Written answers

Thursday, 7 May 2015

Department of Finance

Mortgage Arrears Proposals

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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60. To ask the Minister for Finance if it is expected to introduce guidelines to encourage lending institutions, intent on family home repossession, to observe the need to accommodate borrowers by way of restructuring, where family illness, or circumstances outside their control, has affected their ability to make full payment, and particularly where borrowers have consistently been making payments to the best of their ability, notwithstanding the lenders insistence with current criteria, in view of the fact that the lending institutions originally granted the facility; and if he will make a statement on the matter. [18036/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, the Government has put in place a broad strategy to address the problem of mortgage arrears and family home repossessions. A central pillar of this strategy in ensuring fair treatment of borrowers in arrears is the Code of Conduct on Mortgage Arrears (CCMA). The Code was first published in 2009 and has been updated on a number of occasions since.  The CCMA sought to deliver on the following established principles:

1. Ensure the appropriate resolution of each borrower's arrears situation;

2. Ensure that lenders deal with borrowers in a fair and transparent manner;

3. Support and facilitate meaningful engagement between lenders and borrowers; and

4. Ensure borrower awareness of the benefits of cooperating with their lender and the consequences of not cooperating.

I am informed by the Central Bank that the CCMA applies to all regulated mortgage lenders operating in the State when dealing with borrowers facing or in mortgage arrears on their primary residence, including any mortgage lending activities outsourced by these lenders. 

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. All cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his/her mortgage obligations.  A lender may only commence legal proceedings for repossession where it has made every reasonable effort under the Code to agree an alternative repayment arrangement with the borrower or his/her nominated representative and the specific timeframes set out in the Code have been adhered to or the borrower has been classified as not co-operating.

Where a borrower engages with his lender with a view to putting in place a restructure arrangement to address his/her mortgage arrears situation, repossession of the family home should only be considered as a last resort.  The Central Bank's most recent quarterly release on Residential Mortgage arrears and Repossessions (Q4 2014) indicates that almost 115,000 restructure arrangements have been put in place up to the end of December and of these almost 85% were deemed to be meeting the terms of their arrangement.  This shows that active engagement can deliver positive results and in the majority of cases will enable a borrower in mortgage distress to remain in his/her family home.

Many borrowers can also find solutions through the options offered by the Insolvency Service of Ireland and Government will ensure that the personal insolvency process is as fair and effective as possible and that the objectives as set out in the original Personal Insolvency Act are realised as much as possible.   My colleague, the Minister for Justice and Equality, and her officials are actively preparing amendments to the legislative framework for personal insolvency aimed at enabling Government's objectives in this regard to be met and allowing more people in distressed debt to access the available mechanisms than has been the case to date. 

The effective management of mortgage arrears is, however, an area that remains under continuous review.  more and concerted action can be undertaken by the banks to assist customers in arrears and, as the Taoiseach has previously announced, the Government is considering a range of options to support the existing framework and to improve the update of personal insolvency solutions.

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