Dáil Éireann Debate, Tuesday - 12 December 2023
253. Deputy John Brady asked the Minister for Finance if a scheme will be implemented in the near future to allow homeowners to buy out their mortgage from a vulture fund; if so, to provide further information on the scheme, timeframe and the measures the Government is taking to assist homeowners whose mortgages have been transferred to a vulture fund; and if he will make a statement on the matter. [55195/23]
View answerThe Government is acutely aware of recent events which are impacting on mortgage interest rates and the strain these increases place on households.
On 31 August 2023, I met with the mortgage industry including the Banking and Payments Federation Ireland (BPFI), CEOs and senior representatives of all the main mortgage lenders and servicers and I made it clear that banks and all other mortgage entities should be fully aware of the significant challenges that some of their customers are facing and that lenders and servicers should respond by assisting their customers who are experiencing difficulty.
I also highlighted that greater clarity should be provided to customers on the possibility of switching provider and that this option should be fully supported by all mortgage entities, including the existing mortgage creditor. Further, I supported the steps taken by the Central Bank to ensure that firms proactively deal with emerging difficulties for their customers since the increase in interest rates.
The Central Bank requires firms to enhance the range of supports available to borrowers in or facing arrears and to have sufficient operational capacity to manage applications by borrowers to switch their mortgage or mortgage provider.
Arising from that meeting, on 6 September the Banking and Payments Federation of Ireland announced a number of further initiatives by the mortgage industry. This included:
• a second phase of a ‘Dealing With Debt’ campaign to highlight new and existing supports for concerned mortgage customers;
• mortgage servicing firms and MABS to collaborate on an expansion of streamlined customer engagement framework; and
• the provision of initial eligibility criteria by the main lenders to provide clear guidelines for home mortgage customers of credit servicing firms who are seeking to switch their mortgage.
This means that, for the first time, there is now an agreed industry wide set of initial eligibility criteria to facilitate people to redeem an existing mortgage with a non-bank creditor and to refinance it with new credit from a credit institution or other lender. Credit servicing firms have committed to working with these criteria to support customers switching and to ensure they are aware that they may have options to switch their mortgage.
The main mortgage broker representative bodies, Brokers Ireland and the Association of Irish Mortgage Advisors, have also agreed to communicate these criteria to borrowers seeking to switch their home loans. In order to be eligible to switch under these guidelines, customers need to be making full capital and interest repayments on their mortgage. In addition, customers must have no arrears on their home mortgage or any other lending in the past two years.
Once customers meet these and other initial criteria, applications will be assessed on a case-by-case basis in line with individual lender credit policy.
Separately, Budget 2024 provided for a temporary one-year mortgage interest tax relief scheme for homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on 31 December 2022. Qualifying homeowners will be eligible for mortgage interest tax relief in respect of the increased interest paid on that loan between the calendar year 2022 compared to the calendar year 2023 at the standard rate of income tax (20%), capped at €1,250 per property.
It also important to note that there is a strong consumer protection framework in place for mortgage borrowers and this framework is in place regardless of the type of regulated entity with whom they are dealing, such as a bank, a retail credit firm or a credit servicing firm..
I would also like to indicate that if a customer is not satisfied with how a regulated firm is dealing with them in relation to the handling of their mortgage, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes (including the Code of Conduct on Mortgage Arrears which applies to any loan that is secured on a primary residence) and regulations or other financial services law, they should make a complaint directly to the regulated firm.
If they are still not satisfied with the response from the regulated firm, they can refer the complaint to the statutory Financial Services and Pensions Ombudsman. Furthermore, I would advise that any person who is experiencing difficulty in relation to their mortgage should seek the assistance of the Money Advice and Budgeting Service (MABS). This is a State funded service for people whose home is in mortgage arrears or in mortgage difficulty and it can provide free legal and financial advice.
A dedicated adviser can help borrowers to find the best solution for their situation and under the Abhaile Scheme operated by MABS they can if necessary have a free face-to-face meeting with an accountant or a solicitor, who will explain their financial or legal situation and advise them how best to proceed.
