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Mortgage Arrears Proposals

Dáil Éireann Debate, Wednesday - 6 March 2013

Wednesday, 6 March 2013

Questions (69)

Ciaran Lynch

Question:

69. Deputy Ciarán Lynch asked the Minister for Finance if he will outline the respective models of long term forbearance provided by regulated mortgage lenders to the Central Bank of Ireland to assist borrowers in arrears as part of the mortgage arrears resolution satrategy; the number of split mortgage arrangements that have been proposed by each of the lenders to borrowers; the number that have been accepted; the way the respective lenders propose to treat the warehoused part of the mortgage in terms of interest charged; if he will provide details of the amount of capital that has been written down by the pillar banks in mortgage arrears cases; and if he will make a statement on the matter. [11787/13]

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Written answers

The Central Bank, under its MARs project, has for some time been intensively working with lenders to ensure that they can offer a range of longer term options to their customers who are experiencing mortgage difficulty. These can include mortgage-to-rent, trade-down mortgages, equity participation, interest rate reduction, split mortgages and sale by agreement, or other appropriate options as may be developed by lenders. The split mortgage is one of a number of arrangements suggested by the Inter-Departmental Mortgage Arrears Working Group Report (the Keane Report) and involves splitting a distressed mortgage into an affordable mortgage and warehousing the balance.

The Central Bank has informed me that the majority of the lenders have introduced or are in the process of introducing a split mortgage arrangement. While lenders have taken on board the broad approach set out in the Keane report, the product details vary from lender to lender. The most notable difference involves the interest rate charged on the warehoused element of the split mortgage which, I am informed, varies from 0% up to the full mortgage interest rate. Central Bank statistics indicate that at the end of September 2012, which is currently the latest statistical data available, twelve split mortgages were in place. However, long term options are now being rolled out and the Central Bank has informed me that data being published as part of its quarterly mortgage arrears and repossession statistics for the end of 2012 and throughout 2013 will show progress in this area.

The Deputy will be aware that write-downs of residential mortgages are agreed on a case by case basis and are not disclosed by the covered banks. However general information on the accounting write-offs of the covered banks is set out in their annual and interim reports.

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