Mary Lou McDonald
Question:12. Deputy Mary Lou McDonald asked the Minister for Finance his plans to tackle the one in four in mortgage distress here above and beyond what has already been announced. [10565/13]
View answerThursday, 28 February 2013
Questions (12, 36)
John Halligan
Question:36. Deputy John Halligan asked the Minister for Finance the further measures, if any, he proposes to take to force banks in which the Government owns shares to restructure or write down distressed mortgages; and if he will make a statement on the matter. [10632/13]
View answerWritten answers
I propose to take Questions Nos. 12 and 36 together.
I have spoken previously about the range of measures the Government has adopted to assist people who are experiencing mortgage difficulty. These measures include
- The Personal Insolvency Act which is now in place. The Minister for Justice and Equality is urgently putting in place the infrastructure to make the provisions of the Act operational shortly.
- The Minister for Housing and Planning has formally launched the “mortgage to rent” scheme on a nationwide basis. This is a social housing response to the problem of mortgage distress.
- An extensive independent mortgage advice framework has now been put in place by the Minister of Social Protection comprising (i) an enhanced website - www.keepingyourhome.ie (ii) a Mortgage Arrears information helpline, and (iii) the provision of free independent ‘one-to-one’ professional financial advice to borrowers when considering a long term forbearance/resolution offer from their lender. The list of accountants providing this service is located on the www.keepingyourhome.ie website.
In addition, the Central Bank has over the past year had intensive engagement with all regulated mortgage lenders on the development of mortgage arrears resolution strategies. The Central Bank has informed me that in 2013, the Bank is focusing on the implementation of MARS by lenders and is specifically looking at the operational capability of lenders.
The Central Bank has led on this issue and I support the Bank in this leadership role as it continues to actively engage with banks on this process, in particular, now that the process has reached implementation and roll out phase.
The Deputy will also be aware that the Governor of the Central Bank recently stated that the banks are now much better staffed and organised to deal with mortgage arrears and that the Central Bank, as regulator, will now be setting targets for the effectiveness of achieving lasting solutions. However, it will need to be demonstrated to the Central Bank that restructures put in place by all the mortgage lenders will be durable over the medium to longer term. I expect the lenders, many of which now have also had significant leadership change, to respond to the challenge made by the Governor and to work with the Central Bank in the roll out of measures to assist their customers who are experiencing genuine and real mortgage distress. Resolving unsustainable debt is in the best interests of both individuals and the wider economy. This now needs to be progressed quickly, and the recent statement of the AIB CEO that his bank is dealing with 2,000 distressed mortgages a month, and will address the bulk of the whole arrears book by the end of the year, is welcome.
The Code of Conduct on Mortgage Arrears also remains a very important framework governing the relationship between mortgage borrowers and mortgage lenders and provides a number of important protections for a co-operating borrower who is in arrears or who is at risk of going into arrears on the mortgage secured on a primary home. However, the Central Bank is currently conducting a review of the Code to take account of recent developments in the mortgage arrears landscape, the review will ensure that the Code continues to provide these protections and also facilitates effective communication and engagement regarding situations of mortgage difficulty.
With regard to the covered institutions, as Minister for Finance I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. Relationship Frameworks have been put in place to govern the relationship between me, as Minister, and the banks in which I have a shareholding interest. The Relationship Frameworks provide that the Boards and management of the covered banks have the responsibility for the operation and day to day decision making of the banks. This includes decisions they make on individual loans, as well as decisions on the management and resolution of loans in arrears, all of which are commercial matters for the individual banks.
Nevertheless, I can assure the Deputy that from an overall policy and financial stability perspective, my Department and the Central Bank are prioritising the mortgage arrears problem. The Government is proceeding on the basis of the recommendations of the ‘Keane Report’ committed to building on the progress made we are further intensifying its efforts to address the mortgage arrears problem.