Business Irish

Monday 24 October 2016

Central Bank asked to look at lenders' attitudes to arrears

Published 11/08/2016 | 02:30

Michael Noonan made request
Michael Noonan made request

Finance Minister Michael Noonan has asked Central Bank Governor Philip Lane to carry out a wide-ranging assessment of the solutions being offered by bank and non-bank lenders to customers in mortgage distress.

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The minister wants to know whether lenders are exhausting all options before resorting to the courts.

The request is linked to a Programme for Government commitment to help those in mortgage distress hold on to their homes. Mr Noonan wrote to Professor Lane in June stating that he would like the bank to carry out an assessment of the range of sustainable restructure solutions being offered to customers struggling with their home loan repayments.

"There is little publicly available information available on the solutions offered by non-bank entities in particular and any additional information on their activities in this area would be most welcome," the minister wrote in the letter, which has been obtained by the Irish Independent under Freedom of Information.

"I would also ask that the assessment should also consider how the options available may impact on the distressed borrower's capacity to remain in the primary residence."

The minister stipulated that the assessment should also gauge the effectiveness of financial institutions in meeting the needs of borrowers in trouble, "and the extent to which the institutions have exhausted all available options before moving to the legal process".

"I would welcome the early assessment of the Central Bank as to the range of available sustainable restructure solutions offered by banks and non-bank entities to facilitate those in mortgage distress in the resolution of their mortgage arrears," the minister said.

It is understood that the assessment is due to be completed by the middle to end of September, with a relatively detailed response expected to the minister's request.

The Central Bank did not wish to comment.

In June, the Dáil Housing and Homelessness Committee said home repossessions by banks should be halted immediately.

But economics lecturer Séamus Coffey, Brendan Burgess of and mortgage broker Karl Deeter said a ban on banks taking back homes would worsen the arrears crisis.

They said that last year 48,000 mortgages were restructured, compared with just 687 houses that were taken into possession by the banks on foot of a court order.

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