Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

205. To ask the Minister for Finance the degree to which he and his Department continue to monitor the policy of lending institutions that are set to repossess family homes, even in instances in which the borrower has over the past number of years continued to make repayments to the extent of up to one third of income; if a protocol can be devised to facilitate such borrowers (details supplied); if the lenders will now be expected to accept some responsibility in the issue by way of extending the terms of the mortgages or splitting such mortgages in a way to make it possible for the borrower to meet the demand; and if he will make a statement on the matter. [14236/18]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy will be aware, within the remit of the Central Bank of Ireland'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. 

The Code of Conduct on Mortgage Arrears () forms part of the Central Bank’s Consumer Protection Framework.  It is a statutory Code first introduced by the Central Bank in February 2009, replacing the existing voluntary Code of Practice on Mortgage Arrears issued by the Irish Banking Federation.  The CCMA has been revised three times since 2009, with the current CCMA becoming effective from 1 July 2013.The CCMA provides a strong consumer protection framework to ensure that borrowers in financial difficulty are treated in a timely, transparent and fair manner by regulated entities. 

Firstly can I highlight to the Deputy that the CCMA includes timelines for regulated entities before they can commence legal proceedings for repossession of a primary residence. 

It also includes requirements that repayment 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.  Borrowers who engage, therefore, benefit from the protections afforded under the Mortgage Arrears Resolution Process (MARP), enhancing their chances of remaining in their homes.  The MARP process is a four-step process that regulated entities must follow and must consider the most suitable arrangement from the suite of options they offer.  Each regulated entity must consider the borrower’s situation in the context of the range of solutions it offers, which may differ from lender to lender.  The CCMA does not prescribe the solution which must be offered and this remains a commercial decision for the lender (outside of a Court process such as insolvency).  The Central Bank has published guidance for supervisors on what constitutes sustainable mortgage arrears solutions. 

At the end of the MARP, regulated entities are required to provide a three-month notice period to allow co-operating borrowers time to consider their options, such as voluntary surrender or an arrangement under the Personal Insolvency Act, before legal action can commence.  Regarding potential court proceedings for repossession, under the CCMA, a regulated entity may only commence legal proceedings for repossession of a primary residence where it has made every reasonable effort to agree an alternative repayment arrangement (ARA) with the borrower and other clear requirements are met.  This framework requires lenders to exhaust the options available from the suite of ARAs offered before taking action which may result in the borrower losing their home (whether by voluntary sale or repossession). 

During the legal process, borrowers have opportunities to re-engage with lenders to find a solution.  In some circumstances, however, loss of ownership may be unavoidable. 

As I mentioned at the outset, a key element of the Central Bank’s role is ensuring that the consumer protection regulatory framework is fit for purpose so that consumers best interests are protected.  To this end, I have also asked the Central Bank to carry out a review of the CCMA to ensure it remains as effective as possible and for the review to be completed as soon as possible.

Finally, in June 2016, I requested the Governor of the Central Bank to provide me with a report detailing the mortgage restructuring activity within banks and non-banks, the range of solutions offered by non-banks, assessing the range of solutions that may affect borrowers’ capacity to remain in their primary residences, and whether these are addressing the requirements of over-indebted borrowers.  In that Report, the Central Bank stated ‘While repossession proceedings should only be initiated following the MARP, the ability to undertake secured lending is ultimately dependent on the institution’s right to realise the security if needed and to price accordingly.  This is a cornerstone of secured lending and, by extension, an effectively functioning mortgage market’. 

The Central Bank further stated that ‘Overall, there is strong evidence that banks and non-banks are looking to exhaust available options before moving into the legal process’.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

206. To ask the Minister for Finance his plans to introduce statutory rules appertaining to the code of conduct applicable to primary and secondary lenders or their agents with a view to ensuring the protection of families who continue to pay their mortgage to the best of their ability, or those who can demonstrate an ability to so do, and the need to ensure that the current housing crisis is not further exacerbated by the activities of venture capitalists with negative consequences of a social and economic nature; and if he will make a statement on the matter. [14237/18]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy will be aware, 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) forms part of the Central Bank’s Consumer Protection Framework.  It is a statutory Code, issued under Section 117 of the Central Bank Act, 1989. 

The CCMA is a lengthy document which has evolved to reflect the changing times and situations which have arisen in the area of consumer protection.  For example, an Addendum to the CCMA was published to take account of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 which stated that with effect from 8 July 2015, credit servicing firms, as defined in the 2015 Act, must apply for authorisation to the Central Bank and that the CCMA 2013 would apply to these firms.  The great benefit of the CCMA not being a piece of primary legislation is that it can be amended relatively quickly to respond to changing events, pursuant to Section 117 of the Central Bank Act, 1989, while still remaining statutory.

The CCMA is aimed specifically at the process to be followed by relevant firms, 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.  A key element of the Central Bank’s role is ensuring that the consumer protection regulatory framework is fit for purpose so that consumers best interests are protected.  To this end, I have also asked the Central Bank to carry out a review of the CCMA to ensure it remains as effective as possible and for the review to be completed as soon as possible.