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Mortgage Arrears Proposals

Dáil Éireann Debate, Thursday - 20 February 2014

Thursday, 20 February 2014

Questions (65)

Bernard Durkan

Question:

65. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he is satisfied that all lenders remain compliant with his Department's and the Central Bank of Ireland's guidelines in determination of solutions in cases of mortgage arrears with particular reference to family homes; the extent to which economic circumstances including unemployment continue to be borne in mind where efforts are being made to achieve a sustainable solution in view of the fact that in many such cases the loans offered were unsustainable at the outset; and if he will make a statement on the matter. [8810/14]

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Written answers

The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) places an onus on the banks in respect of a co-operating borrower, to explore all the options for offering an alternative repayment arrangement to address a mortgage difficulty and provides a strong consumer protection framework to ensure that those borrowers in difficulty with their mortgage repayments are treated in a fair and transparent manner by their lender. The CCMA is a statutory Code issued under Section 117 of the Central Bank Act 1989 and lenders are required to comply with the CCMA as a matter of law.

As statutory regulatory of credit institutions, the Central Bank has the power, from both a prudential and consumer protection perspective, to require banks to meaningfully address mortgage arrears cases on their books.  Durable long term restructures will have to be applied having regard to the circumstances of individual cases.

The Deputy will be aware that the Central Bank's Mortgage Arrears Resolution Targets (MART) announced last March set time bound and measurable targets for the six main banks requiring them to systematically address their arrears book.  On the basis of their audit of the bank's mortgage arrears 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.  Under this rolling process, quarterly performance targets have now been set to the end of June 2014 to require the banks to propose and put in place durable long term solutions to address individual cases of mortgage arrears of more than 90 days in arrears.  The subsequent targets set by the Central Bank will be the subject of further audit work to ensure consistency with the sustainability principle in respect of solutions being offered by the lenders.

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 necessary 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 throughout 2014.

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