after every possible avenue for solution has been exhausted. This is consistent with Mortgage Arrears Resolution Targets (MART) document published by the Central Bank in March this year. The Central Bank has advised that its MART document recognises that only in certain cases the only available option to the mortgage lender may involve voluntary surrender or legal action for repossession. Taking this route is consistent with the lender’s prudential responsibility to minimise losses, having considered the borrower’s degree of co-operation and/or the borrower’s actual and prospective ability to service the debt.

Importantly however, this is strictly subject to the Central Bank being satisfied that: All regulatory requirements have been adhered to; in particular the Code of Conduct on Mortgage Arrears (CCMA) obligation to ensure that the initiation of legal proceedings is a last resort and that the lender must explore all of the options for alternative repayment arrangements offered by that lender, and; Prior to classifying a borrower as ‘not co-operating’, the lender must write to the borrower and, inter alia, outline the specific actions a borrower must take to avoid being classified as “not co-operating”. If, following this process, the lender concludes that the borrower is “not co-operating”, the borrower must be formally notified of that outcome and that legal proceedings can commence immediately.

In addition, paragraph 49 of the CCMA also provides that a lender must have an appeals process in place to enable a borrower to appeal in relation to a decision of the lender, including: a) Where an alternative repayment arrangement is offered by a lender and the borrower is not willing to enter into the alternative repayment arrangement; b) Where a lender declines to offer an alternative repayment arrangement to a borrower; and c) Where a lender classifies a borrower as “not co-operating”.

The Central Bank has also advised that it will commence audits of the Quarter 2 Target submissions by banks in September/October. These submissions will contain the information regarding banks’ offers of restructuring to 30% of borrowers in mortgage arrears. Audit work will include an element of third party review and assessment.