I propose to take Questions Nos. 540 to 543, inclusive, together.
I can advise the Deputy that the current position regarding mortgage arrears and repossession procedures is outlined in the Report of the Expert Group on Repossession which was published on my Department’s website on 14 January. This Government has consistently taken the line that repossession of a home should only be considered as a last resort when all other sustainable options have been fully considered but are not considered viable having regard to all circumstances of the case. To that end, the Government has introduced a comprehensive framework to tackle the mortgage arrears problem.
Lending institutions are working with borrowers in arrears to meet targets set by the Central Bank which will see the majority of them being offered sustainable solutions by the end of this year. The Central Bank’s Code of Conduct on Mortgage Arrears (CCMA) contains a structured framework which lenders must follow when dealing with mortgage arrears.
The reform of the personal insolvency legislation, which I piloted through the Oireachtas will see a range of alternative solutions being availed of by borrowers where their debt situation is not sustainable. The Personal Insolvency Act 2012 has modernised the State’s insolvency laws and has put in place new mechanisms to resolve personal debt problems. It has also established the Insolvency Service of Ireland.
The Land and Conveyancing Law Reform Act 2013 provides that applications for the repossession of private residences, irrespective of whether the mortgage was created before or after 1 December 2009, may be adjourned to allow the parties to explore the possibility of applying for a Personal Insolvency Arrangement (PIA) under the 2012 Act as an alternative to repossession.
The Personal Insolvency Act 2012 required the Insolvency Service of Ireland (ISI) to prepare and publish guidelines as to what constitutes a reasonable standard of living and reasonable living expenses. Initial guidelines were published as part of the launch of the ISI’s information campaign in April 2013 and in June 2013 the ISI published an updated guide to reflect adjustments for inflation and so ensure that practitioners would be using the most up-to-date information available.
Under the model developed by the ISI, reasonable living expenses are the expenses a person necessarily incurs in achieving a reasonable standard of living, this being one which meets a person’s physical, psychological and social needs. Reasonable living expenses vary depending on a number of factors such as the particular composition of a household and the need for a car. Beyond that, when determining reasonable living expenses, provision is made for reasonable housing costs in terms of rent or mortgage payments as well as for reasonable payments in respect of childcare where this expense arises.
In addition, the guidelines make allowance for a debtor to specify reasonable costs which arise as a consequence of ill-health or disability or other special circumstances. (In this regard, third level education fees for children are not specifically excluded when determining reasonable living expenses). Page 13 of the June 2013 ISI guidelines makes explicit that this category of special circumstances may also be used where a debtor has persons other than his or her minor children financially dependent on him or her such as where the debtor is contributing financially to the care of an adult dependent such as, for example, a college-going child. Those guidelines are available to view on the ISI’s website www.isi.gov.ie.
On the matter of legal aid, the Legal Aid Board provides advice and representation in accordance with the provisions of the Civil Legal Aid Act 1995. Persons who have mortgage problems are entitled to apply at any of the Board's law centres to get legal advice. In relation to the provision of representation before the Court, the Board applies the "merits" criteria that are set out in the legislation to any application for representation. If the Board takes the view that there is no legal defence to the lending institution's application for repossession it must refuse the application for representation. The Board may however grant representation if it considers that there is a defence to the lending institution's claim.
Finally, I should emphasise that co-operating borrowers have nothing to fear from engaging with the lending institutions to find solutions to their difficulties, with some 79,000 mortgage holders having had their mortgages restructured as of November 2013. Advice on dealing with mortgage arrears is available independently of the lending institutions, through the Citizens Information Board help line and website (www.keepingyourhome.ie).