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Mortgage Arrears Proposals

Dáil Éireann Debate, Tuesday - 18 February 2014

Tuesday, 18 February 2014

Questions (226, 227)

Micheál Martin

Question:

226. Deputy Micheál Martin asked the Minister for Finance the way the mortgage crisis is being dealt with as per the programme for Government; and if he will make a statement on the matter. [2182/14]

View answer

Micheál Martin

Question:

227. Deputy Micheál Martin asked the Minister for Finance the position regarding his recent comments (details supplied) on the way the banks are dealing with the mortgage crisis; and if he will make a statement on the matter. [2186/14]

View answer

Written answers

I propose to take Questions Nos. 226 and 227 together.

The fair resolution of the mortgage arrears problem is key priority for Government and a comprehensive strategy, in line with the main recommendations of the 2011 Keane Report, has been developed.  The implementation of this strategy is overseen at Government level by a special sub-committee which is chaired by the Taoiseach and at official level by a mortgage arrears steering group which is chaired by the Department of Finance.

The Government has significantly advanced a number of key measures in this regard, including;

1. An intensification by the Central Bank of its engagement with mortgage lenders to require them, under the Mortgage Arrears Resolution Targets (MART) process, to propose and conclude sustainable and durable alternative arrangements to their customers in mortgage arrears; targets have, so far, been set for the period to end of June 2014 and by this date the banks will be required to have proposed sustainable solutions to 75% of mortgages which are more than 90 days in arrears and to have concluded solutions with 35% of such mortgages.

2. Significant reforms to personal insolvency and the establishment of the Insolvency Service of Ireland to make it more accessible for people with unsustainable personal and mortgage debt to address their position;

3. Updating the Code of Conduct on Mortgage Arrears to provide additional safeguards to co-operating borrowers while also promoting and encouraging efforts by both lenders and borrowers to meaningfully address mortgage arrears or pre-arrears;

4. Mortgage to rent which is now available as a social housing response to allow people to remain in their house, where possible; and

5. The provision of an independent mortgage information and advice service.

Regarding progress on the MART targets, the Central Bank has indicated that all six mortgage lenders covered by the MART process have reported that they met the 20% proposed sustainable solutions target for the second quarter of 2013 and also the 30% target for the third quarter in 2013.  In particular, with respect to the third quarter 2013 target, which is the latest available data, the lenders have reported to the Central Bank they had issued proposals to 43% of mortgage accounts in arrears against the 30% target. 

Furthermore, the Deputy may also wish to note, that according to information collected by my Department for the 6 main lenders, in the case of private dwelling homes some 51,000 mortgage accounts in difficulty have been the subject of permanent restructuring following engagement between borrower and lender.  A further 21,000 mortgage accounts in difficulty have been the subject of temporary restructures.  The data published by my Department and the Central Bank would appear to demonstrate some success by the lenders in addressing the accounts in early arrears and putting in place appropriate measures to prevent borrowers from going into arrears.

Taken together, the framework is in place to enable banks to work with distressed homeowners to reach sustainable solutions for dealing with their personal indebted situations.  However, early and effective engagement between borrowers and lenders is key to resolving the cases of mortgage difficulty.  Where there is effective and meaningful engagement by all parties regarding a mortgage difficulty, the data shows that an increasing number of durable long-term mortgage restructures is being put in place.  However, it is accepted that it will be necessary for lenders and borrowers to continue to build on this.

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