Written answers

Thursday, 14 November 2013

Department of Finance

Home Repossession Rate

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

57. To ask the Minister for Finance if he is concerned at the significant rise in the number of home repossession actions being taken by banks during the month of October; and if he will make a statement on the matter. [48780/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The strong view of the Government is that, in respect of co-operating borrowers under the Mortgage Arrears Resolution Process, repossession of a person’s primary home should only be considered as a last resort and that every effort should be made to agree a sustainable arrangement as an alternative to repossession. The policy measures adopted by Government are built on that overall objective.

The Central Bank’s Code of Conduct on Mortgage Arrears (CCMA) places an onus on the banks, in respect of a co-operating borrower, to explore all the options for an alternative repayment arrangement offered by the lender to address a mortgage difficulty before any legal action is considered. Furthermore, under the Mortgage Arrears Resolution Targets (MART) process, the Central Bank is now requiring the main lenders to work through their mortgages in arrears of more than 90 days and, where possible, to propose and conclude sustainable restructures with their borrowers in arrears. As the Deputy will be aware, the Governor of the Central Bank has stated that any bank proceeding to legal recourse with co-operating borrowers, or where alternative sustainable arrangements were available, is not acting in a manner consistent with the MART process, or with the CCMA.

The initial results of the Central Bank’s audit of the banks’ end of June target will be available shortly. This will provide an independent assessment on the compliance by the banks with all the MART requirements.

Of course, the CCMA and MART can only work in circumstances where the borrower cooperates with the lender and engages with the process. Where this does not happen, the lender may have no other option but to go down the legal route to deal with an arrears case. However, if that course of action leads the borrower to commence a constructive engagement, this can lead to a more favourable outcome for the respective parties.

The Deputy will be aware that there are also now new insolvency resolution options available to a borrower under the Personal Insolvency Act. The Courts now have the power to adjourn legal proceedings in respect of a primary home to see if a Personal Insolvency Arrangement can be explored and agreed as an alternative to repossession.

Regretfully, however it must be accepted that due to the individual circumstances, not all mortgages can be made sustainable. There will sometimes be circumstances where the person will have to lose ownership of the home. Indeed, in such cases this may be in the best overall long term interests of all parties. The Central Bank has stated that it does not expect that repossession will be the lender’s preferred solution to mortgage difficulties and in most cases engagement by the borrower will make the legal option unnecessary. However in circumstances where the borrower does not engage with a lender to address a mortgage difficulty and, subject to fully complying with the Code of Conduct on Mortgage Arrears, there may be no other option for the lender but to commence legal proceedings.

Comments

No comments

Log in or join to post a public comment.