Dáil Éireann Debate, Wednesday - 20 March 2013
187. Deputy Bernard J. Durkan asked the Minister for Finance if in the context of any restructuring of family home mortgages, cognisance will be taken of the current income of the borrowers as opposed to their income at the time of mortgage approval; if it is expected that any sustainability test will encourage restructuring on a sound basis that is within the capacity of the borrower; and if he will make a statement on the matter. [14246/13]
View answer188. Deputy Bernard J. Durkan asked the Minister for Finance if arising from his discussions with the Central Bank, he is satisfied that family homes currently in arrears are restructured in such a way that repayments are sustainable and within the capacity of the borrower; and if he will make a statement on the matter. [14247/13]
View answer191. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he intends to monitor discussions between borrowers and lenders in the context of restructuring of family home mortgages with particular reference to the need to ensure that lending institutions respect the need to protect the family home while at the same time encouraging or incentivising workable solutions; and if he will make a statement on the matter. [14250/13]
View answerI propose to take Questions Nos. 187, 188 and 191 together.
The Code of Conduct on Mortgage Arrears (CCMA) states that a lender must use a standard financial statement to obtain financial information from a borrower in arrears or in pre-arrears. A lender’s Arrears Support Unit must base its assessment of the borrower’s situation on the full circumstances of the borrower including:
- the personal circumstances of the borrower;
- the overall indebtedness of the borrower;
- the information provided in the standard financial statement;
- the borrower’s current repayment capacity; and
- the borrower’s previous payment history.
The Central Bank is proposing to update the CCMA so that it continues to provide protection to customers who cooperate with their bank while facilitating and promoting the resolution of arrears cases.
As the Deputy is aware, last week the Central Bank also announced new measures to address mortgage arrears, which included the publication of performance targets for the main mortgage banks. This new approach is aimed at ensuring that banks offer and conclude sustainable solutions for their customers in arrears by setting performance targets and proposing revisions to provision standards. While the Central Bank is not mandating any particular model of restructuring and while sustainable solutions can only be arrived on a case by case basis, the Central Bank had indicated that the affordability assessment of the borrower needs to be based on, as indicated above, the borrower’s current repayment capacity and prospective repayment capacity.
Banks will be required to make regular returns to the Central Bank on their performance against the published targets. The Central Bank will consider each bank’s performance against the targets, including assessing whether sustainable solutions have been offered to customers. Assessments will be carried out towards the end of 2013 and 2014 and the outcome of these assessments will determine whether targets have been met. If banks are deemed not to have met the targets they may be subject to regulatory and supervisory actions by the Central Bank.
