Dáil Éireann Debate, Thursday - 28 February 2019
67. Deputy Bernard J. Durkan asked the Minister for Finance if his attention and the attention of the Central Bank has been drawn to the pressure being exerted on borrowers that have consistently engaged with their lenders and have made payment in many cases up to the maximum required but are now being pursued in the courts notwithstanding; and if he will make a statement on the matter. [10207/19]
Amharc ar fhreagraI am advised by the Central Bank of Ireland that within the remit of its responsibilities for safeguarding stability and protecting consumers, its approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place.
The Code of Conduct on Mortgage Arrears (CCMA) forms part of the Central Bank’s Consumer Protection Framework. It is a statutory Code first introduced by the Central Bank in February 2009, with the current CCMA becoming effective from 1 July 2013. The CCMA provides a strong consumer protection framework, aimed specifically at the process to be followed by relevant firms, to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner.
Banks, retail credit firms and credit servicing firms are all required to comply with the CCMA. The overriding objective of the CCMA is to ensure the fair and transparent treatment of consumers in mortgage arrears or pre-arrears, and that due regard is had to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits. The CCMA recognises that it is in the interests of borrowers and regulated firms to address financial difficulties as speedily, effectively and sympathetically as circumstances allow. It sets out the Mortgage Arrears Resolution Process (MARP), a four-step process that regulated entities must follow:
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrower’s circumstances; and
Step 4: Propose a resolution
Each regulated entity must consider the borrower’s situation in the context of the solutions they provide, which may differ from firm to firm. The CCMA does not prescribe the solution which must be offered.
Under the CCMA, a regulated entity may only commence legal proceedings for repossession where it has made every reasonable effort to agree an alternative repayment arrangement (ARA) with the borrowers and other clear requirements are met or the borrower has been classified as not co-operating.
This framework requires lenders to exhaust the options available from the suite of ARAs offered before taking action which may result in the borrower losing his/her home (whether by voluntary sale or repossession). During the legal process, borrowers have opportunities to re-engage with lenders to find a solution. In some circumstances, however, loss of ownership may be unavoidable.
The arrears handling provisions in Chapter 8 of the Consumer Protection Code (the Code) apply when the loan is not a mortgage loan to which the CCMA applies. The Code requires that regulated entities have in place written procedures for the handling of arrears. Where an account is in arrears, a regulated entity must seek to agree an approach that will assist the personal consumer in resolving the arrears. Specified information in relation to arrears must be made available to personal consumers, including general information to encourage the consumer to deal with arrears and stating the benefits of dealing with arrears.
Where an account remains in arrears for 31 calendar days after the arrears first arose, a regulated entity must inform the consumer of the status of the account and other specified information. This includes the amount of the arrears to date and the interest rate applicable to the arrears, details of any charges in relation to the arrears that may be applied and the importance of the personal consumer engaging with the regulated entity in order to address the arrears. This must be updated every three months, where the arrears persist.
Where a regulated entity reaches an agreement on a revised repayment arrangement with a personal consumer, the regulated entity must provide the personal consumer with a clear explanation of the revised repayment arrangement and clarification on what data relating to the consumer’s arrears will be shared with the Irish Credit Bureau or any other relevant credit reference agency.
I would also like to draw the Deputy's attention to the Abhaile scheme, the aim of which is to ensure that people who are at risk of losing their homes to address their mortgage arrears and to help them wherever possible, to remain in their homes. The Insolvency Service of Ireland have stated that if a debtor can, at least, service the current market value of their home, irrespective of the mortgage balance, a Personal Insolvency Practitioner will be able to secure a permanent solution that returns the debtor to solvency and allow them remain in their family home. In over 90% of Personal Insolvency Arrangements, the debtor has remained in their home notwithstanding the fact that the majority of such cases were in long term arrears.
Since Abhaile was established in 2016, over 10,000 households in mortgage arrears have received free financial, legal and insolvency advice from a Personal Insolvency Practitioner or a Dedicated Mortgage Arrears Practitioner under the scheme. Over 7,100 borrowers facing repossession proceedings have received advice and support from a Court Mentor and almost 4,800 borrowers facing repossession proceedings have received legal assistance at court from an Abhaile Duty Solicitor.
