Dáil Éireann Debate, Tuesday - 28 February 2017
39. Deputy Joan Burton asked the Minister for Finance the progress made in supporting families in mortgage distress; his plans to further assist persons and families in mortgage difficulty and ensure they stay in the family home; if his attention has been drawn to the banks' failure to cut deals with mortgage holders in distress, including writing down loans; and if he will make a statement on the matter. [10337/17]
Amharc ar fhreagraMy question relates to the continuing refusal of banks to do deals with people who are in mortgage difficulties and the level of stress and pressure on relationships it is causing. Personal insolvency practitioners have drawn attention to a number of cases and I am personally aware of quite a number of cases. It seems as though the banks are simply not willing to engage, whether at the beginning of the process or after people have been involved in the mortgage arrears resolution process, MARP.
The Deputy will be aware that A Programme for a Partnership Government and the Action Plan for Housing and Homelessness set out the Government's priorities in relation to dealing with mortgage arrears. The Deputy will also be aware of concerted efforts by the previous Government to resolve the mortgage arrears issue over a number of years, including revision of the Central Bank's code of conduct on mortgage arrears in the interests of fairness for consumers, overhaul of bankruptcy rules, introduction of personal insolvency legislation, establishment of a mortgage-to-rent scheme, and making available free access to up-to-date information about mortgage resolution options. These options provide borrowers with the ability to restructure their debt in an orderly and sustainable manner.
Following a request from me, the Central Bank completed its assessment of mortgage arrears and its report was published on the Department of Finance website last December. The report noted that progress is well established in dealing with mortgage arrears and is clearly moving in the right direction. The assessment finds a comprehensive range of available restructuring solutions being offered and delivered by both bank and non-bank entities. The Central Bank considers the range of restructures offered by banks to be broadly appropriate in balancing consumer protections imperatives and maintaining a mortgage market for all borrowers and a functioning banking system. The assessment also found that overall there is strong evidence that banks and non-banks are looking to exhaust available options before moving into the legal process.
Mortgage arrears and repossessions data released by the Central Bank to the end of the third quarter of 2016 provide evidence that consistent progress is being made in addressing mortgage arrears, with the number of private dwelling house mortgage accounts in arrears continuing to fall for the 13th consecutive quarter. In addition, over 121,000 private dwelling house mortgage accounts were classified as restructured, of which 88% were deemed to be meeting the terms of their restructure. This shows that where borrowers actively engage with their lender with a view to agreeing a sustainable arrangement to address their mortgage arrears it is more likely that an equitable arrangement will be found.
Additional information not given on the floor of the House
The Deputy may also be aware of other initiatives being rolled out across Government such as the Abhaile mortgage arrears resolution service and amendments to the mortgage-to-rent scheme which will make the mortgage-to-rent process quicker, more transparent, easier to navigate for borrowers and ultimately more accessible to more households in mortgage distress. Pilot projects to explore potential mechanisms that would facilitate investment into the residential market by private equity firms using the mortgage-to-rent model will be undertaken with a view to facilitating greater numbers of indebted borrowers to remain in their own homes as tenants.
Finally, I would encourage all borrowers in arrears to make contact with their bank or to seek assistance from their local Money Advice & Budgeting Service, MABS.
I wish to tell the Minister a little story of a family with three children, one of whom has specials needs, that I have dealt with over a number of years. The parents found themselves in difficulty with their mortgage despite the fact that both of them are working. One of them became ill due to the stress associated with trying to deal with the bank. When I was Minister for Social Protection I set up a scheme called Abhaile so that mortgage holders in distress would be helped by the Money Advice & Budgeting Service, MABS, which was authorised on a regional basis and a local basis to accompany people to court. As the Minister knows, because we discussed this in government over many a long month, it took a long time to set it up, but it is operating now as is the personal insolvency practitioner structure. However, despite all that, we hear back that, no matter what happens, banks are still reluctant to engage. In the particular case to which I referred, the family went through the full year of the mortgage arrears resolution process and paid everything that was required. Not only that, when the parents got a small increase in their income, they increased their payment. Nonetheless, and this is not atypical, the day the MARP period finished, during which, notwithstanding the difficulties they were in, they had agreed to everything and done everything that was required, the bank issued them with a notification stating that it would seek to repossess the house. In the Government that the Minister and I were members of, it was a primary principle that we would seek to protect people in their family homes. In this particular case, the bank included-----
Thank you, Deputy. You are way over time.
-----the €208 or so that the family was receiving in respect of domiciliary care allowance as income in the family's means assessment.
I must ask the Deputy to-----
I know the Minister does not get involved in individual cases.
This is a joke.
The Deputy is way over.
I will finish on this point.
The Deputy is more than a minute over time and has actually taken two minutes. Will she put her question very quickly, please?
Will the Minister examine some cases to see what banks are doing to people?
I have great sympathy for anyone in the circumstances outlined by the Deputy but I do not have the information she has so I cannot comment in detail on the case. What I know from the general principle is that the banks engage and that they have restructured 121,000 mortgages, which is proof of their engagement. They are making significant progress and for 13 consecutive quarters the number of mortgages in difficulty has gone down. Some of that is because of restructuring by the banks and some of it is because the economy is moving strongly and when people go back to work they re-engage and make their own arrangements because they have an income again to service the mortgage.
The Abhaile scheme to which the Deputy refers and for which she was largely responsible is very important. The amendments to the mortgage-to-rent scheme will make the mortgage-to-rent process quicker, more transparent, easier to navigate for borrowers and ultimately more accessible to more households in mortgage distress. Mortgage distress is also important. A variation on that of which the Deputy is probably aware is that the Department of Housing, Planning, Community and Local Government is now examining the possibility of putting a fund together to purchase houses where there are mortgage difficulties and renting them back to the mortgage holder so that the local authority would no longer be the intermediary and that there would be a more efficient way of implementing the mortgage-to-rent scheme.
I ask Deputy Burton to be brief. She used up her time so I ask her to keep her comments very short.
I understand the Minister's appreciation of the issue. He did not mention one aspect which is that with a recovery in property prices, the level of distress in many mortgages is now automatically going down as the underlying security for the mortgage increases in value. Therefore, things are certainly improving. However, if we examine the reports from the personal insolvency practitioners throughout the country-----
Very briefly, Deputy.
-----they are indicating that it is extremely difficult to get banks to cut a deal. Further, arrangements that were reached with the banks in earlier years, where part of the loan was frozen or parked, are now coming up for review.
We need to know what will happen in these cases.
It is untrue to state the banks will not write off part of the money owed. They will do so but only on a case by case basis as opposed to a universal or across the line basis. People who are in difficulty should engage with their bank with the help of the best advice available or an insolvency practitioner. As I indicated, 121,000 mortgages have been restructured, of which 88% are standing up to the conditions. The test is that restructured mortgages must stand for at least 12 months before they are rated as successful restructuring. The Deputy could help out by bringing individual cases to lenders' attention. I understand banks are open to speaking to Deputies who are acting as intermediaries for borrowers.
We must move on to the next question.
May I make a point?
No, we are over time.
