There are no estimates or projections for the level of repossessions that may arise due to mortgage default. While the repossession of a principal dwelling house consequent upon mortgage default should only be considered as a last option for a person in genuine difficulty, repossessions do arise and this can be expected to continue as long as the mortgage crisis remains. It should be noted, however, that when repossessions do arise, most are of a voluntary nature and the legal repossession route only arises in a minority of cases.
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 an alternative repayment arrangement offered by the lender to address a primary dwelling mortgage difficulty before any legal action is considered.
The Central Bank's Mortgage Arrears Resolution Targets (MART) process, as announced in March 2013, sets time bound and measurable targets for the main banks requiring them to systematically address their arrears book. Under this rolling process, quarterly performance targets have so far 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 mortgages in difficulty where the mortgage is more than 90 days in arrears. The Deputy will be aware that the Central Bank has now concluded its audit and assessment of a sample of the banks' end 2013 target returns. Based on the information submitted, the Central Bank has advised that the banks have indicated they have met the targets of proposing solutions to 50% and concluding solutions for 15% of those in arrears greater than 90 days.
The Central Bank has advised that its MART publication of last 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. Furthermore, if such a decision is made by the lender, the cooperating borrower has the right to appeal a decision not to offer an alternative repayment arrangement.
Of course, the CCMA and MART can only work in circumstances where the borrower cooperates with the lender and engages with the process. Where this does not happen, the lender may have no other option but to go down the legal route to deal with an arrears case. However, if that course of action leads the borrower to commence a constructive engagement, this can lead to a more favourable outcome for the respective parties. The Deputy may wish to note, that according to information collected by my Department in respect of the end of March, some 62,000 principal dwelling mortgage accounts in difficulty have been the subject of permanent restructuring following engagement between borrower and lender.
It is important to point out that even if a repossession case has commenced in the legal system, the Land and Conveyancing (Law Reform) Act 2013 provides the power to the Court to adjourn a repossession proceeding in relation to a principal private residence to enable the borrower to consult a personal insolvency practitioner (PIP) and, where appropriate, to instruct the PIP to make a Personal Insolvency Arrangement (PIA) proposal. In formulating a proposal for a PIA, the Personal Insolvency Act 2012 places an onus on a PIP to do so on terms that shall not, insofar as is reasonably practicable, require the borrower to dispose of an interest or cease to occupy a principal private residence.
The strong view of the Government is that, in respect of co-operating borrowers under the Mortgage Arrears Resolution Process, 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. Even after the commencement of the legal process, it will be possible for lenders and borrowers to reengage and it will be in the best interests of the parties if that happens.