Jerry Buttimer (Cork South Central, Fine Gael)

I welcome the opportunity to speak on this issue. Last Friday week, I listened to Mr. Matthew Elderfield in University College Cork and during the course of an excellent discourse he spoke about the importance of the Central Bank and its statutory duty to protect the consumer and safeguard the stability of the financial system. He is right. It is the twin job of the Central Bank to mind and protect people.

This is a very difficult time for people here and the issue is not just about statistics or about a report which is left on a shelf. The issue is about ordinary citizens who are struggling, i dtrioblóid, faoi bhrú and under pressure. I welcome the fact that the majority of people are meeting their mortgage and personal financial commitments. However, these are extraordinary times and people in their personal and business lives are going through a medley of emotions which have huge implications for and a profound impact on the quality of their lives and those of their husbands, wives, children and communities. These are difficult times I hope we can overcome and there is an obligation on us all to put in place a plan to ensure this happens.

A particular obligation lies on the Government, the banks, the lending institutions and borrowers to work together. Banks, in particular, must work with people. The Minister of State present, Deputy McGinley, will understand what I am about to say. Our banks must not frighten and intimidate people, but must engage, co-operate, work and collaborate with people to reach an agreement. I am not interested in the fly-by-night merchants who are trying to rip off the system or who want to renege on their debts and responsibilities. I do not speak for them. I speak for the ordinary man or woman who bought a house or invested in a business to create jobs and who now find themselves, often through no fault of their own, in trouble.

Our banks have not helped at all. I go so far as to say that they are telling lies to us. They are lying to the Minister, the Government and even to their employees, because they are not working with and helping people in difficulty. Despite the rhetoric, the statistics and the reports they publish, they are not working with people. They must do so. People are looking to us and to Government, the Central Bank and Mr. Elderfield. I heard Deputy McGrath speak earlier on the Central Bank (Supervision and Enforcement) Bill. I wish we had Matthew Elderfield earlier and a proactive regulatory system sooner, but we did not. Fianna Fáil wants the Government to bring up workable solutions.

I note that the interdepartmental working group puts forward two core objectives which are worth analysing and tweaking. These are to assist those facing real difficulties to remain in their own homes where appropriate and to ensure a distinction between those who cannot afford to pay their mortgages and those who choose not to pay their mortgages. Is it not an extraordinary indictment of the past Government of the past 14 years that today in our cities, towns and throughout the country there are men and women struggling to remain in their homes? I was very struck by Mr. Elderfield's remarks in UCC that the State, through its taxpayers, has already assumed too great a burden in this crisis. These are the words of our Financial Regulator when speaking on the issue of mortgage arrears in Cork.

Like unemployment, mortgage arrears are a juggernaut set in motion by the financial crisis that has shattered the hopes and dreams of so many families. The report under discussion makes solutions and suggestions, such as trade-down mortgages, split mortgages, mortgage to rent, and a specialised mortgage advice service. However, this must only be the starting point in developing mechanisms for dealing with mortgage arrears. There are two distinct groups who need separate consideration in the devising of a solution to the problem, the owner occupiers and those with buy-to-let mortgages. In June, some 7.2% of owner occupier mortgages were in arrears by more than 90 days. That is up from 3.3% in September 2009. This is a massive increase. Arrears in the buy-to-let category are also increasing rapidly. The report has urged a case by case handling of distressed mortgages. That makes practical sense because no two loans or entities are the same and the changed financial circumstances of the borrowers will not have the same impact in each case. However, we cannot leave it to the banks to pick a solution from a menu of options. The banks cannot press a button and select an option. The ultimate concern for banks will be the impact of rescheduling on their balance sheets, not the impact on the life of the borrower. The borrower is a person, a husband or wife, a person with a family or a person alone living in a community and these events have a knock-on effect. The Government, as the majority shareholder in the Irish banks, must use its influence to achieve equitable solutions. It must assert its position with the banks. Perhaps there could be a role for a mortgage advice service and, instead of simply advising, it could dictate to the banks the most appropriate form of rescheduling. The Minister is correct when he says there are no easy options. Whatever solution is put in place, our concern must be to enable borrowers to fully participate in society. Whether they purchased a primary residence or a buy to let property, they could never have envisaged such economic devastation. They could not have anticipated jobs disappearing, salaries being cut, personal debt accumulating and mounting mortgage arrears.

We spoke about restructuring, which there is much of in our banks. I welcome the fact that there will be a plan and that we will be able to help people. Where borrowers actively engage with lenders, negotiating a rescheduling of the mortgage must not affect their ability to earn a living and carry on a business. Therefore, it is imperative that the credit ratings of these people cannot be affected because of a negotiated rescheduling. It is equally crucial that the Government, hand in hand with attacking the issue of mortgage arrears, reforms the personal insolvency legislation. The Money Advice and Budgeting Service, MABS, makes the point that "it is counter-productive to address mortgage arrears without simultaneously seeking to manage the issue of personal debt". The Minister for Justice and Equality has commenced reforming this area but it is also important that we do not delay in rolling out a new personal insolvency regime that facilitates people in negotiating reasonable and practicable settlements.

In conclusion, mortgage arrears is a complex problem that needs careful, balanced consideration. A solution will be difficult but we must seek a fair balance between the competing interests of the taxpayer and the social impact on the lives of those faced with unsustainable mortgages. In saving the banks, the burden borne by the taxpayer has been great. It is now time to ensure that our equity interest results not just in a financial return but also in a social dividend.

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