Michael McGrath (Cork South Central, Fianna Fail)
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125. To ask the Minister for Finance if he or the Central Bank have changed policy on the use of the split mortgage restructuring method for mortgages in arrears in view of the recent High Court ruling involving persons and a bank (details supplied); and if he will make a statement on the matter. [32127/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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A comprehensive framework is now in place to address the mortgage arrears problem. One important part of the strategy is the ongoing Central Bank action to require banks to engage with their borrowers in mortgage difficulty and to formulate sustainable solutions to address cases of mortgage arrears. Within the remit of the Central Bank’s responsibilities for safeguarding stability and protecting consumers, its approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place.

The Code of Conduct on Mortgage Arrears (CCMA) is a key part of the Central Bank’s Consumer Protection Framework in this regard. The CCMA provides a strong consumer protection framework, aimed specifically at the process to be followed by relevant firms with each borrower by reference to that borrower’s individual circumstances, to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner by reference to that borrower’s individual circumstances.

Each regulated entity must consider the borrower’s situation in the context of the solutions they provide, which may differ from firm to firm. The CCMA does not prescribe the solution which must be offered. Rather, the CCMA includes requirements to ensure that any alternative repayment arrangement agreed between a lender and borrower be appropriate and sustainable and based on a full assessment of the individual circumstances of that borrower.

Under the CCMA, a lender must explore all of the options for alternative arrangements offered by that lender and such alternative repayment arrangements may include a split mortgage. The Central Bank has also published guidelines on Sustainable Mortgage Arrears Solutions which provides guidance to supervisors as to the important factors to consider when assessing if the restructures implemented are in fact sustainable solutions for resolving distressed mortgage cases. Information relating to a range of restructure arrangements is provided, including split mortgages.

However, as the Deputy is aware, where it is not possible to agree sustainable solutions at a bilateral level, the personal insolvency framework has been significantly reformed over recent years to provide borrowers with more flexible and accessible statutory options to address unsustainable mortgage and other debts. In particular, where it is appropriate in the circumstances of the individual case, the Courts can now confirm a PIA proposal to address an unsustainable primary home mortgage debt even though the proposal is opposed by the mortgage creditor, provided that the arrangement will enable the creditor to recover the debts due to the extent that the means of the debtor reasonably permits. Therefore, the new insolvency framework now provides for a fairer balance between the legitimate interests of both creditors and insolvent debtors in the resolution of unsustainable mortgage debt situations.