Written answers

Thursday, 20 February 2014

Department of Finance

Mortgage Resolution Processes

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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14. To ask the Minister for Finance his views on whether arrears in the sub-prime mortgage sector are being adequately addressed; and if he will make a statement on the matter. [8385/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Central Bank has advised that there is no such regulated category as 'sub-prime' lender but that phrase is sometimes used to refer to some non-deposit taking 'retail credit firms'. Retail credit firms are a regulated category of entities which are authorised to provide credit (in the form of cash loans) directly to individuals. Some firms authorised in this category are mortgage lenders. Retail credit firms have been subject to regulation by the Central Bank since 1 February 2008. A register of all Retail Credit Firms is available on the Central Bank website at the following link:

The Deputy will be aware that the Central Bank's Mortgage Arrears Resolution Targets (MART) announced last March set time bound and measurable targets for the 6 main banks requiring them to systematically address their arrears book.  

The Central Bank has informed me that retail credit firms are not subject to the prudential standards set out in the Central Bank's MART. However, the same consumer protection framework applies to retail credit lenders as to other regulated lenders including the Consumer Protection Code and the Code of Conduct on Mortgage Arrears (CCMA). As such the Central Bank engages with these firms in relation to their treatment of borrowers under the mortgage arrears resolution process as provided for in the CCMA. In particular, the CCMA sets out requirements for all mortgage lenders, including retail credit firms, dealing with borrowers facing or in arrears on a mortgage secured on a primary home and provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender and that long term resolution is sought by lenders with each of their co-operating borrowers in mortgage difficulty. 

The Central Bank has informed me that retail credit firms were also included in the scope of the Central Bank's recent review of the 'Implementation of the Revised CCMA' by mortgage lenders, the purpose of which was to ensure that mortgage lenders achieved full implementation of the requirements of the revised CCMA by end December 2013.

The Central Bank has advised this category of lender is putting in place solutions to address the mortgage arrears difficulty some borrowers are facing.  There are 17,807 principal dwelling houses accounts in this category of which 4,341 have been restructured.  In addition, out of the 659 buy-to-let mortgage accounts, the Central Bank has advised that 68 have been restructured.

The Central Bank continues to engage with all mortgage lenders, including retail credit firms, in relation to lenders' mortgage arrears resolution strategies and approaches to dealing with borrowers in or facing arrears. 

Early and effective engagement between borrowers and lenders is key to resolving cases of mortgage difficulty.  Where there is effective and meaningful engagement regarding a mortgage difficulty, the data shows that an increasing number of durable long term mortgage restructures is being put in place.

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