# Government Strengthens Framework to Support Mortgage Holders in Arrears



## demoivre (13 May 2015)

*Government Strengthens Framework to Support Mortgage Holders in Arrears*

_Wednesday 13 May - _The Government has agreed a number of new measures to support mortgage holders who are in arrears.   Building on action already taken, the measures aim to increase the supports available to people in arrears and to increase the numbers of people availing of them.

In a major reform of the Personal Insolvency framework, the Government has agreed to give Courts the power to review and, where appropriate, to approve insolvency deals that have been rejected by banks.  The Government will legislate to give effect to this change before the Summer recess.  This is expected to see more cases processed to a successful outcome through the Personal Insolvency framework.   The process seeks to ensure that fair and sustainable deals are upheld for struggling borrowers willing to work their way out of difficulties with a view to keeping their family home.

Court rules and procedures will also be streamlined to guide more cases towards the Insolvency Service, building on existing measures to allow cases to be adjourned so that a defendant can engage with a Personal Insolvency Practitioner, and to assist people who are unfamiliar with Court rules and proceedings.

A number of other measures have been agreed.

The Mortgage to Rent scheme will be expanded, including in particular by increasing the property value thresholds that apply.  A number of other flexibilities will also be introduced, making the scheme more accessible.

The Government has also agreed that the Money Advice and Budgeting Service (MABS) will play a greater role in offering information, advice and assistance to borrowers in arrears.  Additional services to provide assistance in identifying the best options, completing financial statements and considering proposed solutions will be rolled out by MABS offices on a phased basis, following a process of engagement with the Citizens Information Board and MABS.  This will ensure that borrowers have access to information on the range of supports and options available, advice on the ones most suited to their needs, and assistance in pursuing such options, where necessary.  MABS will be working closely with the Insolvency Service of Ireland (ISI).

*Speaking after today’s Government meeting, the Minister for Finance, Michael Noonan, said:* _“The Government is committed to helping people in arrears to reach sustainable solutions and engagement between lenders and mortgage holders has resulted in 115,000 solutions._ _
“The major reforms agreed at today’s Cabinet meeting are designed to help more people to access the supports, options and solutions available and, in particular to support mortgage holders in long term arrears.  I am confident that the new powers available to the Courts will help to underpin the credibility of the Insolvency Service and encourage more deals to be reached”._

*Commenting on the new Insolvency measure, the Minister for Justice and Equality, Frances Fitzgerald, said:*

_“ The new provision for independent review by the courts is an important reform to protect distressed mortgage-holders from any unfair lack of cooperation from their banks when it comes to seeking to agree a personal insolvency solution.
“This reform will provide a better balance between the interest of banks and those facing unsustainable mortgages.
“It will ensure that personal insolvency legislation can work as it was intended to. _

_I have instructed my officials to finalise the legislative provisions required so that these changes can be brought forward as amendments to the Personal Insolvency Amendment Bill 2014 which is currently awaiting Report Stage in the Dáil.”_

*Announcing the changes to the Mortgage-to-rent scheme, the Minister for the Environment, Community and Local Government said:*

_“I welcome all of these measures that will assist borrowers in distressed situations. _

_“Specifically on Mortgage-to-Rent, these new measures are designed to improve access to the scheme. The new thresholds make it more flexible and accessible.  While they represent an important development, the mortgage-to-rent scheme is designed for those who are willing to give up ownership of their home and convert it to social housing. _

_“The priority of Government would be that people retain full ownership of their homes. However, for those who have an unsustainable mortgage, it will provide a vital solution or option that allows people to dispose of their mortgage while still remaining in their own homes. I also look forward to seeing the bankruptcy legislation as proposed by Deputy Willie Penrose progressed to the Finance Committee in a timely fashion."_

*ENDS* *NOTES FOR EDITORS*

For more information:

Please contact:

· Brendan Loughnane, Department of Finance, 086 388 7855

· Press Office, Department of Justice & Equality, 01 602 8328

· Jim McGrath, Department of Environment, Community & Local Government, 087 255 8866


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## Brendan Burgess (13 May 2015)

Overall, this is disappointing.   This will not affect the main cause of repossessions - the 20,000 of deliberate defaulters who are simply paying nothing.  


If the government and commentators insist on blaming the bank only, and  remain in denial about the role which the borrowers have to play in getting out of arrears, then they will not solve the problem. 




demoivre said:


> In a major reform of the Personal Insolvency framework, the Government has agreed to give Courts the power to review and, where appropriate, to approve insolvency deals that have been rejected by banks.



This has to be balanced. Where the court agrees that a person has an unsustainable mortgage, there should be a fast track repossession process.


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## Sarenco (13 May 2015)

The Government is attempting to address a problem that doesn't really exist.

Between them, AIB, Ulster and Bank of Ireland have to date vetoed a grand total of 37 PIA proposals.  To put that number in context, there are over 38,000 mortgages that are in arrears of over two years.  There is absolutely no evidence that the banks are unreasonably rejecting PIA proposals.

Providing for some form of personal examinership to deal with mortgage arrears will simply be used as a further mechanism to unnecessarily delay the resolution of this problem. 

Mortgage defaulters must be thrilled! More costs for SVR mortgage holders to bear unfortunately.


