Seán Fleming (Laois-Offaly, Fianna Fail)

Fianna Fáil opposes amendment No. 17 in its entirety. It is a scandal and a shame and I am shocked at it. I know the Minister of State was not personally involved in its drafting but I am shocked that a Minister of the Labour Party would table a proposal to curtail mortgage interest supplement. We have discussed changes to the one parent family payment, and those in receipt of it are at the end of the scale, the most economically disadvantaged, and experience a high level of poverty. Aside from them if one were to ask the people to list those in the most economically distressed situation for whom they have most sympathy they would say those with mortgage arrears. People in mortgage arrears fall into various categories but those in receipt of the mortgage interest supplement are those suffering most due to their income situation and not being able to maintain their mortgage payments. They may have lost their job since they took out the mortgage and when they took out the mortgage they may have been well able to pay it. One person may have had a loss of income or perhaps both people in a house may have lost income.

It is very difficult to obtain the mortgage interest supplement. One must go to one's community welfare officer and one must go through hoops to get it. Community welfare officers have turned down numerous applications for mortgage interest supplement where the banks are chasing people for arrears. A common cause for people being refused mortgage interest supplement is a community welfare officer deciding the interest rate one had on a sub-prime mortgage was very high to start with, notwithstanding that the rate is less than the rate now charged by some of the State-owned Irish banks, in particular Permanent TSB. A community welfare officer may also refuse having decided the level of mortgage was too high for the person to take on in the first place or that the person should not have taken on such a large financial commitment because the value paid relative to the loan taken out was too high. To receive mortgage interest supplement is a tough ask compared to receiving rental supplement. Those trying to put their own roofs over their heads amount to a fraction of the people who receive rental supplement and who are not putting their own roofs over their heads.

The Minister stated clearly the Department supports the findings which recommend curtailing the mortgage interest supplement scheme. I find this very severe. Essentially this will create a legal curtailment with regard to the most hard-pressed borrowers in the country. However, no matching curtailment is being placed on the banks who lent the money. I am shocked that in light of everything we have gone through no action has been taken on the Cooney and Keane reports. The Taoiseach has stated the issue of mortgage arrears is a personal priority but we find the first legislative action to deal with it is to restrict and curtail mortgage interest supplement. However, to obtain mortgage interest supplement one must be on a very low-income to start with. Many people in mortgage arrears would not be eligible for mortgage interest supplement. We are discussing people with a very low level of income. Sometimes mortgage interest supplement is a fundamental factor in helping people avoid going into arrears. The Government's answer to people in mortgage arrears is to take the mortgage interest supplement from them. This is the first legislative action by the Government for people in mortgage arrears. Shame on the Minister and the Government for doing so. I am shocked.

On Second Stage, the Minister stated she would not proceed with reducing the relevant age for one parent family payment to seven years unless she obtained a bankable commitment from the Minister for Finance and the Government. She should tell the House she will not proceed with this unless she has a bankable commitment from the Minister for Finance with regard to tackling the banks. However, the banks have a bankable commitment. The Minister of State and I and the taxpayers of Ireland have already given €5 billion to the banks to deal specifically with mortgage arrears. This should be trickling down to help those in arrears. It should be used to help those in receipt of mortgage interest supplement. However, what is the response of the Government? The banks have been given €5 billion with no legal restrictions on them with regard to how it is utilised and none of the reports are being implemented, yet a legal sanction is being placed on the little person on the lowest rung of the ladder in the Irish financial situation. I cannot understand the Bill and I will say so to the Minister.

The Bill has done three things. It has attacked one parent family payments, it will cut jobseekers benefit for those on a two or three day week trying to cling onto their jobs and it will reduce mortgage interest supplement and so affect those who, more than any group, need help with their mortgages. It is a shameful Bill. Everything about the amendment is wrong and shameful but I suspect the Government will ram it through one way or the other.

I want to deal with the specifics of what is proposed. A person will not be able to receive mortgage interest supplement until he or she has complied with repayment arrangements for a cumulative period of not less than 12 months under the mortgage arrears resolution process as set out in the code of conduct on mortgage arrears applying to mortgage lenders. This is shameful. People are being forced to go further into arrears before receiving the payment.

