Michael McGrath (Cork South Central, Fianna Fail)
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225. To ask the Minister for Finance his Department's estimate, including a breakdown, of the number of residential mortgages here currently held by entities not regulated by the Central Bank of Ireland and which therefore do not have the statutory protection of the Code of Conduct on Mortgage Arrears; and if he will make a statement on the matter. [43317/14]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that the Central Bank's Code of Conduct on Mortgage Arrears (CCMA) is a statutory Code issued under Section 117 of the Central Bank Act 1989 and lenders are required to comply with the CCMA as a matter of law.  The CCMA applies to the mortgage lending activities of all regulated entities, with the exception of credit unions, operating in the State including:

- A financial services provider authorised, registered or licensed by the Central Bank of Ireland; and

- A financial services provider authorised, registered or licensed in another EU or EEA Member State and which has provided, or is providing, mortgage lending activities in the State.

I am aware of the concerns of some borrowers about sale of the mortgage books to funds that are not covered by the CCMA.  I have informed the House before that the details of the numbers of mortgages sold are considered commercially sensitive by the financial institutions involved. However, information from company announcements in the public domain, would suggest that between 8,000 and 10,000 mortgages in total have been sold to unregulated entities in recent years.

The Deputy will also be aware of the Government's intention to bring forward legislation to ensure that, where a regulated financial entity sells its loan book to an unregulated entity, the protections afforded under the Central Bank codes will continue to apply. The Government has reiterated this commitment on several occasions.

My Department ran a public consultation in July and August of this year seeking views on its proposed legislation to protect consumers whose loans are sold to unregulated entities. 19 submissions were received from a range of respondents from the financial services industry, consumer groups, public representatives and individuals and other stakeholders. These have been published on the Department's website at .  Officials in my Department have carefully considered the submissions and are working with the Office of the Attorney General to progress this legislation. It is anticipated that it will be published by the end of this year

I have been informed by the Central Bank that it has communicated to lending firms its preference that the outcome of any sale of mortgage books by regulated entities would ensure continuity of borrower protections under the relevant Codes and also that the purchaser would have relevant policies and procedures, systems and control checks to appropriately manage a mortgage loan book. 

Michael McGrath (Cork South Central, Fianna Fail)
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226. To ask the Minister for Finance the number of residential mortgages here that are classified as sub-prime; the number of sub-prime lenders currently operating in the market; the total value of sub-prime mortgages outstanding; the rate of arrears on these mortgages; the actions specific to the sub-prime sector which are being taken to address arrears; and if he will make a statement on the matter. [43318/14]

Michael 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: .

I am informed by the Central Bank that, at end-June 2014, six of these firms had a total of 17,986 primary dwelling (PDH) mortgage accounts of which 5,047 were classified as restructured; four had a total of 772 buy to let (BTL) mortgage accounts of which 96 were classified as restructured.  Regarding the level of outstanding debt on these accounts, there was a total of €3.323bn in outstanding PDH debt and a further €0.171bn outstanding in BTL mortgage debt.  Of that outstanding debt, mortgage accounts amounting to €1.732bn (PDH) and €0.099bn (BTL) respectively were in arrears of over 90 days.  The Central Bank has advised that it does not publish the interest rates applied by regulated entities.

The Deputy will be aware that the Central Bank's Mortgage Arrears Resolution Targets (MART) announced in March 2013 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 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 that during 2012, retail credit firms reported that 59 properties were repossessed following a court order, accounting for 24% of total properties repossessed following court orders. During 2013, these lenders reported that 53 properties were repossessed following a court order, accounting for 15% of the total.  In Quarter 2 of 2014, retail credit firm lenders reported that 12 properties were repossessed following a court order, accounting for 11% of total properties repossessed following court orders.

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.