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## Brendan Burgess (13 May 2015)

Sarenco said:


> Between them, AIB, Ulster and Bank of Ireland have to date vetoed a grand total of 37 PIA proposals.



Hi Sarenco

This is a very useful statistic. Where has it come from?

I calculate 72 from the attached. 

AIB: 19
UB: 3
BoI: 50 ( All PIAs - Buy to lets and family homes) 

I would imagine that BoI has fewer than AIB as they have fewer loans, and about half the level of arrears.  

Brendan


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## Sarenco (13 May 2015)

Brendan Burgess said:


> Hi Sarenco
> 
> This is a very useful statistic. Where has it come from?
> 
> ...



Hi Brendan

I just aggregated the figures given at the Finance Committee hearings-

Ulster Bank vetoed 5 out of 100 cases;
Bank of Ireland vetoed 18 out of 243 cases; and
AIB vetoed 14 out of 92 cases.

I wonder do BoI receive more proposals from PIPs because of their stated policy not to write off any outstanding debts?

In any event, you are looking at a tiny number of proposals (and vetoes) given the scale of the problem.  

I see Ross Maguire SC is thrilled at today's announcement - I wonder why?


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## Sarenco (13 May 2015)

Hi Brendan

I heard you say on the radio tonight that one in four PIA proposals are being vetoed by the banks.  I don't doubt the figure but could you point me to its source?  It doesn't seem to tally with what the banks are saying to the Finance Committee but I'm sure I'm missing something.


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## Brendan Burgess (13 May 2015)

Hi Sarenco 

In the hurly burly of the debate, I may have said it incorrectly. The overall point I was making was that there were very few PIAs and very few were being vetoed. 

The figures come from the ISI, but I should have said that 1 in 4 were being vetoed, but often by other creditors. 

[broken link removed]


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## michaelg (14 May 2015)

Would this now mean that banks would be forced into giving debt write downs in some cases ?


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## Brendan Burgess (14 May 2015)

Hi Michael 

In theory, yes. 

However, I think that would be unconstitutional.  And if there were any significant number of PIAs involving debt write-downs, the lenders would challenge its constitutionality.  However, the lenders won't bother at this stage as there are so few PIAs and I would imagine that those which are vetoed are vetoed justifiably and the courts will recognise this.


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## Bronte (14 May 2015)

Francis Fitzgerald is going to be interviewed on a newstalk now


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## Bronte (14 May 2015)

Useless interview by Ivan.  Not well briefed, he could have done with real figures from AAM.  In any case he was more interested in talking about her department.  

Apparently there is no budget for the mortgage to rent scheme because they haven't a clue how many people will be eligible.

One figure, 10 million, for 100 houses so far.


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## summersday (14 May 2015)

I cannot see how a strategic defaulter would benefit? Surely if a bank is going to or is forced to write down debt all income will be looked at and checked out to make sure the person isn't a strategic defaulter?????


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## Bronte (14 May 2015)

Better article with actual figures in the Irish times

http://www.irishtimes.com/business/...rrears-means-dealing-with-the-banks-1.2211630

And I see from that where Ivan got his 38k people in arrears, when he said it's actually 30k people due to some having more than one property.

What one really needs is figures on how this mortgage to rent is going to increase those tasking it up.  I suspect smoke and mirrors is more the reality.

As for the court veto, no actual facts on how this will work in practice, who will pay for going to court, how long this will add to the mess, whether it is constitutional, I suspect not, and how many cases.


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## Sarenco (14 May 2015)

Brendan Burgess said:


> Hi Sarenco
> 
> In the hurly burly of the debate, I may have said it incorrectly. The overall point I was making was that there were very few PIAs and very few were being vetoed.
> 
> ...




Thanks for that Brendan - I didn't realise that the ISI produced such detailed statistics.

The other nuance is that not all PIAs relate to residential mortgages.

In any event, it doesn't change the fact that the number of PIAs being proposed (never mind vetoed) is really a drop in the ocean given the scale of the problem.

Still, I suppose the Government can claim that they're doing something and personal insolvency practitioners will obviously be delighted.

On a separate note, you might consider whether it is wise to continue arguing that circa 20,000 borrowers are strategic/deliberate defaulters.  I don't see how you could ever stand up this figure and I would suggest that it is something of a distraction from the core issues.


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## Sarenco (14 May 2015)

summersday said:


> I cannot see how a strategic defaulter would benefit? Surely if a bank is going to or is forced to write down debt all income will be looked at and checked out to make sure the person isn't a strategic defaulter?????



A strategic defaulter will benefit from any mechanism that allows for any meaningful consequences of the default to be further delayed.


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## Brendan Burgess (14 May 2015)

Interesting table from the ISI. It is for PIAs rejected in Q1 2015.  It comes from the PIPs and backs up the figures supplied by the lenders and quoted by Sarenco.   Almost all are are banks or sub-prime lenders, so it's fair to say that the banks have rejected 100 PIAs out of 400. The ISI has advised me that there was a family home involved in 90% of PIAs. 


The table is not completely clear, but I understand that Start had a significant vote in 10 PIAs and vetoed 8 of them.  AIB had 57 PIAs and vetoed only 8 of them.

Brendan


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