Dáil Éireann Debate, Thursday - 8 October 2009
84 Deputy Joanna Tuffy asked the Minister for Finance if he will make provisions for homeowners who find themselves in a situation in which either they or their spouse or partner are out of work and are unable to meet their mortgage repayments and consequently may face repossession of their properties by the lending institutions; and if he will make a statement on the matter. [34997/09]
Amharc ar fhreagraIt is a particular priority of the Government to ensure as much as possible that difficulties in relation to mortgage arrears do not result in legal proceedings for home repossession. Home repossession should be and generally is the last resort for the lender and the preferred method of dealing with arrears cases should be early intervention.
There are a number of important initiatives in place at this time to assist consumers who have fallen into debt or are in danger of falling into debt.
In terms of ensuring that people can continue to afford their mortgages the Government provides support for payment of mortgages under the Mortgage Interest Supplement Scheme. This scheme is administered by the Community Welfare Service of the Health Service Executive on behalf of the Department of Social and Family Affairs. It provides assistance where the mortgage relates to a person's principal private residence. Furthermore, people in debt or in danger of getting into debt can avail of the services of the Money Advice and Budgeting Service (MABS). This is a national, free, confidential and independent service. The Irish Banking Federation (IBF) and the Money Advice and Budgeting Service recently agreed an Operational Protocol on consumer debt. The Operational Protocol will enable MABS and the IBF to continue to work together effectively when dealing with debt problems of personal debtors who approach the MABS Service for assistance.
The Financial Regulator's Consumer Protection Code sets out requirements that a regulated entity must contact the consumer as soon as it becomes aware that a mortgage account is in arrears and that it must have in place a procedure for handling accounts in arrears.
The Financial Regulator also has in place a Code of Conduct on Mortgage Arrears. This Code applies to mortgage lending activities to consumers in respect of their principal private residence in the State and is mandatory for all mortgage lenders registered with the Financial Regulator. Under the code where a borrower is in difficulty the lender has to make every reasonable effort to agree an alternative repayment schedule and the lender has to give consideration on a case-by-case basis to alternatives such as deferral of payments, extending the term of the mortgage, changing the type of mortgage, or capitalising arrears and interest. Obviously cases will arise where the arrears situations persist despite newly agreed changes in repayment schedules. The Code provides that where the arrears situation persists, the lender may reserve the right to enforce the mortgage agreement. However, it must wait at least six months from the time arrears first arise before applying to the courts to commence enforcement of any legal action on repossession of a borrower's primary residence.
Furthermore, as part of their recapitalisation scheme, AIB and Bank of Ireland will not commence court proceedings for repossession of a principal private residence until after 12 months of arrears appearing where the customer continues to co-operate with the banks.
