Bernard Durkan (Kildare North, Fine Gael)
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108. To ask the Minister for Finance the extent to which he and his Department can address the situation arising from potential large-scale repossession of family homes directly or indirectly through repossession of buy-to-let properties; and if he will make a statement on the matter. [45075/17]

Bernard Durkan (Kildare North, Fine Gael)
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111. To ask the Minister for Finance if family home repossessions over the past 12 months have been in accordance with the Central Bank regulations with particular reference to the impact such repossessions have on the housing crisis and the activities of unregulated third parties that have purchased distressed loan books; and if he will make a statement on the matter. [45078/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 108 and 111 together.

The Consumer Protection (Regulation of Credit Servicing) Act 2015 (“the 2015 Act”) was introduced in July 2015 to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm. Credit Servicing Firms are typically firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities.

Under the 2015 Act, if the firm who bought loans from the original lender is an unregulated firm, then the loans must be serviced by a ‘credit servicing firm’. Loans can be sold by regulated entities to entities that are not regulated by the Central Bank of Ireland (the Central Bank).

Credit servicing firms must act in accordance with the requirements of Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers, whose loans are sold to another firm, maintain the same regulatory protections that they had prior to the sale, including under the various Statutory Codes of Conduct issued by the Central Bank.

The Code of Conduct on Mortgage Arrears (CCMA) is a key part of the Central Bank’s Consumer Protection framework. It is a statutory Code first introduced by the Central Bank in February 2009, with the current CCMA becoming effective from 1 July 2013. 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’s borrower’s individual circumstances.

Regulated entities, including credit servicing firms servicing loans on behalf of unregulated loan owners, are all required to comply with the CCMA. The overriding objective of the CCMA is to ensure the fair and transparent treatment of consumers in mortgage arrears or pre-arrears, and that due regard is had to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits. The CCMA recognises that it is in the interests of borrowers and regulated firms to address financial difficulties as speedily, effectively and sympathetically as circumstances allow. It sets out the mortgage arrears resolution process (MARP), a four-step process that regulated entities must follow:

Step 1: Communicate with borrower;

Step 2: Gather financial information;

Step 3: Assess the borrower’s circumstances; and

Step 4: Propose a resolution

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 includes requirements that arrangements be sustainable and based on a full assessment of the individual circumstances of the borrower and that repossession be used only as a last resort. The CCMA does not prescribe the solution which must be offered. A regulated entity may only commence legal proceedings for repossession where the firm has made every reasonable effort under the CCMA to agree an alternative repayment arrangement with the borrower or his/her nominated representative, and the specific timeframes set out in the CCMA have been adhered to or the borrower has been classified as not co-operating.

Details on the protections and options available to a borrower under Irish personal insolvency legislation can be found at isi.gov.ie, should this be of relevance. This aspect of the framework of protections for individuals (including mortgage borrowers) is overseen by the Insolvency Service of Ireland, not the Central Bank.

In relation to addressing the situation arising from potential large scale repossessions of family homes directly or indirectly through repossession of buy to let properties, the position is that I am unable to interfere in the commercial decisions of any financial institution. However, the Government attaches great importance to the resolution of mortgage arrears and wants to keep families in their homes and avoid repossessions insofar as possible.

Across state agencies, there are numerous bodies and processes in place to assist those in mortgage arrears in the hope of avoiding repossession. Most recently, the Abhaile service has been established and offers help to borrowers in arrears to find the best solutions and keep them, if possible, in their own homes. This is assisting borrowers, particularly those in longer term arrears. A dedicated adviser will work with borrowers in arrears and their lender to find the best solution for them. Borrowers can get free advice from an expert financial adviser who can help them to work through their financial situation. An Expert adviser could be from MABS or a Personal Insolvency Practitioner (PIP) or an accountant. Borrowers may also need legal advice and under Abhaile they can have a free meeting with a solicitor. If called to court to face repossession proceedings on their home, they will be able to meet a Duty Solicitor at the court. A MABS staff member will also be present at court to help them.

A Helpline is available Monday to Friday and a face-to-face service which is completely free, confidential and independent is also available in more than 60 MABS locations nationwide.

Finally, I refer you to the latest Central Bank publication for Residential Mortgage Arrears and Repossessions Statistics: Q2 2017 which can be found at the following link:

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This shows that further progress is being made in addressing the mortgage arrears issue. The number of PDH mortgage accounts in arrears continued to fall in Q2 2017, marking the 16th consecutive quarterly decline. A total of 73,706 (10%) of accounts were in arrears at end-Q2, a decline of 3.6% relative to Q1 and a decline of 48% since Q2 of 2013. All maturity categories of arrears declined in Q2 2017. There are very positive signs in relation to the amount of accounts which have been restructured, 120,398 by end June 2017 and of these restructured accounts, 87% are were deemed to be meeting the terms of their restructuring arrangement.