Micheál Martin (Cork South Central, Fianna Fail)
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99. To ask the Minister for Finance the status of hedge funds which bought out homes from banks and which are now requiring the previous owners to depart from their homes so that they can be sold in better market conditions; and if he will make a statement on the matter. [21416/16]

Micheál Martin (Cork South Central, Fianna Fail)
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100. To ask the Minister for Finance if he is concerned about homes still being repossessed; and if he will make a statement on the matter. [21417/16]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 99 and 100 together.

The Deputy will be well aware that the Government attaches great importance to addressing the issue of mortgage arrears and wants to keep families in their homes and avoid repossessions insofar as possible.  In this context, it is important to note that the overall level of repossession orders being granted by the Courts is low relative to the number of accounts in mortgage arrears.   

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 under the CCMA 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.  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.

While the CCMA is an important element in consumer protection, it should be noted a borrower's rights are not confined to the provisions of the CCMA.  There have been very significant reforms to insolvency legislation over the last number of years.  Under this legislation a borrower can engage a Personal Insolvency Practitioner (PIP) to propose a Personal Insolvency Arrangement (PIA) to creditors in order to resolve an unsustainable debt position.

Following legislation introduced in 2015, 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, thus removing the lender's automatic veto on sustainable proposals for personal insolvency arrangements.

With respect to the question of loans that have been sold to third parties, the Deputy will be aware that the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated entity. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes, such as the Consumer Protection Code, the Code of Conduct on Mortgage Arrears and the Code of Conduct for Business Lending to Small and Medium Enterprises. The Act means that any purchasers of loans books are required either to become regulated themselves by the Central Bank or use a regulated credit servicing firm to service their loans.

The Act also ensures that a regulated credit servicing firm cannot do something, or fail to do something, which would be a prescribed contravention if performed, or not performed, by a retail credit firm. It also prevents the owner of credit from instructing a regulated credit firm to perform such an action, thereby further enhancing the consumer's protections.

New owners must either become regulated as credit servicing firms themselves or use a regulated credit servicing firm to service their loans.