Written answers

Thursday, 29 September 2016

Department of Finance

Mortgage Arrears Proposals

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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86. To ask the Minister for Finance the extent to which the lending institutions are expected to accommodate, by way of an extension of the mortgage repayment period, borrowers in arrears in respect of their family homes, having particular regard to that fact that all borrowers and taxpayers have had to contribute to the bailout of the lending institutions; and if he will make a statement on the matter. [27996/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I would remind the Deputy that the lending institutions in Ireland, including those in which the State has a significant shareholding, are independent commercial entities and that relationship frameworks are in place with the State owned banks which provide that the State will not intervene in the day-to-day operations of the banks or their management decisions. These frameworks are required to ensure that the banks are run on a commercial, cost effective and independent basis to ensure the value of the banks as an asset for the State.  

The Code of Conduct on Mortgage Arrears (CCMA) sets out a process, called the Mortgage Arrears Resolution Process (MARP).  Under the MARP, each lender must explore all of the options for alternative repayment arrangements offered by his company and must document its consideration of each option examined including the reason(s) why the option(s) offered to the borrower is/are appropriate and sustainable for his/her individual circumstances and why the option(s) considered and not offered to the borrower is/are not appropriate and not sustainable for the borrower's individual circumstances.  This requirement ensures that if 'extending the term of the mortgage' is one of the alternative repayment arrangements offered by the lender then he must consider whether this option is appropriate and sustainable for the borrower and if he concludes that it is not then he must inform the borrower of the reasons for this conclusion.

The CCMA applies to the mortgage lending activities and credit servicing activities in respect of mortgage loans of all regulated entities, except credit unions, operating in the State.  It provides a strong consumer protection framework to protect borrowers struggling with mortgage repayments, ensuring that they are treated in a fair and transparent manner by their lender.  The CCMA recognises that it is in the interests of borrowers and regulated entities to address financial difficulties as speedily, effectively and sympathetically as circumstances allow.

The Deputy will be aware that the Action Plan For Housing and Homelessness sets out how the Government plans to meet the challenging commitments made in the Programme for a Partnership Government in respect of dealing with homelessness, including how it will address the high level of mortgages currently in arrears for more than two years.  Implementation of this plan is being overseen by the Cabinet Committee on Housing and Homelessness. One action on mortgage arrears relates to a commitment to work with the Central Bank to amend the Code of Conduct on Mortgage Arrears to include an obligation on providers of mortgage credit to provide a range of sustainable arrears solutions.  I have written to the Governor of the Central Bank in this regard to request that an assessment be undertaken of the range of available sustainable restructure solutions offered by banks and non-bank entities.  I have asked that this assessment should consider in particular how the available options may impact on the distressed borrower's capacity to remain in their primary residence.  Other actions to support the position of borrowers in arrears and to adjust the legal framework are being advanced separately by the Department of Social Protection and the Department of Justice and Equality.

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