Minister Ó Cuív to revise terms of mortgage interest supplement scheme

Éamon Ó Cuív TD, Minister for Social Protection has today (Tuesday 6 July 2010) said that the terms of the Department of Social Protection’s mortgage interest supplement scheme (MIS) are to be revised. “The revisions,” said the Minister, will “ensure State support for those unable to deal with mortgage arrears is better targeted, consistent and easily understood and will seek to ensure that lending institutions share responsibility with the State in a balanced way,” in relation to mortgage arrears.

The announcement today regarding the revision of the mortgage interest supplement scheme coincides with the publication of the interim report of the Mortgage Arrears and Personal Debt Review Group, chaired by Mr Hugh Cooney.

The revisions to the mortgage interest supplement scheme announced today come on foot of the publication of a review undertaken by Minister Ó Cuív’s Department of Social Protection that covers policy, administrative and legal issues in relation to the mortgage interest supplement which is currently paid to 16,700 people. Last year’s expenditure on the scheme was €60.7m; the estimate for 2010 is €63.9m. The average weekly payment is €79.00.

The mortgage interest supplement scheme aims to provide short term support to help people repay interest on their mortgage on their home.

Publishing its contents today, Minister Ó Cuív said: “While the current mortgage interest supplement scheme administered by my Department is assisting and supporting thousands of people, in my view eligibility criteria and other aspects of the scheme could be more focused and straightforward. This has been borne out by the findings of the Review Group and I look forward to implementing changes to MIS based on this report.”

The Minister said today that he will actively consider the report and has asked his officials to draw up a draft time-table outlining possible timescales for the implementation of various elements of the report.

Some of the proposed reforms for a revised scheme which are recommended by both the Department of Social Protection’s Review Group and the Mortgage Arrears and Personal Debt Review Group - include:

The rule preventing payment of MIS to couples where one person is working in excess of 30 hours should be removed.

All legal action by the lender should be postponed while mortgage interest supplement is being paid to the lender where the borrower has adhered to the agreed arrangement with the lender.

Given the scale and cost of Government support in this area, the Group considers that the State should not provide support above market rates of interest. Payments from the State are risk-proof and therefore, high rates of interest because the loan is at a higher risk of default are not justified.

The rule excluding MIS where a property is offered for sale is unduly restrictive in the current market and should be suspended and re-introduced when the housing market recovers.

MIS should not be provided where repayments of the capital element of the loan are being made to the lender. This will insure the borrower is not placed under additional financial stress.

The applicant must renegotiate a six month period of forbearance with the lender before the State intervenes in providing MIS.

An overall time limited period in the region of 2 years should be introduced to ensure that MIS does not impact on behaviour in terms of seeking or retaining work and that it remains as a short term scheme. The exact period of time will be subject to discussion with all parties and the findings of the next report from the Cooney Group.

Minister Ó Cuív added: “The basic purpose of the mortgage interest supplement when established, was to ensure that a person who suffered a short-term loss of income would not have the family home repossessed due to an inability to meet the mortgage repayment. The Review Group has found that this objective remains valid even though recent forbearance policies (such as the Government’s Code of Conduct on Mortgage Arrears) ensure that repossessions are far less likely in the current climate.”

Minister Ó Cuív concluded: “The Group consulted with a wide range of interested parties and has carried out extensive analysis of the scheme and its role within the broader housing area. The Group has noted that MIS is only one element of the range of supports required by those in difficulty, and in this context has worked closely with, and been informed by, the work of the Mortgage Arrears and Personal Debt Review Group, chaired by Mr Cooney.”