John Halligan (Waterford, Independent)

It is as well to remind ourselves of the latest statistics from the Financial Regulator that show 56,000 householders were in arrears at the end of June 2011. I have little doubt the figure will now be well in excess of 60,000. Coupled with an estimated 40,000 households which have had their mortgages restructured and 19,000 households in receipt of mortgage interest supplement, or welfare payment, it is reasonable - even conservative - to assume there are now considerably more than 100,000 households in difficulty with their mortgages. I welcome that the Minister will initiate a report which will be brought before the Dáil. However, it will do little to ease the suffering and financial hardship endured by people in homes throughout the country. The report raises many more questions than it answers for many of the householders who are tearing the hair out of their heads wondering, come the weekend, how they will pay their mortgage.

I have a number of questions for the Minister who may be able to answer them. Was there any consultation with any of the front-line groups such as the money advice and budgeting service, MABS, New Beginning or the Free Legal Advice Centres, FLAC, all groups working with distressed home owners day to day? They have some good proposals which I do not have time to put to the Minister but am sure were sent to the Government. Did we take into consideration the many people who appear to be off the radar, for example, those who took out loans through city and county councils on shared ownership schemes? Many of these people are in distress and in mortgage arrears. Did we enter into consultation with the individuals in the respective councils who deal day to day with those people who are trying to negotiate their mortgage terms?

Why is there no costing of the report's proposals? I missed the Minister's introduction and perhaps it was contained in it, but I put the question. Who will fund the new quango, the independent mortgage advice service? Who will fund the purchase of homes from distressed borrowers? How exactly will local units of foreign banks be forced to take a hit on their loans? We need to have answers to these questions. Who will fund the additional cost of housing those who will inevitably lose their homes, as the report states? Why does the report in effect offer no prospect of a debt-free future by virtue of it postponing reform of bankruptcy legislation that would take into account people's overall means and needs, a matter that has been discussed in this House on a number of occasions?

I refer also to the Government's election promises in regard to mortgage relief for those in negative equity which would have allowed savings of about €166 per month. The Government also pledged to force banks to squeeze their own costs before they squeezed those of customers to help holders of variable rate mortgages. The negative equity disaster has left hundreds of thousands of young families trapped under a mountain of debt they will never be able to pay off in their lifetimes, no matter how long or how hard they work. Whatever earnings they bring in, they cannot pay because they are in so much debt. Contrary to what some people may say, this negative equity was caused not by reckless borrowing but by reckless lending by the banks. We do not want to go through that matter all over again but it is a fact. These are the same banks into which the Government has, to date, injected €63 billion of taxpayers' funds. Last July the Government gave €19 billion of capital to Irish banks to cover potential future losses on loans. Surely some of those funds could have been put to far more productive use in restructuring negative equity mortgages on family homes? The Minister might return to the House on that point.

I fully acknowledge the mortgage arrears problem is serious and is an immediate priority for the Minister, but I am disappointed that no provision of any kind has been made for those who, in spite of being in negative equity, are just about making their mortgage payments at the expense of other basic necessities. How many of them are dreading the next budget? They are just about paying their mortgage - nothing more - and are not able to invest into the economy. None the less more money will be taken from them which will drive them into arrears.

I refer to the mortgage to rent scheme, the State rental scheme whereby local authorities take ownership of mortgage properties and rent them back to residents. I believe the scheme is ill-conceived, the tangible proof being that the report is geared to minimise the risk to banks, not to the home owners. The Government is buying homes for social housing by seeking funds from the original borrowing institution. This is a win-win situation but only for the banks. Little thought has been put into how morally demeaning it would be for a householder who, having put thousands of euro into his or her home, will lose ownership of that property but must still pay to keep the same roof over his or her head. These many people are not responsible for what has happened in the economy and will face a mortgage shortfall into the bargain. That is not fair. It is thoroughly unfair to those people who are not responsible for this situation in the first place. Surely a reduced mortgage payment by a householder, whatever sum he or she can realistically afford, is a far more reasonable solution than trapping people in an interminable rental situation.

I spoke in the House some months ago about renegotiating mortgages, which surely makes sense. The Minister will know that when people go into arrears by more than €5,000, €6,000 or €7,000, they give up paying because they do not see any point in paying more. We should have forced the banks to take payments based on people's incomes, a payment of a reasonable amount every week. That would mean that banks would get something every month. This is not happening at present in spite of all claims to the contrary. In The Irish Times today there is a report of people who came to court with proposals but the banks said they were having none of it. The banks are not being fair to people who are going in to renegotiate.

I know the Minister must meet these people because I do every day of the week. They want to keep their homes, and while they cannot afford to pay €600 or €1,800 a month, they can pay something. Why can we not commit the banks to this plan of a person paying something based on what he or she earns rather than have them put that person out on the street or drive them into negative equity? Simply put, that is the way forward. I am not an economist by any stretch of the imagination but I meet people in my constituency every day of the week who are in arrears with their mortgage or suffering negative equity who do not want to be in a position of having to tell the banks they cannot pay them.

The Minister should look very carefully at the proposals made by MABS on how to deal with negative equity and mortgage arrears. I reiterate there must be a proposal in this document whereby a person can say to the bank that they have reduced earnings because they have lost their job or are on two days a week or whatever, and we should be able in that instance to force the banks to accept a percentage of whatever that person is earning and ensure they do not lose their home. At least the bank would get something.

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