The Government is acutely conscious of the difficulties many households are facing in terms of mortgage arrears. Where any borrower, either from a local authority or from a private financial institution, is facing difficulties in meeting mortgage repayments, they should engage proactively and constructively with the lender to seek to achieve an agreed solution. The services of the Money Advice and Budgeting Service are also available to such borrowers and support is available through the Supplementary Welfare Allowance Scheme. Local authorities have long been the lenders of last resort servicing the housing loans needs of less affluent members of society. In the present economic circumstances it is to be anticipated that the ability of some borrowers to service housing loans may become restricted and that a number of loans may fall into arrears.
Section 34 of the Housing (Miscellaneous Provisions) Act 2009 provides local authorities with powers to deal flexibly with distressed borrowers, and they have demonstrated sensitivity over the years in dealing with such cases. In March 2010 my Department issued guidelines to local authorities, based upon the Central Bank’s first Code of Conduct on Mortgage Arrears, which continued the tradition of handling arrears in a manner that is sympathetic to the needs of the particular household, while also protecting the position of the local authority concerned. To reflect the content of the Central Bank’s revised Code of Conduct – which replaced the previous code from 1 January 2011 and was informed by the deliberations of the Expert Group on Mortgage Arrears and Personal Debt – my Department issued updated guidance in June 2012 to local authorities in consultation with the County and City Managers Association. This will further enable local authorities to provide a range of flexible repayment options for households in difficulty.
In particular, the introduction of a Mortgage Arrears Resolution Process (MARP), which closely mirrors the suite of options available in the commercial sector, presents borrowers in difficulty with a range of alternative payment agreements, including those referred to, which can be accessed to ease the particular circumstances of each case. This process features a standard set of options including, in cases of certain unsustainable mortgages, the facility of mortgage-to-rent. Local authorities have been restructuring loans for some time using their own internal practices. The introduction of these revised guidelines standardises the approach across the whole sector, introduces a systematic structure to this area and provides borrowers with a transparent and accessible model for arrears resolution. My Department is currently preparing updated guidance in line with the Central Bank’s latest Code of Conduct on Mortgage Arrears.