Charles Flanagan (Laois-Offaly, Fine Gael)

I welcome what the Minister is doing here, which is important and practical. I am not sure, however, whether the Government appreciates the extent of the problem. More than 700 new repossession cases were initiated in the High Court in the nine months to March of this year, compared to less than 350 during the same period last year, according to the Courts Service. A breakdown of these figures shows that 207 repossession cases were taken in the High Court in the first three months of this year compared to a mere 95 in the first quarter of 2008. There is a real problem here for Government. A voluntary code of practice has been entered into by some of the financial institutions, which needs to be constantly monitored by Government.

The Minister mentioned that applications are being brought to the High Court for repossessions in cases in which the sum in arrears is quite small. I recently saw a case in which GE Money took an application for possession of a house in the High Court when the sum outstanding was a little over €4,000. This is a real problem being faced by people in financial difficulties. As the Minister said, these people are at the mercy of a High Court judge and in some cases there is no appearance because they are feeling hopeless and desperate. This is a difficulty.

I agree fully with what the Minister said about the difficulty with people responding to notices from the courts. They are served with notice to appear in the High Court in Dublin, usually in the following eight or ten days. One of the reasons put forward for not taking such actions in the local Circuit Court was that people were reported to have said they did not want to attend a court where they would be readily identified, where there may have been neighbours sitting near them or watching them going in or out, and where the local papers might carry reports of the story, which would not necessarily happen in the High Court. However, on balance, what the Minister said is correct. It is important that we as legislators are prepared for what will be a very difficult year in terms of repossessions.

I wonder about the mortgage code that has been drafted and agreed between the parties and which gives guidance to lenders, urging them to deal sympathetically with borrowers in times of difficulty and facilitate escape routes if they wish to short-circuit the code, as they will. However, there is an issue with regard to responsibility of lenders or building societies.

I was informed of particular case in my constituency recently. I am sure every Member of the House can recount such details but it is important that we appreciate the extent of the crazy lending practices that went on. A man came to my clinic with a notice for repossession of what was originally a council house belonging to his mother which had been left to him on her death. Like many during the course of the boom years, this man was encouraged by the former Minister for Finance, Deputy McCreevy, and others to get a top-up mortgage, although it was not in fact a top-up because he did not have one before.

This man had no accounts and clearly did not have any capacity to repay the mortgage because he was not working. He got a mortgage of €120,000 from a building society but fell into arrears, and the building society took an action for repossession after a mere six months. It transpired that the man had never had a PPS number. How that could happen I do not know. I inquired of the lender how a sum of €120,000 could have been advanced to a person who did not have a PPS number, but the correspondence was passed from Billy to Jack. They were not interested in the manner of negotiation of the loan but rather in how the money was to be repaid. This man faced his ruin. The money was spent. His favourite football team was Liverpool and he did something he had never done before, visiting Anfield six or seven times in the course of a season, courtesy of the building society. Now his home which was originally a local authority property and has been in the possession of his family for generations will be taken from him and sold on the open market at a price substantially less than the amount borrowed. The building society does not care that this man will be on the street. It is absolutely essential that proper codes are in place to ensure citizens are protected from such reckless lending on the part of building societies.

I do not know whether the Minister intends to have the legislation in force by mid-July. If so, I do not intend to delay the House beyond what it is necessary to say. What the Minister proposes will reduce the element of cost. It has been common practice for banks to take a case to the High Court, issue a summons, follow up with the paper work, get the order for possession and then tack thousands of euro in court costs onto the sum of mortgage arrears, thus ensuring in many cases that people who provided their family home as security would not be in a position to pay. Several High Court judges have expressed their dismay in recent times at cases in which borrowers do not make an appearance. By allowing such cases to be heard in the Circuit Court, there may be a higher rate of attendance whether by those against whom the order is made or by their representatives.

The manner in which financial institutions have dealt with loan applications has given rise to a process that is now inevitable, with more than 700 new cases currently before the courts and hundreds of High Court actions ready to be initiated. The prospect that they will now be taken in the Circuit Court in the autumn session will probably not ease the pain to any great extent. A warrant for repossession of a person's home is a most serious engagement. It is important that the people against whom warrants are outstanding can be dealt with in a way that is absolutely sympathetic and that the repossession of a person's home shall in all cases be the absolute last resort.

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