Ciarán Lynch (Cork South Central, Labour) | Oireachtas source

I apologise. I meant Deputy Catherine Murphy. Deputy Ellis and I are on the same psychic level, so I know what he is going to say in a moment. Deputies Murphy and Stanley referred to the Housing Finance Agency as the vehicle that provides funding to local authorities that want to borrow money. Those borrowings end up in three specific categories. The traditional tenant purchase loan, which is provided at a rate of 3% for every year occupied in the house, up to a total of 30%, is the old scheme we all knew. The borrowings can also end up being used as part of the shared ownership approach or as affordable housing loans. The difficulty with the standard tenant purchase approach is that people may be in arrears. The difficulties with loans in the two other areas are far more complex. It can be taken as a given that every affordable loan issued from 2005 or 2006 onwards is now in negative equity. That is in addition to the fact that such loans might also be in arrears. At the top of the bubble, affordable housing was priced at approximately €250,000 in certain areas of Cork. Those properties are not within an ass's roar of €250,000 today. They would be lucky if they reached €125,000 or €130,000.

The particular difficulty with the shared ownership programme relates to the fact that when it was first rolled out, houses in an estate in the Douglas area of Cork were sold for £40,000, half of which was taken on a mortgage and half of which was deferred over a 20-year period. That valuation became somewhat skewed, obviously, when we went into the euro, etc. The real difficulty arises upon the completion of the 20-year schedule that was agreed at the outset. The owners do not have to clear the euro equivalent of £20,000. They do not even get 50% of the current market value of the property. They have to make a balloon payment that is far in excess of half of the current value of their property. It is as if the shared ownership scheme was based on the premise that property values would keep increasing into the future. People now have balloon payments that are greater than the entire proportionment of the property. One could buy the property for less than what the half-share should actually be.

In her presentation, Dr. Norris said the Housing Finance Agency had €59 million in reserves at present. She said those reserves will increase to €74 million in the coming period. I accept that the reserves are needed, but should the increase of more than €20 million in the reserves be examined? Could we consider an element of write-down of the debt, particularly with regard to the shared ownership programme? We have discovered that the programme was flawed from the outset. It has put people of 60 years of age in impossible situations. They cannot remortgage. They cannot get another 20-year schedule because one's schedule has to be completed by the time one reaches 65 years of age. We should forget about using the mortgage arrears resolution process, which was mentioned earlier, because it is designed as a deferment process. We are bringing forward the insolvency Bill because the mortgage arrears resolution process keeps pushing the problem down the line. The process will not resolve the dilemma of those who live in shared ownership properties. They need a significant debt write-down. Is there a possibility that the reserves that have been accrued by the Housing Finance Agency could be used to reduce those debts?

I ask the witnesses to park those issues while I mention another matter of lesser importance that is nonetheless worth considering. In the risk analysis section of their presentation, they said that the agency's loans are protected. As Dr. Norris knows, my view is that mortgage indemnity insurance should be mandatory in this State, just as car insurance is. If one takes out a mortgage on a house, one should be required to have it insured, just as one has to insure one's car. There seems to be some kind of model out there at the moment. If I took out a local authority loan that was financed by the Housing Finance Agency, what requirements would the agency place upon me with regard to having that loan insured at the end of the process?