Pat Rabbitte (Dublin South West, Labour)
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573. To ask the Minister for Environment, Community and Local Government if his attention has been drawn to the burden being borne by the small number of mortgages in possession of legacy Housing Finance Agency loans; if there are any measures in prospect to alleviate that burden; and if he will make a statement on the matter. [5559/15]

Alan Kelly (Tipperary North, Labour)
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I assume that the Question refers to income-related loans that were advanced by individual local authorities to individual borrowers between 1982 and May 1986. The Housing Finance Agency (HFA) advanced the associated funds to local authorities.

A total of €403 m was advanced by local authorities under the pre - May 1986 income-related loan scheme for 15,571 mortgages. On 30 June 2014, 286  of these loans were still outstanding with a corresponding total loan balance of €10.5 m (i.e. an average loan amount of less than €37,000). Current interest rates are as listed in Schedule 1 A and 1 B of Circular HFA 236 which can be found on the HFA website at: .

Overall, the Scheme has successfully funded over 15,000 homes for families who would, otherwise, not have obtained a house loan. No new loans have issued under this Scheme since 1986 and there are no plans to alter this position. Individual local authorities administer the Scheme and deal directly with borrowers.

As with all local authority mortgages, evidence of having been refused a loan by two financial institutions was necessary in order to apply under the Scheme. Less than 2% of borrowers under the Scheme have outstanding loans. In some pre-May 1986 loan cases, the income related repayment did not fully cover the interest charges on the loan and, as a result, the loan values appreciated. The outstanding loan balance, in most cases, relates to a property whose value greatly exceeds the outstanding debt.

Since the extension of the Supplementary Welfare Allowance (SWA) Scheme to pre-May 1986 income-related loans in 1996, a borrower availing of SWA who has a loan balance that has increased since the time of advance can have the interest on the increased portion of the loan, less any arrears, provided for by the HFA. The interest on the original advance amount is covered by the SWA scheme through the Department of Social Protection, subject to borrower eligibility.This arrangement operates through local authorities.

To assist local authority borrowers in financial distress, my Department issued revised guidelines to local authorities for dealing with mortgage arrears within the local authority sector in June 2014. Dealing with Mortgage Arrears – A Guide for Local Authoritiesis available on my Department’s website by clicking on the following link:

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The Mortgage Arrears Resolution Process (MARP), already in place in respect of commercial mortgages, is now being implemented across all local authorities. In cases of acute mortgage distress, homeowners also have the option of seeking to avail of the legal process now also in place to deal with personal insolvency. The most important step any family in arrears can take is to engage early with the Arrears Support Unit of the local authority. Solutions are available and advice should be sought as early as possible.

In addition, the Local Authority Mortgage to Rent (LAMTR) scheme was rolled out nationally in February 2014. The Scheme allows local authorities to offer the mortgage to rent scheme to local authority mortgage holders with unsustainable mortgages. This enables families to stay in their home and their established community. Surrendering the ownership equity in a home is a very difficult decision for a family; however, the mortgage to rent option does provide families with stability and continuity, after an often long period of financial turmoil. Ownership of the home transfers to the local authority and the family pays a differential rent. LAMTR is just one of a range of short term and long term solutions available to local authority mortgage holders in arrears.