Written answers

Tuesday, 7 November 2017

Department of Finance

Tracker Mortgage Examination

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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224. To ask the Minister for Finance the number of court cases being taken against State-owned banks and other banks by persons appealing the compensation or redress they have been offered under the tracker examination process; and if he will make a statement on the matter. [46406/17]

Photo of Tommy BroughanTommy Broughan (Dublin Bay North, Independent)
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227. To ask the Minister for Finance if mortgages affected by the tracker scandal have been sold on to vulture funds; if so, the number of such mortgages that were and are owned by vulture funds; the redress that will be made available to persons affected; and if he will make a statement on the matter. [46411/17]

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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253. To ask the Minister for Finance the number of persons that fell into arrears on their mortgages as a result of being wrongly denied a tracker mortgage rate or as a result of being on a less favourable tracker rate, by each of the 15 lenders included in the Central Bank's examination of tacker mortgage-related issues, or the aggregate data if details are not available; and if he will make a statement on the matter. [46998/17]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 224, 227 and 253 together.

The Tracker Mortgage Examination is the largest, most complex and significant supervisory review that the Central Bank has undertaken to date in the context of its consumer protection mandate, involving a review of more than two million mortgage accounts by lenders.

As per the most recent Central Bank’s status update of 17 October on the tracker mortgage examination (), circa 13,000 affected customers have been identified to date through the Examination, the majority of whom will receive their redress and compensation before the end of the year. Prior to the Examination, the Central Bank ensured a further 7,100 cases involving tracker mortgage issues were rectified and remedied.

The Central Bank also publishes data on the number of PDH and BTL mortgages, and on the arrears position of those mortgages (see latest data attached ). This data series also provides information on the mortgages which are held by unregulated loan owners. However, the Central Bank advises that as the Tracker Examination is ongoing it is not in a position to provide granular data on the on the number of impacted tracker mortgage accounts in arrears or which have been transferred to unregulated loan owners.

However, it should be noted that the Tracker Framework requires lenders to review all mortgage accounts, including those that have been redeemed, sold or transferred to another entity by the lender, together with mortgage accounts where the customer has lost possession of the secured property for any reason (including by way of voluntary and involuntary sale). In the case of any loans that have been transferred or sold to another entity the Central Bank has taken the approach that the originator of those loans is responsible for their review and the payment of any redress and compensation required as set out by the Framework. The Framework also requires lenders to implement controls and/or measures to ensure that potentially impacted customers do not lose possession of their properties during the period from when the potential relevant issue is identified until the lender satisfies itself that potentially impacted accounts are not in fact impacted by the issue or redress and compensation occurs. Such controls and measures may include, but are not limited to, pausing legal activity and repossessions of properties and informing customers that wish to undertake assisted voluntary surrenders of their properties, of the possibility that they may be included in a redress scheme in the future.

Regarding the number of Court cases initiated against banks arising from the tracker issue, the Central Bank advises that it does not have data on this legal matter. However, it should also be noted that the Tracker Framework provides that redress and compensation is to be paid to impacted customers up front at the point of offer and compensation cannot be reduced by virtue of a customer lodging an appeal.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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225. To ask the Minister for Finance the action that will be taken against banks that have appointed receivers to properties that have been part of the tracker examination since the beginning of the examination; and if he will make a statement on the matter. [46407/17]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, the Central Bank is independent in the performance of its duties in the supervision of regulated financial service providers and it is working to ensure the Tracker Mortgage Examination is completed as soon as possible. The Central Bank has advised that in line with its mandate to ensure that the best interests of consumers are protected, the immediate focus of the Tracker Mortgage Examination is to ensure that lenders prioritise the identification of impacted customers, stop the harm, and then provide appropriate redress and compensation in line with the ‘Principles for Redress’ developed by the Central Bank.

The lender is to take appropriate steps to ensure that any harm potentially being caused to impacted customers is stopped at the earliest possible time after a potential relevant issue is identified, as follows:

- The lender is to cease charging the incorrect rates of interest to potentially impacted cohorts of customer accounts and to apply correct rates of interest to those accounts after each cohort is identified and to inform the Central Bank in advance of doing so.

- The Central Bank expects that lenders will not take steps in the legal process (including issuing demand letters) and will implement controls and/or measures to ensure that potentially impacted customers do not lose possession of their properties during the period from when the potential relevant issue is identified until the lender satisfies itself that potentially impacted accounts are not in fact impacted by the issue or redress and compensation occurs. Such controls and measures may include, but are not limited to, pausing legal activity and repossessions of properties and informing customers that wish to undertake assisted voluntary surrenders of their properties, of the possibility that they may be included in a redress scheme in the future.

- Where the lender is satisfied that a potentially impacted account is not impacted by the potential relevant issue or any other relevant issue, it may cease to apply the said controls and measures to the account. The lender is to put appropriate systems in place regarding decisions to cease to apply such controls and measures. As part of this process, senior management is to approve any decision to cease to apply the controls and measures to an account in advance of the controls and measures being dis-applied.

- Before the lender takes any steps against customers that it has not previously identified as being affected by the potential relevant issue that may result in such customers losing possession of their properties (for example by commencing or advancing legal proceedings to take possession of the properties), or before the lender facilitates such customers in the sale of their properties (for example by way of assisted voluntary sale), the lender is to satisfy itself that such customers are not affected by the potential relevant issue or any other relevant issue. The lender is to put appropriate systems in place regarding the process by which it satisfies itself in this regard. As part of the process, senior management is to be satisfied that such customers are not affected by the potential relevant issue or any other relevant issue.

Where there is doubt regarding whether or not the potentially impacted customers are in fact impacted by potentially relevant issues or any other issues, lenders should not take steps in the legal process (including issuing demand letters) until lenders are satisfied that it is fully in order to proceed.

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