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Local Authority Housing Mortgages

Dáil Éireann Debate, Wednesday - 16 October 2013

Wednesday, 16 October 2013

Questions (94)

Seán Ó Fearghaíl

Question:

94. Deputy Seán Ó Fearghaíl asked the Minister for the Environment, Community and Local Government if his Department has received any submissions from the County Managers' Association in relation to local authority loans; if any such correspondence, having been received, indicates an approach that might be adopted by local authorities to housing related loans; and if he will make a statement on the matter. [43843/13]

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Written answers

Local authorities have long been the lenders of last resort servicing the housing loan needs of less affluent members of society. In the present economic circumstances it is understandable that the ability of some borrowers to service housing loans has become restricted and a number of loans have fallen 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 on 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 July 2012 to local authorities in consultation with the County and City Managers Association. This has further enabled local authorities to provide a range of flexible repayment options for households in difficulty. Furthermore, my Department is currently reviewing the Central Bank’s most recent Code of Conduct which issued in July 2013, and will update the local authority code where appropriate.

In particular, the introduction of a Mortgage Arrears Resolution Process (MARP), which closely mirrors the suite of options available in the commercial sector, has presented borrowers in difficulty with a range of alternative payment agreements, 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 guidelines has standardised the approach across the whole sector, introduced a systematic structure to this area and provided borrowers with a transparent and accessible model for arrears resolution.

My department has no record of any recent submissions from the City and County Managers Association in this regard.

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