Expert Group Report: An Important Step In Addressing The Mortgage Arrears Problem

17 November 2010

Today's Final Report from the Expert Group on Mortgage Arrears and Personal Debt contains a number of recommendations, which if implemented, should improve the situation for thousands of indebted mortgage holders.

While the expert Group comprised a diverse group of interests, nonetheless there was a broad consensus on the need for a structured process for dealing with mortgage arrears, reform of the bankruptcy laws and the introduction of a non-judicial debt settlement process.

Director General of FLAC, Noeline Blackwell commented: "At a time when people may feel overwhelmed and feel that their problems are unmanageable, the recommendations in this report offer an opportunity for an element of control over one of the largest debts a person can incur - namely the mortgage on their family home. "

This year alone FLAC notes that every one in ten calls to its Information Line and visits to its network of legal advice centres are debt-related. This represents a jump from under 2% in 2007 to between 10 and 11% now.

FLAC has consistently campaigned, for well over a decade, for reform of the outdated laws in relation to debt-enforcement and for the fairer treatment of people in debt in Ireland. FLAC, through its Senior Policy Researcher, Paul Joyce, represented the interests of consumers by participating in the Expert Group.

"We must acknowledge that many people are trying to cope with other personal debts on top of their mortgage debt. Structures must therefore be put in place to attempt to resolve not just the mortgage arrears problem but consumer debt in general," commented Paul Joyce.

FLAC welcomes the emphasis the recommendations place on preventing repossessions to keep people in their homes. The report proposes that:

  • - A new Mortgage Arrears Resolution Process (MARP) be put in place which will oblige all lenders to consider alternative payment arrangements for those in arrears. Where such payments are agreed, the lender cannot bring legal proceedings to repossess the home.
  • - The Mortgage Interest Supplement (MIS) scheme be reformed with some of the more restrictive qualifying conditions to be relaxed. For example, the rule that a person working more than 30 hours cannot obtain MIS.
  • - A new voluntary Deferred Interest Scheme be adopted by mortgage lenders. This will allow a borrower, with the lender's agreement, to pay a minimum of two-thirds of the mortgage interest payment. This process would continue until either 18 months interest has been accumulated in total under the mortgage or for five years, whichever comes first. The effect of this, in respect of those lenders who accept the scheme, will be to buy a substantial amount of time for the borrower's position to improve.

FLAC accepts that unfortunately some mortgages may not be viable and notes the recommendations in the report in relation to unsustainable mortgages. These will allow for those affected to be considered for social housing without the need for a repossession order. FLAC also welcomes that the report addresses the question of mortgage shortfall which arises once a repossessed property has been sold for less than the amount owed to the lender. The Group recommends that this debt be included in future debt settlement legislation.

"These recommendations are part of a bigger picture. FLAC is pleased to note the Government's acceptance of the Group's recommendations and its wish to see them implemented without delay. There must also be an equally urgent commitment to reforming debt settlement and bankruptcy laws that will complete the picture," concluded Ms Blackwell.


Editors' notes:
1. FLAC (Free Legal Advice Centres) is an independent human rights organisation which works to promote equal access to justice for all. It runs a lo-call telephone information line giving general legal information and supports a network of evening FLAC clinics around Ireland. FLAC has produced research reports in the area of personal debt: 'An Ends Based Means' and 'To No One's Credit' in 2003 and 2009 respectively.
2. The latest figures from the Central Bank show that for the 3rd Quarter of 2010 there were 40,472 mortgage accounts in arrears for more than 90 days. This represents 5.1% or just over one in every 20 mortgages. 3.6% or 28,049 of those in arrears have been in arrears for six months or more. The Expert Group's Report indicates that the number of rescheduled mortgage accounts is up to 45,000. This means there is an estimated total of 70,000 who are either in arrears or have rescheduled.
3. The Central Bank figures also show that there were 81 repossessions in the 3rd Quarter of 2010 - 22 on foot of Court Orders and 59 which were voluntarily surrendered or abandoned. So far, over 500 homes have been repossessed in 2010.
4. FLAC made two submissions to the Financial Regulator on the changes to the Code of Conduct on Mortgage Arrears which were announced in August. One of these submissions was based on a questionnaire survey of the public undertaken by FLAC. Both documents are available at and