The fair resolution of the mortgage arrears problem is a 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;
- 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 of greater than 90 days;
- 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;
- Updating the Code of Conduct on Mortgage Arrears to provide safeguards to cooperating borrowers while also promoting and encouraging efforts by both lenders and borrowers to meaningfully address mortgage arrears or pre-arrears;
- Mortgage to rent which is now available as a social housing response to allow people to remain in their house, where possible; and
- The provision of an independent mortgage information and advice service.
Regarding the Central Bank's MART 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 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 accounts in arrears greater than 90 days.
The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender, and that long term resolution is sought by lenders with each of their borrowers in arrears. Under the CCMA, if a borrower is not satisfied with the way that their lender is dealing with them or if they think the lender is not complying with the CCMA, the borrower can make a complaint to their lender. Borrowers also have the right to appeal to the lender's Appeals Board if they are not happy with the alternative repayment arrangement offered or where a lender declines to offer an alternative repayment arrangement or if they believe they have been wrongly classified as not co-operating. If the borrower is still unhappy with the outcome of the appeal or the complaint made to the lender, they can refer the matter to the Financial Services Ombudsman.
The monthly mortgage restructures and arrears data published by my Department also provides an impetus for those 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.
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.