Willie Penrose (Longford-Westmeath, Labour)

This is one of the most important debates we will have in this Dáil. Like many of my colleagues, I wish we did not need to have it. I hope for the sake of young couples and families around the country we will need to have it only once.

Almost three years ago, in December 2008, the present Tánaiste, my party leader, Deputy Gilmore, described the mortgage arrears crisis as a ticking time-bomb. The ticking grew steadily louder for many months and it has now exploded. At the time, the previous Government chose to do what it had done for years when anyone raised a concern about the ballooning housing market. It tried to shout him down and deny the existence of a grievous problem. The problem of mortgage arrears is the most painful, most shameful and most acute legacy of the boom years. The time has come when we can no longer keep kicking the problem down the road.

This report contains wide-ranging, meaningful and comprehensive measures but does not purport to be the final word on the problem. The Government is not holding it up as a panacea. The problem is simply too complex, as Deputy Clare Daly noted. We welcome inputs and contributions from elsewhere, whether in this House or beyond. I met the New Beginnings group this week and was keen to examine its proposed solution which is underpinned by key principles that should be explored and evaluated. No solution to the mortgage arrears process should be discounted. Perhaps the most important lesson to be learned from this report is that there is no one solution. It will take a wide range of measures to even begin to resolve this most intractable problem.

We need to be realistic. We should avoid irresponsible claims that there are easy solutions - there are not. For every solution proposed there are consequences - for the Exchequer, the taxpayer and other mortgage holders, for people who decided not to buy a home and for banks which have a significant role to play in resolving this issue. There is a collective responsibility to deal with the problem. We cannot cut loose those whose lives have been devastated by chronic arrears. They cannot be left to sink or swim without assistance. It is right that all of us, as a society, should contribute and it is in our national economic interests that we should do so.

To that end the report sets out a range of recommendations, targeting households with arrears problems of varying degrees. Mercifully, not all households in arrears will be in that position permanently. Many will recover and, in time, will return to paying their way. These households do not need and would not want the State to intervene permanently in their housing circumstances. Forbearance will work for some of these households and although these are worrying times for them many will emerge on the other side given time and proper breathing space.

Others with more pervasive arrears problems will need forbearance and temporary income support from the State through mortgage interest supplement. Demand for this support has, as one would expect, grown very considerably in recent years and has increased more than fourfold since 2007. It will continue to play an important part in supporting people in their efforts to keep the show on the road and remain home owners, although it must be recognised as having limitations. For some householders, being a mortgage holder and a home owner is no longer sustainable. It gives me no pleasure to say that but it is a fact and must be recognised. Only when we recognise this painful fact can we begin properly to plan solutions.

Even in advance of the report, my officials have been working on possible mortgage-to-rent schemes, identifying two variations. These would target householders whose mortgages are unsustainable and who meet social housing eligibility requirements. Under each scheme the household will get to remain in the family home although it will no longer be the owner. Instead, ownership will transfer either to a housing association or to the bank which provided the mortgage originally. Where a housing association becomes the owner it will do so by acquiring the house at market value from the bank after the house has been voluntarily surrendered by the mortgagee. A discount will apply to reflect the benefit to the bank of avoiding legal costs. The acquisition will be financed through a mixture of loan finance, provided by the bank, and from Exchequer funding. The householder will move from being a home-owner to being a social housing tenant, paying a differential rent based on his or her new household circumstances, and the housing association will lease the property to the relevant local authority. Under the bank-owned option, the same voluntary surrender process will take place but this time the bank will acquire the house itself which it will then lease to the relevant local authority on a long-term basis. The household will pay a differential rent as under the first option. These will be extremely helpful measures for many households that are currently facing a very uncertain future.

I want to achieve the maximum impact with these schemes and am already moving to set them up on a pilot basis. The pilot schemes will be based in a single local authority area and will involve one housing association and one bank. The pilot phase needs to be sharp and focused so that any bumps or issues which arise can be quickly ironed out ahead of wider implementation.

The Minister for Social Protection, Deputy Joan Burton, has set out reforms in her area. The establishment of a dedicated mortgage support and advice function will be a critical to households facing one of the most difficult crises they will ever experience. In the midst of the pain and anguish people are enduring, it is impossible to put a price on independent impartial advice to help them consider their options and make the right choice.

Reform of Ireland's archaic legislation is also required to bring about a resolution of the bankruptcy and personal insolvency regime. The dynamic of the relationship between lender and mortgage holder must change if the arrears problem is to be dealt with effectively and compassionately. Not all cases should go through the courts because only lawyers will benefit from this. What is required is a non-judicial settlement option to stand alongside reformed and modernised bankruptcy laws. These legislative interventions must be made either in conjunction with or prior to any ultimate solution in respect of this matter. The entire thrust of policy must be aimed at ensuring that people who find themselves in difficulty will retain a roof over their heads and that the threat of their losing their homes will be removed. People must be allowed to continue to live in some degree of comfort.

I would like to explore, in the context of the mortgage-to-rent schemes, situations to which other Members have referred, even outside the House in the course of private conversations. One Member inquired as to what would happen if a person who is a tenant or who has a long-term leasing arrangement recovered financially after a period of three or four years. We must explore the options available for such individuals. After a certain period, those who are currently social housing tenants acquire tenant purchase rights. We must explore all of these matters and that is why the scheme should be initiated on a pilot basis in order that it might be amended as we proceed. As already stated, we should not be blind to ideas from any side of the House or to those offered by people outside it, such as individuals who have served as local authority representatives for many years. Their wisdom with regard to how we might identify a solution to this massive problem should not be dismissed. Indeed, it should be incorporated within the overall process. I would be keen to examine and evaluate the merits of any proposals aimed at resolving this issue.

We have made clear the importance we attach to dealing with this issue comprehensively and promptly. We have also tried to approach the problem in a responsible and mature way, seeking to avoid raising unrealistic expectations regarding what will and will not be possible. It bears repeating that there are no easy solutions. We are open to all contributions to the debate and will consider all proposals and act on those which have merit and which stand up to scrutiny. This is not a time for anyone to take to the trenches in defence of narrow sectoral or political interests. Neither is it a time to reject solutions because they have not been tried before. We need to be bold and brave. We must examine every option and if it can contribute to solving the problem then we should try it. As stated earlier, these are not times for the faint-hearted. We must be bold, brave, imaginative and creative. However, we must also display compassion and a sense of equity, fairness and balance. In that context, I hope we will not be found wanting.

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