The Government is very aware of the significant difficulties some homeowners are facing in meeting their mortgage obligations and it is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty. A special Government Sub-Committee is already in place since March last year to address the mortgage arrears problem. This Committee is chaired by An Taoiseach and includes all other relevant Ministers, and reflects the need for accelerated progress in this area. At official level, my Department is taking a lead role and in that context, a high level Steering Group, chaired by the Department’s Secretary General, was established to drive the implementation of the recommendations contained in the Report of the Inter-Departmental Working Group on Mortgage Arrears (the ‘Keane Report’).
The Government has put in place a comprehensive strategy to address the problem of mortgage arrears, focusing on four main distinct areas:
- Innovative Personal Insolvency Reform: Personal insolvency reform was identified by the Keane Report as a catalyst for addressing the mortgage arrears problem and it indicated that without an effective insolvency system the mortgage arrears problem will not be resolved. The introduction of the new Personal Insolvency Act provides new statutory insolvency frameworks to allow debtors and creditors reach arrangements on unsustainable mortgage and personal debt. The legislation provides a legal framework for the resolution of mortgage arrears, as well as other personal debt, and it will provide certainty for borrowers and lenders alike about the consequences of non-payment and failure to reach agreement. The Insolvency Service of Ireland, which will generally oversee the operation of the new insolvency frameworks, has now been established and it is envisaged it will be in a position to process cases later this summer.
- Mortgage Arrears Resolution Strategies: The development and implementation of mortgage arrears strategies by individual lenders has further intensified with the Central Bank initiative of last March to set time bound and measurable targets for the main banks on their progress in addressing and resolving, on a durable basis, the position of their mortgage customers who are in arrears on their mortgage. In particular, the Central Bank is now requiring the relevant lenders to propose sustainable solutions to 20% of mortgages that are in arrears (of over 90 days) by end June, 30% by end September and 50% by end December 2013. In addition, the more recent pilot initiative announced by the Central Bank will seek, where there are a number of lenders involved, to address a debtor’s position in a holistic and fair way in the best interest of all creditors and the debtor.
- Comprehensive Advice and Guidance: In addition to existing arrangements, the Government has introduced a range of additional information and guidance resources to assist mortgage holders through what can be a difficult and stressful process. A dedicated website, www.keepingyourhome.ie, has been put in place to provide general public information on mortgages arrears issues. In addition, there is a Mortgage Arrears Information Helpline, which is established under the aegis of the Citizens Information Board, to provide more tailored information to individual callers. Finally, a panel of accountants has been put in place to provide “one to one” independent advice to borrowers who have been provided a long term forbearance resolution offer by their lender in respect of a mortgage on their primary home. All of these information services are provided at no direct charge to the users of the service.
- Keeping families in their homes: As a social housing response, a “mortgage to rent” scheme is now in place on a nationwide basis. This option will be available to households with unsustainable mortgages and who would qualify for social housing support and meet other appropriate criteria. It will allow the family, in the context of an agreed resolution to an unsustainable mortgage, to remain in their home.
The Central Bank’s Code of Conduct on Mortgage Arrears remains a key protection and applies to mortgage lending activities with borrowers in respect of their principal private residence in the State. These protections include the establishment of a formal Mortgage Arrears Resolution Process (MARP) to deal with mortgage customers who are in arrears or in pre-arrears, the establishment of a dedicated Appeals Support Unit and a separate internal appeals process by lenders to deal with individuals on a case by case basis. A copy of the Code is available on the Central Bank’s website www.centralbank.ie.
The Central Bank is also updating the CCMA so that it continues to provide protection to customers who cooperate with their bank while facilitating and promoting the resolution of arrears cases. Issues being considered in the review include:
- New safeguards to ensure borrowers are given sufficient warning before being classified as ‘non cooperating’;
- Changes to the contact levels permitted, while ensuring consumers are not subject to harassment;
- Transparency on resolution options so borrowers have a full understanding before making a decision; and
- Consideration on whether there is merit in allowing a lender to move a borrower in arrears off a tracker rate where the lender has offered an alternative arrangement which is more advantageous in the long term.
Further information on the review is available on www.centralbank.ie.
The Central Bank expects to publish the revised Code very soon.
The Government is making significant progress to address the problem of mortgage arrears and taken together believes that the ingredients of a fair resolution process for distressed borrowers are now in place.
