Clare Daly
Ceist:63. Deputy Clare Daly asked the Minister for Social Protection if she will remove the 12 month interest-only criterion to enable a person to receive mortgage interest supplement. [32891/13]
Amharc ar fhreagraTuesday, 9 July 2013
Ceisteanna (63, 86)
Mick Wallace
Ceist:86. Deputy Mick Wallace asked the Minister for Social Protection if she will review the mortgage interest supplement scheme in view of the increased numbers of homeowners in difficulty with their mortgage repayments who cannot afford an interest-only arrangement for 12 months; and if she will make a statement on the matter. [33206/13]
Amharc ar fhreagraFreagraí ó Béal (4 píosaí cainte)
I propose to take Questions Nos. 63 and 86 together.
The purpose of the mortgage interest supplement scheme is to provide short-term support to eligible people who are unable to meet their mortgage interest repayments. There are currently some 12,000 people in receipt of mortgage interest supplement, for which the Government has provided almost €42 million in 2013. To ensure that those who are in mortgage difficulty engage with their lenders under the mortgage arrears resolution process, MARP, and avail of its forbearance arrangements, from June 2012 the mortgage interest supplement is not payable until applicants have agreed with their lender and complied with an alternative payment arrangement for a cumulative period of not less than 12 months. This measure is in line with the recommendations of both the Department's Review of the Mortgage Interest Supplement Scheme, published in July 2010, and the report of the mortgage arrears and personal debt group chaired by Mr. Hugh Cooney and published in November 2010.
The process acknowledges that it is in the interest of both the lender and the borrower to address financial difficulties as speedily and effectively as circumstances allow. The underlying principle is to ensure the MARP functions alongside State supports. The MARP provides protection for customers without the need for State intervention. The Central Bank has introduced a revised code of conduct on mortgage arrears, or CCMA, which came into effect on 1 July 2013. I am satisfied that the mortgage interest supplement continues to provide suitable support within the revised CCMA framework and I have no plans to amend the conditions of the scheme at this time.
I must say that there is a real problem with this scheme. As the Minister pointed out, only 12,000 homeowners are in receipt of it, yet we have almost 100,000 people in mortgage arrears, many of whom have lost their jobs. The reality is that some of those people do not have the economic wherewithal to sustain an arrangement with their lenders for 12 months of interest-only payments. They are too poor to do that, so if the Department does not give them mortgage interest supplement they are in danger of losing their homes and then coming back to the Department looking for rent supplement. It does not make any sense to me. A number of homeowners in my area are in that situation. The process needs to be reformed straight away.
The number of people in mortgage difficulty is growing, not decreasing. It is pretty obvious that anything the banks are doing in this area is not substantial enough. The decision not to give people mortgage interest supplement when they need it will drive more of them into it. They are not getting the money when they need it. The supplement is being offered after 12 months, but many of these people will lose their homes in the next 12 months and it will not be any good to them. There is no logic in not helping people who could work their way out of their difficulties. It was fine to give €67 billion to the banks, but the Government will not help people retain their homes by giving them a bit of relief when they need it, and not later after they lose their homes.
We are spending €42 million on this very important supplement, which is being received by around 12,000 people who are in difficulty with their mortgages. The critical issue is that there must be a solution between the borrower and the lender - namely, the bank and the person who is in difficulty. The Department of Social Protection spends €42 million on mortgage interest supplement that is then passed on to the banks. If a person receives a supplement indefinitely, as can be the case with rent supplement, he or she can end up in an unemployment trap in which it can be difficult to take up a job due to dependence on the mortgage interest supplement. That is one of the downsides to how the scheme operates.
We have worked very closely with the various agencies to ensure that the focus is on a sustainable resolution and not simply on something that actually locks a person into not being able to take up a job. That was an unintended consequence of how the scheme worked. If the banks engage with the individual, which they are required to do, then, if the individual has lost his or her job, he or she may be eligible for the supplement. Some 12,000 people get the supplement at a cost of around €42 million.