I propose to take Questions Nos. 12 and 16 together.
As statutory regulator of credit institutions, the Central Bank has the power to require banks to meaningfully address mortgage arrears cases on their books. The Central Bank has set specific targets, which the six main banks are required to meet on a quarterly basis, in terms of offering and concluding sustainable solutions for those in mortgage arrears of greater than 90 days.
The Central Bank has advised that the purpose of setting the targets is to:
- Return as many loans as possible to performing status;
- Where necessary to make such modifications to loans as are necessary to ensure a sustainable outcome, or
- If a sustainable alternative repayment arrangement is not appropriate or possible, to put another arrangement or process in place to resolve the matter.
As well as imposing the Mortgage Arrears Resolution Targets (MART), the Central Bank has had ongoing frequent engagement with the banks. It is the Central Bank's view, based on the feedback generated, that the MART as designed and implemented has supported an increased focus on long term solutions. The Deputies will be aware that the Governor of the Central Bank confirmed to the Oireachtas Committee on Finance, Public Expenditure and Reform on 30 April that, based on the information submitted for end-December 2013, the banks have proposed sufficient numbers of solutions to meet the targets of proposing solutions to 50% and concluding solutions for 15% of accounts in arrears greater than 90 days.
The monthly mortgage restructures and arrears data published by my Department also provides an impetus for the six MART banks to increase the pace of provision of mortgage restructures. The latest publication, in respect of the end of March, shows that some progress has been made in putting permanent mortgage restructures in place. For example, the total number of permanent restructures of principal dwelling houses (PDH) mortgages has risen from around 51,000 in December to around 62,000 in March 2014. This data, as well as the Central Bank quarterly mortgage arrears publications, would appear to demonstrate some success by the lenders in addressing the accounts in arrears as well as measures to prevent borrowers from going into arrears.
The Central Bank has advised that its MART publication of March 2013 clearly indicates that where a lender relies on legal action to address an arrears situation it must be able to demonstrate that an alternative arrangement could not be reached or is not appropriate. It is important to point out that in respect of co-operating borrowers under the Mortgage Arrears Resolution Process, the strong view of Government is that repossession of a person's primary home should only be considered as a last resort and that every effort should be made to agree a sustainable arrangement as an alternative to repossession. My officials in their regular meetings with the lenders have expressed the clear view of Government that the lenders should make every effort to agree a sustainable arrangement as an alternative to repossession.
It will now be necessary to build on the measures implemented by Government such as the reform of the insolvency service process, the mortgage advisory service and the mortgage to rent scheme. The issue of mortgage arrears is a major problem that needs to be resolved, not only for an individual borrower, but also for the long term economic and social health of the country.