Kevin O'Keeffe (Cork East, Fianna Fail)
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114. To ask the Minister for Finance if he will consider putting in place a moratorium on family home evictions until such time as a solution to the family housing crisis in place. [17598/16]

Michael Noonan (Limerick City, Fine Gael)
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As recognised by the Programme for Government, the Government attaches great importance to addressing the issue of mortgage arrears.  The Government wants to keep families in their homes and avoid repossessions insofar as possible.

In this context, it is important to note that there are a number of protections already in place to protect borrowers in arrears.  In particular, the Code of Conduct on Mortgage Arrears (CCMA) sets out how mortgage lenders must treat borrowers in or facing mortgage arrears, with due regard to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits.

The CCMA is a statutory code issued under Section 117 of the Central Bank Act, 1989. 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.  Lenders are required to comply with all aspects of the CCMA and non-compliance with the CCMA is enforceable against regulated entities by the Central Bank. 

When it was introduced initially the CCMA contained a six month (later extended to 12 months) moratorium for co-operating borrowers whose mortgage was in arrears (or pre-arrears).  This was revised in 2013 and replaced with a requirement that a lender is required to wait at least eight months from the date the arrears arose, before legal action can commence against a co-operating borrower.  Separately, regardless of how long it takes the lender to assess a case, and provided that the borrower is co-operating, the lender must give three months' notice to the borrower before they can commence legal proceedings where the lender does not offer an alternative repayment arrangement or the borrower does not accept an alternative repayment arrangement offered by the lender.  This gives co-operating borrowers time to consider other options such as a Personal Insolvency Arrangement.

The combined effect of these two protections (an eight month protection period and a requirement for three months' notice) is that, for a co-operating borrower, legal proceedings may not commence until three months from the date the letter (setting out one of the above positions) is issued or eight months from the date the arrears arose, whichever date is later.

It is important to also note that the commencement of the court process is not a signal that a repossession will occur it may often be the case that the process then prompts borrowers to re-engage with their bank and to find a solution.  Often these cases are adjourned to allow both parties time to find a sustainable solution.

Last year the Supreme Court ruled on an issue that arose regarding the extent to which non-compliance with the CCMA could be adjudicated by the Courts in a repossession case between a lender plaintiff and a borrower defendant.  In that regard, the Supreme Court found that the CCMA prohibited lenders from seeking an order for possession where the moratorium was not complied with but that it did not prohibit the seeking of an order for possession in other circumstances.

It should also be noted that in a repossession case before the Courts a borrower's rights are not confined to the provisions of the CCMA.   The 2013 Land and Conveyancing Law Reform Act has provided a new statutory avenue to borrowers in a repossession case involving a primary dwelling to seek an adjournment of the repossession case to allow the borrower the opportunity to consider and, if so decided, to propose a Personal Insolvency Arrangement (PIA) to creditors in order to resolve an unsustainable debt position.  If this is approved by the Court, the debtor would then be in a position to formally propose an alternative and sustainable payment arrangement irrespective of whether or not the primary home lender considered or rejected such an arrangement under the CCMA.  Also, under a PIA there is an onus on the personal insolvency practitioner to,  insofar as is reasonably practicable, formulate a proposal on terms that will not require the debtor to dispose of an interest in, or cease to occupy, a private principal residence.  Even if such a PIA proposal is rejected by creditors, the Personal Insolvency Act has now been amended to provide that the proposal can then be submitted to a Court for adjudication.

The numbers in mortgage arrears have been steadily declining.  Data released by the Central Bank on 10 June shows that to end-Q1 2016, the number of mortgage accounts in arrears for principal dwelling houses (PDH) has declined for the last eleven quarters.  Some 120,447 PDH accounts were also classified as restructured.  It is clear that where a borrower actively engages with their lender with a view to agreeing a sustainable arrangement to address their mortgage arrears, it is more likely that an equitable arrangement will be found and that borrower will be able to remain in their family home.  Consequently, I would urge borrowers in this situation to contact the Money Advice and Budgeting Service (MABS) who are in a position to provide free and confidential support to borrowers.