Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

70. To ask the Minister for Finance the role that the Central Bank of Ireland is taking in requesting banks to deal with long-term mortgage arrears; and if he will make a statement on the matter. [3200/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy will be aware, in March 2013, the Central Bank published the Mortgage Arrears Resolution Targets (MART) framework, which set out performance targets for mortgage arrears resolution at six Irish mortgage lenders. The six lenders, Allied Irish Banks, Bank of Ireland, Permanent tsb, Ulster Bank, ACC Bank and KBC Bank are required to meet targets at quarterly intervals. The targets cover both proposed and concluded sustainable solutions, with respect to the lenders' Republic of Ireland principal dwelling home/primary residence ('PDH') and buy-to-let ('BTL') mortgagees.

The targets are specifically set in relation to arrears cases which are 90 days or more overdue, which importantly includes borrowers in long-term arrears (in arrears > 720 days). The targets require the banks to propose sustainable solutions to 85% of customers over 90 days in arrears and for concluded solutions to reach 45% by the end of 2014.

A sustainable solution has been clearly defined in the Central Bank's published MART document as one of the following:

a) "An arrangement concluded under a bank's MARP in accordance with the CCMA, where the borrower is co-operating under the MARP and the bank has satisfied itself that the arrangement provides a sustainable solution which is likely to enable the customer to meet the original or, as appropriate, the amended terms of the mortgage over the full remaining life of the mortgage, including repayment of the original or an agreed revised principal sum where offered. This may include an interest only or other temporary solution for a period if it is likely that full repayment of the original or revised principal will be achieved over time, or where there is a payment plan to return the account to sustainability through the clearance of arrears.

b) A personal insolvency arrangement (PIA) effected under the Personal Insolvency Act 2012; or

c) If an arrangement could not be reached or is not appropriate, that the PDH and BTL property securing the loan has been voluntarily sold or, failing that, any situation where a Specified Credit Institution takes possession of the property including by way of voluntary agreement with the borrower or by Court Order or otherwise".

The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) sets out requirements for mortgage lenders dealing with borrowers facing or in mortgage arrears on their primary residence. 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 Central Bank continues to engage proactively with the financial institutions in relation to their cohort of customers in long-term arrears and I expect that this work will continue to be a priority for them.