12th July 2017

Minister highlights Government initiatives to address mortgage arrears


Insolvency system already under review by Government


The Minister for Justice and Equality, Charlie Flanagan TD, has told the Dáil that he has serious reservations about the Mortgage Arrears Resolution (Family Home) Bill 2017, because it is unlikely to survive a challenge on constitutional grounds.


Minister Flanagan said that the Government had prioritised supporting and assisting financially distressed borrowers in mortgage arrears on their homes by introducing a raft of measures.  He noted that mortgage arrears have been falling consistently for 15 consecutive quarters.


Minister Flanagan stated:


“The Government’s legal advice is that this Bill is very likely to be unconstitutional, and it contains other legal defects.”


He pointed out that the bill would lead to the creation of a quasi-judicial Mortgage Resolution Office and an Appeals Office, with “extremely wide-ranging powers to intervene in and change the vested constitutional legal rights and obligations of private parties. However, such powers are exclusively reserved to the Courts, under Article 34 of the constitution. Advice from the Attorney General is that the proposed far-reaching powers and discretions of these bodies would contravene Article 34”


The Minister added:


“The Bill is also risks having unforeseen negative effects on the distressed borrowers it is trying to help. For instance, it deals only with mortgage debt – while borrowers need a solution which resolves their overall debt picture and returns them to solvency. Furthermore, the Bill does not protect the borrower against other creditors registering a judgment mortgage against their home. The proposed new Mortgage Resolution process is also resource-intensive, and seems likely to generate a high proportion of appeals and legal challenges.”


Minister Flanagan warned that the Bill being debated in the Dáil was “an over-simplistic solution, in this very complex area, and risks creating a range of serious and unintended negative effects – most importantly, for the distressed mortgage holders themselves.”


The Minister also questioned the fact that the Bill:


Minister Flanagan highlighted the measures introduced by the Government and its predecessor, including:



He stated that these measures were bearing fruit:


In summation, the Minister told the Dáil that: “The Government is open to looking at all constructive solutions. I fully appreciate the Deputy’s very genuine intentions, but this Bill is fundamentally flawed, appears incompatible with the Constitution, and risks adding to the problems of those in the worst arrears.”