Michael Creed (Cork North West, Fine Gael)
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233. To ask the Minister for Finance the number of mortgages in substantial arrears; the number of these mortgages that are provided by subprime lenders; his plans to address this cohort of home owners in substantial arrears with their mortgages to subprime lenders; and if he will make a statement on the matter. [2297/15]

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's website.

The Deputy will be aware that latest Central Bank mortgage arrears and restructures statistics were published in December and cover the period to end September 2014. This publication shows that overall arrears and arrears greater than 90 days fell for the fifth and fourth consecutive quarter respectively. There were 760,238 private residential mortgage accounts for principal dwellings held in the State at end-September 2014, with some 84,955 principal dwelling houses in arrears of greater than 90 days, representing a decline in the greater than 90 days arrears category of 6 per cent over the quarter.  The Central Bank has advised that, at end-September 2014 non-bank lenders accounted for 5.2 per cent of the total stock of residential mortgage accounts outstanding at end-September 2014 (5.4 per cent in value terms). A total of 18,064 mortgage accounts issued by these lenders were in arrears of more than 90 days at end-September, this figure accounted for 15.5 per cent of total mortgages in arrears over 90 days. In addition, data published by the Department of Finance last week also showed that the number of accounts in mortgage arrears is declining.

The Central Bank has also informed me that 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. The CCMA sets out requirements for all mortgage lenders, including retail credit firms, dealing with borrowers in arrears or pre-arrears on a mortgage loan which is secured by their primary residence. It 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 Central Bank has advised 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.

This Government tackled the issue of mortgage arrears head on. We overhauled the systems and structures to support customers in arrears to find solutions. We acknowledged from the outset that, due to the scale of the challenge, resolution for all customers in arrears was likely to take a significant period of time. The mortgage arrears resolution process is working. The number of mortgages in arrears is declining. There is, however, no doubt that the issue of longer terms arrears remains the biggest challenge. Borrowers in difficulty must engage with their lender as early as possible in order to identify the best solution to their debt situation. This will afford them the protection of the Code of Conduct on Mortgage Arrears (CCMA) and ensure that the resolution arrangement that is finally agreed is both affordable and sustainable. Of course, the Central Bank is also working 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.