Denis Naughten
Ceist:31 Deputy Denis Naughten asked the Minister for Finance the steps which he is taking to deal with mortgage arrears; and if he will make a statement on the matter. [27387/11]
Amharc ar fhreagraWednesday, 5 October 2011
Ceisteanna (34, 35, 36)
Denis Naughten
Ceist:33 Deputy Denis Naughten asked the Minister for Finance the steps he is taking to assist homeowners with mortgage arrears; and if he will make a statement on the matter. [27388/11]
Amharc ar fhreagra
Joe Higgins
Ceist:40 Deputy Joe Higgins asked the Minister for Finance the work he has undertaken to coordinate Government policy on the mortgage crisis facing many householders and families. [24429/11]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 31, 33 and 40 together.
There are a number of measures in place to assist people who are having genuine difficulties in meeting their mortgage repayments. The Central Bank's revised Code of Conduct for Mortgage Arrears (the Code) applies to mortgage lending activities with borrowers in respect of their principal private residence in the State. Compliance with the Code is mandatory on all mortgage lenders registered with the Central Bank. The Code came into effect on 1 January 2011. With effect from 30 June 2011, lenders must have in place the required systems and trained staff necessary to support the implementation of the Code. The Code sets out the framework that lenders must use when dealing with borrowers who are in arrears or are in pre-arrears. For the purposes of the Code a "pre-arrears" case arises when the borrower contacts the lender stating that he or she is in danger of getting into financial difficulties and/or is concerned about getting into mortgage arrears. The Code can be accessed at www.centralbank.ie.
The main provisions of the Code are as set out below:
(1) Lenders must establish a Mortgage Arrears Resolution Process known as "MARP" and use this framework when dealing with borrowers who are in arrears or in pre-arrears situations.
(2) The lender must not apply to the courts to commence legal action for repossession of the borrower's primary residence until every reasonable effort has been made to agree an alternative arrangement with the borrower or his/her nominated representative.
(3) Where a borrower cooperates with the lender, the lender must wait at least 12 months from the date the borrower is classified as a MARP case (i.e. 31 days from the date the arrears first arose) before applying to the courts to commence legal action for repossession of a borrower's primary residence.
(4) Where a borrower is in mortgage arrears, a lender may commence legal action for repossession of the property without the 12 month period applying, only in the following circumstances:—
where a borrower does not cooperate with the lender,
in the case of fraud perpetrated on the lender by the borrower, or
in the case of a breach of contract by the borrower other than the existence of arrears.
(5) A lender must not require a borrower to change from an existing tracker mortgage to another mortgage type as part of an alternative arrangement offered to the borrower in arrears or in pre-arrears.
(6) Lenders must establish an Appeals Support Unit which must be adequately staffed, to manage cases under the MARP.
(7) Borrowers can make an appeal in relation to the decision of the Arrears Support Unit and the lender's treatment of the borrowers under the MARP, to an internal Appeals Board which lenders are required to establish.
The Central Bank has produced, with input from the National Consumer Agency, a consumer guide to assist consumers in understanding the new process under the revised Code that lenders representing the majority of the market have already implemented or indicated their willingness to implement a Deferred Interest Scheme (DIS) or a variation of it as recommended by the Expert Group on Mortgage Arrears and Personal Debt. A DIS is intended to allow borrowers, subject to certain criteria being satisfied, to pay at least 66% of their mortgage interest but less than 100%. Payment of the balance may be deferred for up to 5 years.
Financial assistance is available to eligible claimants under the Department of Social Protection's Mortgage Interest Supplement Scheme.
People in debt or in danger of getting into debt can avail of the services of the Money Advice and Budgeting Service. This is a national, free, confidential, and independent service.
I would like to assure the Deputies that the Government is acutely aware of the increasing financial stress that some householders are facing arising from difficulties in meeting their mortgage commitments. Against this background, the Government's Economic Management Council, prior to the summer recess, requested an Inter-Departmental Group to consider further necessary actions to alleviate the increasing problem of mortgage over-indebtedness and to report to it by the end of September.
The outcome of the work carried out by the Group, which was chaired by my Department and comprised representatives from other relevant Departments, the Central Bank and expertise from the banking sector, has been presented to the Economic Management Council. I will bring the Report to Cabinet next week, after which it will be published. My preference is that the Dáil will be given an opportunity to debate fully the contents and the findings soon afterwards.