Ciarán Lynch (Cork South Central, Labour)

I thank the Technical Group for bringing this motion before the House. The problem of residential mortgage debt is hurtling down the tracks towards us, so it must be dealt with comprehensively. The programme for Government contains a determined and responsive plan, the key aspect of which is that people will not find themselves on the side of the street as a result of the property bubble. The primary focus of the new Government's agenda is to ensure a two year moratorium is put in place. That is not the only measure included in the programme, however. We need a comprehensive and detailed response to this problem, but there is no one-size-fits-all solution. The previous Government's position was not to address the issue at all. It established an expert group following a Private Members' debate initiated by the Labour Party in the autumn of 2009. That group issued a report on the very day the Dáil went into recess in 2010. Its findings, which were published in October or November 2010, were not debated in this House, despite calls to do so by myself and others. This is not a new issue but an immediate response is required.

Ever since the mortgage crisis started developing in 2007, we had procrastination by the previous Government. What will the new Government do about it? The first thing is to put in place a two year moratorium on repossessions to give people time to sort out their financial position, while allowing them to remain in their homes. We will do that because it is in the programme for Government.

Second, we will convert MABS into a strengthened personal debt management agency which will be established within an extensive and comprehensive legislative framework. Since one size does not fit all, we need to have such an agency to assess the individual needs of people in mortgage distress. In doing so, we will provide professional advice to those in arrears to rebalance the relationship between borrowers and lenders, which is one of the big difficulties facing those in mortgage distress. We need to make greater use of the MIS because that is required as well. The criterion to qualify for MIS is unemployment. The vast majority of people bought houses based on their income three or four years ago but this amount is no longer available to them. Private and public sector wages have reduced and the income ratio for their mortgage repayments is no longer relevant. The MIS scheme, therefore, has to be adjusted.

The three measures relating to repossession also need to change because we need longer-term solutions. To do so, the reconstructed MABS or personal debt management agency needs to assess people on an individual basis and, after two years, in order that the problem is not long fingered or kicked down the road, their case should be reassessed and if they can meet two thirds of their repayment, as recommended in the expert group's report, their mortgage should be restructured.

If they cannot repay this amount, the State needs to step in to cover the repayments and take equity in the properties. An unbelievable sum is allocated to the rent supplement scheme. If people are evicted following repossession of their homes, they will move into another house and claim rent supplement. It makes more sense to provide them with mortgage interest relief. However, householders have obligations as well and the minimum requirement for anybody in difficulty should be to pay the rent differential they would have to pay if they were in receipt of rent supplement. They would still service their loans and have financial obligations to meet but this would be done in a structured fashion.

Over time as this programme is rolled out, the State will step in and take equity in properties. We are a home purchasing nation and we will not change. We need to provide a facility for those in difficulty to ensure they will not be evicted, that the State will provide assistance and that the householder can redeem the equity the State has taken in their property after a period. This recession will not last for six months or 12 years but people need a guarantee that they will be protected by the State for a set period and that they will not lose their homes but they should be obligated to redeem the equity the State has taken in them.

See this speech in context