Bernard Durkan (Kildare North, Fine Gael)
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32. To ask the Minister for Finance the extent to which mortgages in respect of family homes continue to be treated in a sympathetic manner by lenders along the lines set out by the Central Bank of Ireland and his Department and practiced by most lenders with particular reference to the need to ensure that borrowers who find themselves in difficult circumstances are facilitated by way of restructuring and that the recently emerging practice by some lenders to the effect that resolutions being offered by them amounts to voluntary or enforced sale with little emphasis on any other option notwithstanding their recapitalisation; and if he will make a statement on the matter. [16186/14]

Bernard Durkan (Kildare North, Fine Gael)
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167. To ask the Minister for Finance the extent to which he and his Department continues to monitor the situation regarding mortgage arrears with particular reference to the need to ensure that homeowners who have fallen into arrears through no fault of their own are not unfairly treated and the cognisance is taken of the facts of each individual case particularly where, through loss of income or loss of employment has resulted in arrears; and if he will make a statement on the matter. [16801/14]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 32 and 167 together.

The strong view of the Government is that, in respect of co-operating borrowers under the Central Bank's '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 loss of ownership.

The Deputy will be aware that 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 lenders to address a mortgage difficulty before any legal action is considered.  Furthermore, under the Mortgage Arrears Resolution Targets (MART) process, the Central Bank is 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. 

The Central Bank has indicated that all six mortgage lenders covered by the MART process have reported that they met the 20% proposed sustainable solutions target for the second quarter of 2013 and also the 30% target for the third quarter in 2013.  In particular, with respect to the third quarter 2013 target, which is the latest publically available data, the lenders have reported to the Central Bank they had issued proposals to 43% of mortgage accounts in arrears against the 30% target. 

The Deputy may also wish to note, that according to the latest information published by my Department, in the case of private dwelling homes some 54,000 mortgage accounts in difficulty have been the subject of permanent restructuring following engagement between borrower and lender. 

As the Deputy is aware, any bank proceeding to legal recourse with co-operating borrowers, in circumstances where an alternative sustainable arrangement is feasible and can be agreed, is not acting in a manner consistent with the MART process, or with the CCMA.  Of course, the CCMA and MART can only achieve positive results 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 conclusion for the respective parties.

It is important to point out, however, that even if a repossession case has commenced in the legal system, the Land and Conveyancing (Law Reform) Act 2013 now provides a power to the Court to adjourn a repossession proceeding in relation to a principal private residence to enable the borrower to consult a personal insolvency practitioner (PIP) and, where appropriate, to instruct the PIP to make a Personal Insolvency Arrangement (PIA) proposal.  In formulating a proposal for a PIA, the Personal Insolvency Act 2012 places an onus on a PIP to do so on terms that shall not insofar as is reasonably practicable, require the borrower to dispose of an interest or cease to occupy a principal private residence. 

I have informed the House previously that letters threatening repossession or legal action should only ever be considered after every possible avenue for solution has been exhausted. I can assure the Deputy that I have expressed this view to the lenders and my officials are keeping in regular contact with the lenders on this important issue. 

Regretfully, however, it must also be accepted that due to the individual circumstances, not all mortgages can be made sustainable and that in these limited circumstances, it will be in the best interests of both parties to resolve the situation in a fair manner.