The reply to Parliamentary Question No. 68 of the 16 of October 2013 sets out the intrinsic role of the Irish Credit Bureau in the local authority loan process, as was requested. It would not be appropriate for me to comment on individual loan applications.
Local authorities have for many years provided housing loan finance to people of limited means and who could not access such finance in the commercial market. One of the qualifying conditions for such local authority loans was the provision of evidence of refusal from two commercial lenders. In extending housing loans, local authorities are as flexible as possible when dealing with borrowers experiencing difficulties servicing those loans.
Housing loans extended by local authorities are based on obtaining matching finance from the Housing Finance Agency which must in turn be serviced by local authorities. Any default on a housing loan exposes the local authority to a drain on its finances in continuing to service loans. In extending loans, it is also critical to ensure that borrowers are capable of servicing the loan sought, thus avoiding the distress which might ensue should the home be repossessed as a result of unsustainability.
The credit guidelines for housing loans, introduced in 2009, were intended to standardise best practice throughout the sector, and apply a transparent and coherent process to the assessment of loans. Central to this was the requirement to have the application subjected to examination by the Irish Credit Bureau, to ensure that each loan was similarly treated and assessed. Anecdotally, loans extended under the guidelines are performing more satisfactorily than those not subjected to these guidelines.
I am satisfied that the guidelines in place, and the checking of applications by the Irish Credit Bureau, represent prudent practice and work in the best interests of borrower and lender alike.
