Dáil Éireann Debate, Thursday - 22 June 2023
91. Deputy Pearse Doherty asked the Minister for Finance for an update on his engagement with mortgage lenders and representative bodies with respect to forbearance measures, financing solutions and the mortgage loan treatment of mortgage holders where their loans are secured against properties affected by defective blocks; and if he will make a statement on the matter. [30178/23]
View answerI want again to raise the difficulties being experienced by homeowners in my own county of Donegal and elsewhere in regard to those affected with defective blocks. They were failed by the Government scheme, which failed to provide 100% redress. Despite this, homeowners are doing their best to work with the scheme and rebuild their homes and lives. However, serious problems remain from funding shortfalls they face around terms and conditions to their mortgage agreements. I acknowledge the Minister agreed to meet with the group and I appreciate that, in relation to our last engagement, when he indicated that. I know that has happened. Will the Minister update the Dáil on the engagement he had with the lenders and with the representative group to address these problems?
I met the banking and insurance defective block redress focus group yesterday to discuss its concerns, which included the issues raised by the Deputy. The focus of the meeting was on mortgages. I understand the very difficult situation faced by homeowners whose houses are affected by defective concrete blocks, and the Government is determined to assist households impacted by this terrible situation. As the Deputy is aware, the Government response on this issue is led by my colleague the Minister for Housing, Local Government and Heritage.
I understand from his Department that, following the enactment of the Remediation of Dwellings Damaged by the Use of Defective Concrete Blocks Act 2022, the necessary regulations under that Act are now close to finalisation. While I do not have a regulatory role in respect of banks and other mortgage creditors, that is an independent matter for the Central Bank, I believe the existing consumer protection regulatory framework is strong and should be fully applied to assist households impacted by defective blocks. This regulatory framework seeks to ensure that mortgage creditors are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle.
In particular the Central Bank code of conduct on mortgage arrears, CCMA, requires regulated entities to have fair and transparent processes in place for dealing with borrowers in, or facing, arrears on a mortgage secured on a primary residence. This applies irrespective of the particular issue that is giving rise to the mortgage difficulty. All CCMA cases must be handled in a sympathetic and positive manner by the regulated entity and the entity must explore all of the options for an alternative repayment arrangement or any other relief method which may be offered by that mortgage creditor.
In relation to any request for new credit, while the decision on such applications is a commercial matter for the lenders within the regulatory framework, such applications should be processed and assessed in an efficient manner, in line with the timeframes as set out in the consumer protection code. Perhaps in subsequent replies I can give a flavour of the issues we discussed yesterday.
I thank the Minister for meeting with them. This is an ongoing process. When banks were issuing this loans, no one foresaw that we would see a scenario whereby thousands of homes need to be demolished and rebuilt. I know some of the individuals who are already in the process of doing so. It means they have to get bridging finance in the region of €70,000. Many families are not going to get that type of a loan. There is a serious issue regarding the application of the scheme despite its flaws and its faults. There has to be some type of bespoke arrangements within the banking sector to recognise that there are unique sets of circumstances here where houses that underpin these mortgages are going to be knocked down and rebuilt. There are also issues in relation to the terms and conditions, bridging financing and to the fact that the Government is not providing the 100%. Many of the people involved are at pension age. They have to knock down their homes and they do not know where they are going to get the rest of the money. The banks have a responsibility to put in place structured and affordable forbearance measures for them. We have engaged with the banking sector in relation to this. I have engaged with the Central Bank. I know the Minister has met the group. Has the Minister now had these conversations with the banks? I know it was only yesterday that the Minister met the groups. Is the Minister going to have those conversations with the banks and the Central Bank and what action does he plan to take?
I did engage with Banking and Payments Federation Ireland, BPFI, in recent weeks on these issues. I know that BPFI met the mortgage group on 29 May and provided me with an update from that meeting. Having met the homeowners yesterday on the specific mortgage issues, I think the asks they have are quite reasonable in the main. They want dedicated contact points in place within the institutions concerned. Bridging finance or interim funding will be an issue for many of them. We will of course discuss this issue with the banking sector. The group also raised the issue of covenants and some of the terms of the existing mortgage clause. For example, where a home is demolished because of defective blocks, it should not allow the bank to essentially nullify and call in a mortgage. The group's issues are legitimate in the round and we will engage further now with the sector. We will certainly keep the channel open and continue to work with the group on the particular mortgage issues they raised with me.
I welcome the Minister's engagement on this issue. I say this with respect but this is an example of how a scheme is devised by the Government without understanding how it flows through. We now have a situation, as I said, where people have to find bridging finance of €70,000 and more to fund the rebuild of their homes. The mortgage terms and conditions, which are legally binding, say that if a person demolishes their home, he or she needs the permission of the bank. For the bank to give that permission, it needs assurances that the home can be rebuilt in full. There are also questions about where a person can get the rest of the money. We need the Government and the banking sector to come up with a unified scheme. I know this scheme is being held now because there are still issues in relation to the new scheme. We need to see that published as soon as possible but it needs to be correct. There is no point publishing a scheme that does not work in reality. That is why I urge the Minister to talk to his Government colleague about the new scheme to make sure that the issues being experienced by homeowners are addressed. The Department needs to be talking to the banks to make sure that an all-in-one system is put in place.
The real problem here is that the Government is asking almost 4,000 people to be self-builders. We should not be asking people to demolish their own homes and rebuild them. The Housing Agency should be dealing with this from start to finish.
I understand that there is a further meeting today between the Department of Housing, Local Government and Heritage and the homeowners' group with the view to getting the scheme up and running. I also understand that BPFI is going to meet the Department as well in order that they fully understand the intricacies and the detail of how the scheme will operate. We also need to ensure that the non-bank sector is involved here because some of the homeowners have mortgages with the non-bank sector. The starting point here should be an acknowledgement by everybody that all of these homeowners are potentially vulnerable clients and need to be treated accordingly. They were at pains to emphasise to me, as I know they have done many times to the Deputy in his constituency, the anxiety, stress and anguish they have to live with every day. If I can help in any way, as I have said before, to make the process more palatable and accessible for them, I will do so. I will take an ongoing interest in this and I will work with the Deputy and his colleagues and the homeowners action group to try to deal with these mortgage issues as best I can.
