Pat Breen (Clare, Fine Gael)

I welcome the opportunity to talk in this debate and I welcome the publication of the Keane report, which places the focus very clearly on helping households who are in mortgage arrears. Every Deputy will concur when I say our clinics are good barometers of the depth of the problems ordinary people are suffering. Like many Deputies, I have witnessed the huge upsurge in the number of people attending my clinics who have difficulties meeting their mortgage repayments. Many of their stories are heartbreaking. The collapse of the property bubble caused the country to go quickly into recession and left a trail of destruction in its wake. Many householders are under severe pressure trying to keep a roof over their heads.

Some commentators argue that there should be a blanket forgiveness for all. It is important that we differentiate between those who cannot pay and those who simply will not pay. According to the Keane report, approximately 45,000 households are in arrears of more than 90 days and a further 32,000 households are in arrears of more than 180 days. In addition, approximately 56,000 households have already reached an agreement with their lending institutions and have an agreed restructuring plan in place.

The scale of this problem is huge. No two cases are the same. Cases need to be dealt with on a one-to-one basis as there are many complexities involved. In some cases, the problems are compounded by personal indebtedness which is a huge problem. In 2008, for example, the level of personal indebtedness in Ireland equated to every household borrowing more than it was earning, or €158 borrowed to every €100 earned.

It is important, given the sheer scale of personal indebtedness in this country, that we reform our personal insolvency legislation in tandem with any plan to help householders in mortgage arrears. I compliment the Minister for Justice and Equality for the action he has already taken to address this situation. As and from 10 October last, all 360 so-called legacy bankruptcies, which have existed for more than 12 years, have been automatically discharged. Also, the Minister is working on further reforms which he will be introducing early next year. However, I would prefer to see restructuring of loans, agreements with lenders and bankruptcy to be the last resort.

A number of speakers have pointed out that we need to deal with an individual's capacity to discharge his or her debts. This is important and is fundamental to any resolution of the mortgage arrears problem. Also, a number of commentators have criticised this report for placing banks at the centre of the solution. It is essential that those who were central to creating the problem are central to finding a solution. The Central Bank has strengthened its code of practice and now includes in its protections the mortgage arrears resolution process, MARP. The MARP sets out the guidelines which regulated lenders must follow in dealing with arrears and includes a number of important protections for consumers. The Central Bank website contains a useful leaflet entitled Mortgage Arrears - A Consumer Guide to Dealing with your Lender, which answers many of the questions people have in terms of dealing with their lenders. However, having a code of practice is not enough. We need to ensure that it is supervised and that there is enforcement of it. For far too long, a blind eye was turned and easy touch regulation became the norm in this country, allowing malpractices to take place in our banks. We are all only too well aware of the consequences of what happens when banks are not kept in check.

This report recommends the setting up of a specialised mortgage advice service which would be available to householders in distress. It also suggests that this service could be linked to MABS. MABS in my constituency provides an excellent service on a confidential basis to people from Ennis and Shannon. It is essential that any new service is adequately resourced and that expertise to help consumers in distress is available locally. This framework exists within MABS, thus any new service should be built around and linked into MABS.

The economic collapse in this country has left a trail of victims in its wake. As I said earlier, there are many complex cases in this regard. I would like this evening to highlight a particular case which portrays the complexity of the problem. I have been trying to help a couple in their early 50s with teenage children, both of whom are out of work and have been for the past two years. Whatever savings they had are gone and they are at their wits end. They are constantly in contact with my office and fear that one of these days they will end up on the side of the road. Like many other people in this country this couple, when working and doing well, invested in two separate synergy pension plans with an insurance company. Under Irish pension legislation, a person must be 60 years of age to encash a policy and even at that stage can only encash 25% of same. It will be a further eight years before this couple will be 60. They believe that if they could access at least some of their savings now it would satisfy their mortgage holder.

We are all aware that there is a pension crisis looming in this county, as highlighted by a recent RTE documentary. We cannot under-estimate the scale of the crisis ahead. Nevertheless, many people have stopped paying into their pensions plans given the extent of the current economic crisis. This couple fall into that category. They cannot understand why they cannot cash in part of their policy in order to pay off their debt and save their home.

It is easy to understand why people want to spend their money in the here and now, in particular when they are facing the threat of losing their home. The are many similar examples throughout the country. Last week I was visited by another couple whose loan repayments are €1,100 per month and who had offered to repay the bank €400 per month because that was all they could afford. When that was not accepted they offered to repay €600 per month but were told by letter last week that under the Central Bank's code of conduct the bank had options to consider, including a voluntary sale of their property and repayment of their mortgage with the proceeds of same or to trade down their existing home at its current market value and relocate to a more financially affordable property. How could any couple do that? I heard of another case involving a person who owes €1 million to a bank which accepted repayment in that regard of €500 per month.

Banks need to be more understanding of people, in particular people who genuinely want to repay their mortgage. While the banks say they are committed to working with people in regard to their mortgage difficulties, when it comes to it that is not the case.

I ask that the Minister for Finance take a look at the pension situation. Perhaps given the current economic circumstances couples such as the couple to whom I first referred could be allowed to encash part of their pension savings to secure their home. I envisage individuals in such circumstances having to produce from their mortgage lender evidence of arrears-default. This could be enshrined in any amendment introduced to deal with this situation as part of any change in our pension legislation.

We are living in difficult and unprecedented times and must investigate every option to assist those most in most need. I support the Keane report, which is the first step in tilting the balance back in favour of those householders in mortgage arrears. This Government is committed to helping those most in need, which I welcome.

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