Mr. Brendan Burgess:

I would like to look at the bigger picture. As legislators, it is absolutely incumbent on committee members to look at the bigger picture when considering mortgage issues, mortgage arrears, vulture funds or personal insolvency legislation. The biggest number is that there are 300,000 borrowers, citizens of this State, who are paying the highest mortgage rates in Europe. I have been campaigning on this issue for a number of years. The response of the banks, the Central Bank, the Department of Finance and everybody else is to point to the high levels of arrears and non-performing loans in Ireland to justify charging extra. I do not accept that excuse is an explanation for all of it. It is an explanation for part of it. However, if we want to protect the vast majority of responsible borrowers, it is absolutely essential to allow the banks to deal with the very small percentage - about 2%, roughly 10,000 borrowers - who are not prepared to pay their mortgage. If I do not pay my mortgage, then Dr. O'Hagan-Luff and Mr. Hall will be asked to pay it for me. I do not get free accommodation. It is free to me, but somebody else pays it for me.

There are 24,000 borrowers who have been arrears for more than two years and 10,000 borrowers have been in arrears for more than five years. These are recent Central Bank figures. This would not be tolerated anywhere else. It is an extraordinarily high level of arrears. The vast majority of people take their responsibility seriously. They are the people I am most interested in. I regularly go down to the repossession courts to watch what is happening. I invite all of the committee members to go down to their local repossession court or to the one in Dublin to see the carry-on that takes place and how difficult repossession is. In my submission, I have outlined three case studies from last Thursday. There is no selection or bias here. These are three from last Thursday alone. I have set out the details. I will deal with one in particular. I am using the borrower's initials, SM. She is a Start Mortgages customer. She borrowed €267,000 in 2008 and today owes €350,000. The last time she paid was six years ago. She is not that unusual.

She is unrepresentative of mortgage holders in general but she is not unrepresentative of many mortgage holders who are before the courts and have orders granted against them. She had the usual two years or so of a mortgage arrears resolution process, when the banks were dealing with customers before getting anywhere near coming the heavy with them. She has been in the courts process for four years and her case has been adjourned on multiple occasions. She said she was going to go from mortgaging to renting and she got an adjournment on the basis that she would engage with MABS. However, she did not engage with MABS and it stopped representing her. She is investigating a personal insolvency arrangement and has excuse after excuse but she is paying nothing. It is the rest of us who are paying for her.

I would like vulture funds to be redundant. I do not particularly want to see them operating in this country but if we are not going to allow the banks to repossess houses, vulture funds are necessary. A bank repossessing a house with a mortgage with a nominal value of €100,000 would probably collect in the region of €80,000 if it were allowed to do so, with a 20% write-off in the process. If it sells the house to a vulture fund, it would get €50,000 or €60,000 so it loses money by doing so. It would be much better to allow the bank to repossess the house.

Having said all that, I want to see protection for responsible borrowers. Some vulture funds have been particularly aggressive in their dealings with customers. Many borrowers got into difficulties some years ago and have now recovered but if they had been with any other bank, their arrears would have been capitalised. They would pay a lot of capital and their mortgage would be paid off at or around their retirement, albeit at a later time than originally scheduled. They were being harried by the vulture funds, particularly Tanager, but that has now changed. Tanager has become much more open and is facing challenges of its own, including a High Court case with Rolf Kane and the discovery that it has been calculating repayments incorrectly. Tanager is now engaging fairly well with borrowers and they are getting good treatment from the company.

In a recent case in Galway which was written up on my website, askaboutmoney.ie, AIB initiated legal proceedings when the woman involved was €2,500 in arrears. If members were to go down to the courts, they would see that the biggest users of legal action, by any measure, are AIB and Permanent TSB. They would not see the vulture funds there too often.

A cohort of people cannot pay their mortgages, or are really struggling to do so, but are doing their best. In my view, they should be getting a mortgage assistance payment. If I cannot pay the rent on my home and I am either on social welfare or a low earner, I will get the housing assistance payment which will help me stay in my home. However, we do not give anything to borrowers and that makes no sense. If I cannot pay my mortgage, I get no assistance from the Department of Employment Affairs and Social Protection. If I sell my house to Mr. Hall and pay rent to him, however, the Department will give me housing assistance payments. A mortgage assistance payment would be very cheap for the Government to operate because, even at the higher rates of interest in Ireland, it is much cheaper to rent money than to rent property. This is at standard variable rates but at tracker rates the Department would be able to pay the mortgage in full - interest and capital - for less than its housing assistance payments to a fund that buys one of these houses under the mortgage-to-rent scheme. A mortgage assistance payment would help far more people, particularly as mortgage-to-rent is an extremely complicated way of dealing with things and the Department of Finance would be very reluctant to see its widespread use because it can never be reversed. Once my house is sold to a fund, it becomes social housing for life unless my situation changes and I can buy the house back at a discount.

In my appendix, I have included some of the figures for the number of mortgages in arrears and how many are family homes, on which I focus as distinct from commercial lending. There are 11,400 non-performing loans on the market. I was delighted that Permanent TSB pulled its split mortgages yesterday. The Central Bank and the Single Supervisory Mechanism have a crazy definition of non-performing mortgages and Permanent TSB had very profitable split mortgages which it was being forced to sell. I do not know what has happened and its explanations have been quite vague. I also list examples of what people have said about all this. Ulster Bank sold mortgages on 900 family homes a couple of years ago. All the loans were in the courts process but, despite that, the bank felt it was better and simpler to sell them because otherwise they would have been stuck in the process for number of years.

I would like the committee to focus on the bigger picture, which is the very high mortgage rates being charged because we do not allow banks to repossess. If we insist that banks are not to be allowed to repossess houses, we should not complain if the loans are sold to vulture funds.