Written answers

Wednesday, 3 December 2014

Department of Finance

Mortgage Loan Books

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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14. To ask the Minister for Finance the extent to which he and his Department continue to monitor the situation with the various lending institutions in respect of mortgage arrears with particular reference to the purchase of loan books by unregulated third parties and the influence this may have on banking in general; and if he will make a statement on the matter. [45950/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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My Department and I actively monitor the evolving situation with regard to mortgages arrears.  The Government is very aware of the difficulties some homeowners are facing in meeting their mortgage commitments and has a clear strategy to support households in arrears.  The Government published the Report of the Inter-Departmental Mortgage Arrears Working Group in October 2011 (commonly known as the Keane Report) and the key recommendations of that Report have been adopted by Government as the most appropriate framework to address this problem.  The implementation of this strategy is overseen at Government level by the Construction 2020, Housing, Planning and Mortgage Arrears sub-committee which is chaired by the Taoiseach.

As part of the strategy, lenders were encouraged to develop practical solutions tailored to individual circumstances for people in the most difficulty with their mortgage.  In that regard, in March 2013, the Central Bank published the Mortgage Arrears Resolution Targets - or what is commonly known as the MART framework.  This set out performance targets for mortgage arrears resolutions for six mortgage lenders.  These six are AIB, Bank of Ireland, Permanent TSB, Ulster Bank, KBC Bank Ireland and ACC.  My Department also publishes data on a monthly basis on mortgage restructures and arrears for these six main banks. 

In addition, Irish financial services legislation, including Codes issued by the Central Bank of Ireland, provide strong protections to borrowers when dealing with regulated lenders. In particular, for borrowers facing financial difficulty on mortgages, the Central Bank's Code of Conduct on Mortgage Arrears ( the "CCMA") sets out requirements for mortgage lenders dealing with borrowers facing or in mortgage arrears. The CCMA 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 borrowers.

The CCMA applies to the mortgage lending activities of all regulated entities, except credit unions, operating in the State, including, inter alia, 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. The sale of a loan book by a regulated entity to an unregulated entity does not require Central Bank approval. Only certain lending activities are required to be regulated.

However, the Government is committed to bring forward legislation to protect consumers whose loans are sold.  In July and August, the Department of Finance ran a public consultation seeking views on this proposed legislation.  Nineteen submissions were received from a range of respondents including consumer groups, the financial services industry, public representatives and individuals.  The submissions are accessible on the Department's website.  Officials in my Department have carefully considered these submissions and are working with the Office of the Attorney General to progress this legislation.  My officials will meet with the Joint Committee on Finance, Public Expenditure and Reform later today on this issue.  It is anticipated that the legislation will be published by the end of the year.

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