Fergus O'Dowd (Louth, Fine Gael)

Nobody has a monopoly on wisdom and this debate is a constructive engagement by a democratic Parliament to bring the best ideas to the fore and resolve this issue without excluding any views. Tens of thousands of young people who bought their homes during the boom have since lost their jobs and are saddled with mortgages they cannot repay. The interdepartmental working group was established in an effort to address that issue. I acknowledge Deputy Fleming's point about private debt and mortgage debt but mortgages represent a heavier burden than other forms of debt. If we can deal with the mortgage issue, people will then be able to start dealing with personal debts. At the end of the process it is hoped that the economy will start to recover and when the money is coming in through increased employment people will be in a better position to repay their mortgages. The Government's economic strategy aims to bring growth back to our economy. Thankfully, it is predicted that we will experience growth this year, leading to increased wealth and job creation. At the end of the day, that is the only solution.

Several Deputies have spoken about people with distressed mortgages who have gone to bed hungry in order to service their debts. I have met others who are relying on their parents for assistance in meeting their daily needs. The problem affects not only young couples but their parents, grandparents and extended families, who are being asked for financial support.

Having regard for increasing problem of mortgage arrears, the economic management council requested the working group to consider further necessary actions to address mortgage difficulties. The two objectives it set were to assist those who face real difficulties in remaining in their homes, where appropriate, and distinguish between those who cannot afford to pay their mortgages and those who chose not to do so. The working group, which comprised representatives from a number of Departments and bodies, finalised its report at the end of September. The report concluded that those who can pay their mortgages should do so and that blanket negative equity debt forgiveness is not appropriate.

The dominant response to the problem to date has been extended forbearance measures. This is a helpful response in many cases but the adoption of long-term forbearance will not be sufficient in all cases and it must be recognised that some mortgages are currently unsustainable. I have dealt with several cases in which people have left their homes because they knew they could not repay their debts. The surrender of a house can cause significant trauma for people. Where a person's future prospects are such that he or she is unlikely to be in a position to build up reasonable equity in a property, more sustainable solutions will have to be advanced by banks and the State. The report sets out a range of possible solutions, as well as a decision tree approach to aid assessment of individual cases. However, these solutions are not intended to be exhaustive or prescriptive and they will need to be developed over time.

One of the possible solutions set out in the report is a trade down mortgage. This could be suitable where owners of high value or large properties trade down to a more affordable mortgage. Split mortgages might be suitable where a household is not in a position to meet the commitments of a full mortgage but could pay a reduced amount and perhaps repay the remainder over time from income or capital increases. Where an alternative solution cannot be reached, the borrower and lender could agree to sell the property and resolve the shortfall in the mortgage in an appropriate and reasonable manner, considering the borrower's circumstances. The State also has a significant role to play in circumstances where a person with a distressed mortgage qualifies for social housing support. The group proposes two new mortgage-to-rent schemes which would be administered by the Department of the Environment, Community and Local Government. These schemes would utilise approved housing bodies or leases to local authorities.

In each case, the key criterion to qualify is that the person with the distressed mortgage and the person's house must qualify for social housing. In line with previous reports, the group was of the view that the unlimited duration of the Department of Social Protection's mortgage interest supplement scheme is inappropriate. The scheme is an important support for people in short-term or medium-term difficulties, but it is not sustainable for the State to support private home ownership indefinitely. In long-term situations, mortgage-to-rent type solutions represent a more appropriate and sustainable social housing solution. Accordingly, the group reiterated the recommendation in previous reports that the mortgage interest supplement scheme should be time limited. The group also considered that a more specialised mortgage advice service will be needed to advise and assist mortgage holders to make decisions in their best interests and to act as a consumer advocate in this area. This service could be linked to the money advice and budgeting service, MABS, which does a fantastic job. All of my colleagues in this House are familiar with scores of people who go to MABS to get professional, good and helpful advice.

The need to reform and update our bankruptcy and personal insolvency law underlies all the approaches to problem mortgages that are set out in the report. The report points out that the mortgage arrears problem will not be resolved in the absence of effective bankruptcy legislation. A number of key elements of the report have already been implemented. The Minister of State, Deputy Penrose, will shortly launch two mortgage-to-rent schemes in line with a recommendation in the report. The schemes will operate on a pilot basis initially. They will be subject to prompt review before they are more widely rolled out. Under each scheme, people in extreme mortgage distress who are eligible for social housing will be able to remain in the homes as social housing tenants. Either the lending institution or a housing association will take ownership of the property.

The Minister, Deputy Shatter, has done extensive work on the heads of a personal insolvency Bill, as set out in the report. This will be published shortly. The Minister, Deputy Noonan, has instructed the banking division of the Department of Finance to begin discussions with the banks to ensure the measures set out in the report are implemented speedily. The Government obviously arranged for this debate to take place in the House. The Joint Committee on Finance, Public Expenditure and Reform will also consider the report. The key point is that the Government wants to hear the views of all parties on this important issue. The strong views we all have comprise the collective wisdom of this Parliament. No effort should not be made and no stone should be left unturned as we try to help those who are facing these serious difficulties. At the end of the day, the key point is that we need to restore our economy to growth so that people can get jobs and return to repaying their mortgages. Notwithstanding the terrible recession we are experiencing, people need to be able to continue with their lives.

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