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Written Answers - Banking Sector Regulation

Tuesday, 7 February 2012

Dáil Éireann Debate
Vol. 754 No. 3

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 117.  Deputy Michael Healy-Rae Information on Michael Healy-Rae Zoom on Michael Healy-Rae  asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan  the proposals he has to ensure that mortgage lenders are going to develop products to help mortgage holders in distress as part of the new strategy to help troubled borrowers; and if he will make a statement on the matter. [6263/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan The Central Bank revised Code of Conduct on Mortgage Arrears (CCMA), the key framework that governs the relationship between lenders and borrowers who are in arrears, or facing arrears, on their mortgage, provides a number of protections to borrowers. These include the establishment of a formal Mortgage Arrears Resolution Process (MARP) as the framework for handling such cases, the establishment of dedicated Arrears Support Units and a separate internal appeals process by lenders to deal with individuals on a case by case basis. The Code also provides that a lender must not apply to the Courts to commence legal action for the repossession of a borrower’s private residence until every reasonable effort has been made to agree an alternative arrangement with the borrower and that, where a borrower co-operates with the lender, the lender must wait at least twelve months from the date the borrower is classified as a MARP case before applying to the Court to commence legal action for repossession of a borrower’s primary residence.

This twelve month period does not include any time where the borrower is complying with the terms of any alternative arrangement agreed with the lender, or being processed by the internal Appeals Board, or any time during which a complaint against the lender against any aspect of the Mortgage Arrears Code is being processed by the Financial Services Ombudsman’s Office. In addition, lenders are restricted from imposing charges and/or surcharge interest on arrears arising on a mortgage account in arrears to which the Code applies and in respect of which the borrower is co-operating reasonable and honestly with the lender in the MARP process. The Central Bank has published a guide for consumers on mortgage arrears ‘Mortgage Arrears — A Consumer Guide to Dealing with your Lender’ and this is available on the Central Bank website.

More recently, the Central Bank has also required licensed mortgage lenders to develop comprehensive strategies and implementation plans to deal with their individual mortgage arrears situations. The Central Bank is currently reviewing these strategies and plans to ensure that they are addressing the problem and that mortgage lenders are looking at appropriate longer term solutions, such as those recommended in the Inter-Departmental Mortgage Arrears Working Group report and other options that banks may develop themselves, for their customers who may have unsustainable mortgages. The Central Bank will continue to engage with lenders on the further development and implementation of these strategies and plans.

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