Ms Carol Dunne:

This is a good opportunity for us to speak before the committee. I am joined by my colleague, Ms Anna Walsh, the co-ordinator of Waterford MABS. Today we will bring her experience in dealing with families in mortgage arrears for the committee's interest.

The Money Advice and Budgeting Service, MABS, is a State service funded and supported by the Citizens Information Board, under the Department of Social Protection, and it has been in operation since 1992. We have over 20 years of experience as a trusted intermediary in debt resolution, with that trust won through experience, expertise and outcome. MABS operates a network of 51 local companies in over 65 locations, as well as two national companies, a helpline and a website, mabs.ie. The work is supported by the websites keepingyourhome.ie and citizensinformation.ie. There is also the mortgage arrears information helpline, run to date by the Citizens Information Board but which will transfer to MABS from 1 June this year.

Committee members would be familiar with the MABS process, which centres on the particular circumstances of each unique client, seeking to maximise income, examine outgoings, control spend and establish reasonable and sustainable offers to make to creditors. These offers are designed to create sustainable arrangements, which allow a client to discharge his or her obligations to a creditor while at the same time maintaining an acceptable standard of living. It is our experience that sustainable arrangements are those which take a holistic approach to the individual client, examining all debts, commitments and income. The complex, multi-layered problem which is over-indebtedness requires a solution which is equally multi-layered, and there is no silver bullet. All debt and creditors must be examined in the context of the individual client.

The current mortgage crisis is exceptional in its scale, both in terms of the numbers of families affected and the value of the debt involved. Of 20,000 new clients who came to a MABS office in 2013, slightly less than half, at 48%, presented with mortgage difficulties. Two thirds of calls to our MABS helpline pertain to mortgage debt, with support being provided through that channel as appropriate. The vast majority of those living in mortgaged accommodation with debt difficulties, at 36.5%, have a recorded status of married with children. Age of clients tends to be between 41 and 65, with 55% of clients in this age group. Approximately 40% of clients are waged, with the next highest income source coming from the 18% of clients on jobseeker's allowance. Geographically, there is the unsurprising finding that clients correlate with high population centres.

Of those clients presenting with mortgage issues, 45% were already in the mortgage arrears resolution process, MARP, and being supported by lenders, with 54% outside that process. The focus on mortgage debt is essential in that the consequences of failure to maintain payments on mortgage loans can result in the loss of a home. MABS would add, however, that a balanced approach is essential if the client is not to be disadvantaged by the system designed to assist in the resolution of a debt. One of the difficulties we see in participation in a MARP and its necessary focus is the negative consequences it can have for a client. Failure to adequately address other pressing debt problems can result in exclusion from financial services and loss of access to credit. We have seen considerable incidence of this within our client base, and lenders within the secondary tier of debt require a minimum level of repayment to maintain credit status. When this is lost the client has no support for even the simplest household emergency. In a recent case a client was left with no access to credit following a death in his family, with apparently no option but recourse to an unlicensed moneylender if support from charity or friends could not be sourced beyond an exceptional needs payment from the Department of Social Protection. Clients can find affordable avenues for credit are closed and the only credit available is through high-cost moneylending.

Some clients, having defaulted on payment arrangements, are forced to close otherwise functioning accounts in order to agree long-term sustainable solutions with their mortgage lender. Without any social lending programme many distressed borrowers could be tempted to access finance from unlicensed sources. MABS and the Citizens Information Board have made proposals on social lending models and look forward to seeing progression in this area.

The cost associated with over-indebtedness and the loss of the family home is not confined to the individual, although that is where it is most keenly felt. The cost is also borne to an extent by the Exchequer through the necessary resourcing of other supports, including potential accommodation provision. There is therefore an imperative on an individual, societal and economic basis to deal with the crisis effectively. We echo the comments of Mr. Joyce and Ms Blackwell in their critique of the code of conduct on mortgage arrears. There are benefits in that there is a protocol in place, although our experience has not always been positive. We know the success of the MARP will hinge on a comprehensive and factual standard financial statement, SFS. It is incumbent on the lender to support a client in completing the SFS fully, comprehensively and - most importantly - realistically. It is also in the interests of all parties to do so as any other
approach will result in failed agreements.

Our experience has demonstrated that some lenders insist on completing this SFS over the phone with a borrower; we argue that an amount of informed preparation is required on the part of the borrower in advance of the completion in order to address this very important issue in any meaningful way.