Terence Flanagan (Dublin North East, Fine Gael)

I thank the Labour Party and, particularly, Deputy Ciarán Lynch, for bringing forward this motion, which aims to give homeowners some breathing space through the introduction of a two-year moratorium for those homeowners who find themselves unable to pay their mortgage arrears.

We are facing a serious repossession timebomb in this country, as Deputy O'Donnell said. Thousands of young people and families are facing mortgage difficulties as a result of they or their spouses having become unemployed or having had to take a cut in their take-home pay. Therefore, they are unable to adequately service their mortgage payments. Clearly, it is not all the fault of the homeowners. The banks offered them 100% mortgages and the Government helped create and fuel the artificial property bubble and did not cry stop at any stage to end the property madness.

According to housing agency, Respond, 25,000 families currently in mortgage arrears face the possibility of repossession of their home next February when the mortgage moratorium expires. This is a very real issue for people. It is a major timebomb that needs to be defused by the Government, which is in a state of denial. It is not listening to what is happening on the streets and in every town and city. This problem will not go away.

The ESRI forecast that by next year 200,000 families will face negative equity, whereby the value of their mortgage will exceed the value of their home. It is shocking for these people to find themselves in that position. They will have to continue to pay their mortgages for the next 20 to 30 years but their homes will be worth less than what they paid for them.

The problem of repossessions has been exacerbated by the fact that 15,000 people took out subprime mortgages during the past five years. This is a concern. When we read in the newspapers of companies such as Start Mortgages, Springboard Mortgages and others taking repossession orders, clearly, there is something wrong.

The Government should have been worried as well when we heard the Master of the High Court state, in February of this year, that there will be an avalanche of repossession cases over time and that repossessions will be of historic proportions.

The Government has turned a blind eye to the problem of sub prime and has not tackled it. That is why we see, through the High Court, the number of homes being repossessed. For instance, yesterday in the High Court 18 repossessions were granted. The Minister of State's amendment, stating that only 20 houses have been repossessed to date, is clearly incorrect. The number is double that amount. Some 38 houses have been repossessed, when one considers the 18 that were repossessed yesterday. These are real cases involving real families. I accept the point that some of the houses were not occupied, but the others were. Families are distressed and are being put on to local authority waiting lists which are long enough already, and this should not be the case. Of the 76 cases heard yesterday, 28 were taken by sub-prime lenders, which highlights the Government's failure to regulate the sub-prime industry.

The Courts Service annual report for 2008 reported 238 High Court possession orders in 2008, compared to 109 in 2007 and 61 in 2006. The numbers are on the increase and the Government is in denial by stating that they are not. The total number of houses repossessed last year was 99.

There are homeowners who have received redundancy lump sums and that money is being used to service their mortgages. We have not seen the full effects of the current recession, and all that will happen in time. In addition, when the NAMA legislation, which is on Report Stage here this week, is passed next week other lenders will go ahead and look to repossess homes.

The Government needs to get real on this issue. It needs to extend the moratorium, as the Labour Party has looked for. Homeowners cannot be reliant on the mercy of judges to ensure they remain in their homes. What we have in place is grossly inadequate - a voluntary code of practice for banks and an unregulated sub-prime industry.

Since January last I have called continuously on the regulator to draft new industry guidelines on reckless mortgage lending and to create new penalties for mortgage lenders and professionals found guilty of reckless lending and deception. Sadly, these calls have been ignored and we continue to see the results of the regulator's inaction, with the number of repossession cases escalating every month. The Minister must move urgently to regulate the sub-prime industry and also introduce proper penalties for those who commit a crime.

Clearly, the mortgage interest subsidy scheme is not working because one partner must be at work. It also provides assistance only for the interest part of a loan and excludes those with sub-prime mortgages, at whose cases the Minister might look again.

As much as moratoriums provide breathing space and help for homeowners in difficulty, they do not deal with the underlying problem of those in mortgage difficulty. That is why we, in Fine Gael, looked to introduce an amendment to the National Asset Management Agency Bill which was shot down on Committee Stage but which we will re-introduce, as Deputy O'Donnell stated, on Report Stage. The amendment would provide a social benefit for homeowners and ensure that NAMA would take over the loans of those whose homes are about to be repossessed and take an equity share, the homeowners would deal directly with NAMA on the matter, and there would be strict eligibility criteria.

The Minister needs to look at what other jurisdictions have done to rectify this situation and take on board what has been stated already in this debate.

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