Dáil Éireann Debate, Tuesday - 17 May 2016
223. Deputy Michael McGrath asked the Minister for Finance to bring non-bank lenders within the terms of the Mortgage Arrears Resolution Targets; his plans to deal with very high long-term arrears in this sector; and if he will make a statement on the matter. [10640/16]
View answerThis Government is very committed to dealing with mortgage arrears and providing support for borrowers that find themselves in that situation. This commitment is evidenced by the range of commitments contained in the Programme for A Partnership Government which will provide renewed impetus for dealing with the issue particularly for those borrowers in longterm arrears.
The Central Bank is also working to deal with mortgage arrears. Relevant actions taken by the Central Bank since 2010 include capital assessment reviews, stress tests, distressed credit operation reviews, balance sheet assessment exercises and on-going, intensive supervisory engagement with the banks regarding distressed debt. The Central Bank's approach from 2011 has required banks to fix their operational capability and ensure that they execute appropriate strategies to address mortgage arrears. From March 2013 to December 2014, the Central Bank required the banks as a prudential measure to meet mortgage arrears targets to propose and conclude sustainable arrangements for the resolution residential mortgages in arrears (https://www.centralbank.ie/press-area/press-releases/documents/approach%20to%20mortage%20arrears%20resolution%20-.pdf). All of this was done in the context of the protections for borrowers under the consumer protection framework, including, in particular, the Code of Conduct on Mortgage Arrears.
The Central Bank, in its capacity of independent regulator of credit institutions has determined that relying on common quarterly solution mortgage arrears targets across all banks is no longer appropriate and announced this in April 2015. As a new approach, the Central Bank has written to each bank setting out new requirements that:
- concluded sustainable solutions are put in place for the vast majority of distressed borrowers;
- they meet the 'terms being met' target of 75 per cent of concluded solutions to the end of 2015 and beyond;
- they continue to comply with the Code of Conduct on Mortgage Arrears;
- where they initiate legal action that may result in loss of ownership for a borrower, they should be prepared to re-engage with the borrower and explore alternative solutions if the borrower re-engages; and
- they engage fully and appropriately in the process set out in the Personal Insolvency Act, 2012.
The banks have also been required to submit enhanced information to the Central Bank on the resolution of non-performing loans, including their strategies for delivering the outcomes outlined above. Further, the banks will be subject to enhanced and more granular monitoring of specific cohorts of distressed borrowers where progress has been slower.
The Central Bank, including in its role as part of the Single Supervisory Mechanism, remains focused on ensuring that the banks continue to improve issues identified in relation to their individual systems and procedures to ensure that they resolve arrears cases by implementing sustainable solutions for distressed borrowers in a fair manner.
As indicated, the Mortgage Arrears Resolution Targets (MART) were introduced as a prudential policy measure for credit institutions. As such, the MART process did not apply to non credit institutions such as retail credit firms. However, the same consumer protection framework including the Consumer Protection Code and the Code of Conduct on Mortgage Arrears (CCMA) applies to retail credit firms as well as to credit institutions and like credit institutions retail credit firms are also required to fully comply with the full provisions of the CCMA when dealing with a mortgage in arrears or pre-arrears which is secured on a primary home.