What I find objectionable and sick about the amendment is that for the first time we will give the banks a veto on who can receive mortgage interest supplement from a community welfare officer. Community welfare officers have moved from the HSE to the Department of Social Protection but I did not know they had moved to work for the banks. The banks will be able to give orders to community welfare officers whereby unless a person has a 12 month agreement which is fully complied with the community welfare officer will not be able to award mortgage interest supplement. A community welfare officer will not be able to award a mortgage interest supplement payment without verification from the bank that the person is complying with the scheme.

There must be two sides to everything. Yesterday, the Minister stated €50 million of taxpayers' money is being given to the banks under the mortgage interest supplement scheme and that she wants a bang for her buck on behalf of the Irish taxpayers. She is right but what she should be doing in parallel to the change being made to the mortgage interest supplement is placing a legal curtailment on the banks with regard to how they deal with their customers. She is taking a one-sided view. She thinks she will get something from the banks but all she is doing is penalising the poor borrower. No legal restrictions are being placed on the lenders who caused the problem. I do not blame any 20 or 21 year old or couple who received too large a loan from a bank. A person seeking a mortgage from a bank, which has been in existence for years, is reliant on the financial advice of that bank and if told he or she can afford a mortgage of €300,000 he or she will accept that. I do not blame the young couples or individuals in their twenties who took out huge mortgages. The banks are to blame for that. Yet, the legal restriction being introduced through this measure is on the borrower rather than the banks.

This section deals with the banks and financial institutions which are party to the mortgage arrears resolution process through the code of conduct on mortgage arrears. Many of the banks providing mortgages in Ireland are not Irish banks. While the main banks, most of which we own, are Irish a number of other banks in this country are mortgage providers that do not have a centre of business operation here and whose main business is operated from abroad. These banks are not regulated by the Irish Financial Regulatory Authority but from eastern Europe and elsewhere.

The Minister might think I am being alarmist but I am stating the facts. Banks that do not have a presence in Ireland, in terms of an office, and as such are not regulated here can prevent a community welfare officer in the Department of Social Protection giving a hard pressed client mortgage interest supplement. Shame on any Minister who would introduce such a provision. If there is one inaccuracy in what I am saying, I invite the Minister to point it out to me. The Minister has engaged in a great deal of scaremongering over the past three days. I wish I was wrong but I know I am not.

This section refers to banks which are party to the voluntary rather than the legal code. Before we conclude our discussions on the Bill today, I would like clarification from the Minister on the role of local authorities in this regard. I have tabled several parliamentary questions on this matter. Local authorities also provide mortgages. Many people who have local authority mortgages are in receipt of the mortgage interest supplement. Prior to applying for a mortgage from a local authority a person must have been refused same by two banks. By definition, such a person is in a bad situation before even applying to the local authority for a loan. Many people who have local authority mortgages are in receipt of the mortgage interest supplement. As I understand it, the local authorities are not part of the banking federation.

I have asked in various parliamentary questions when the local authorities will sign up to the code of conduct on mortgage arrears which is being operated by the banks and have been told time again the matter is being looked into and that circulars in this regard were issued some years ago to the local authorities. However, when one visits one's local authority one is told they are not obliged to follow the code of conduct on mortgage arrears. I am speaking in this regard about my local authority in County Laois. I am sure the same applies in other areas. Laois County Council has repossessed more homes in County Laois than have all the private banks in County Laois put together, primarily because they are not obliged to adhere to the code of conduct on mortgage arrears. The banks are holding off for 18 months and are not repossessing many homes relative to the number of people in arrears but the local authorities continue to repossess homes.

I was delayed attending this morning's Order of Business. I received a telephone call last night at 10.25 p.m. from a distressed constituent who was in tears having received an eviction notice from a local authority in respect of a shared ownership loan which she took out with the authority, part of which was being met through mortgage interest supplement. That is what local authorities are doing. They are not covered by this provision. To qualify for mortgage interest supplement a person must have complied with an alternative arrangement under the code of conduct on mortgage arrears scheme. How is a person to get mortgage interest supplement if his-her lender is not party to the scheme? I hope it will not be suggested that local authority managers will be issued circulars because that will not work. While some local authorities are adhering in part to the code their heart is not in doing so. People in arrears on shared ownership homes who, having lost their jobs, wish to discuss the matter with their local authority are being told the authority will not engage with them until their arrears have been paid.

The Minister stated that one bank has 350 people designated to dealing with arrears. While local authority staff are excellent they are not sufficiently trained to deal with mortgage arrears. This amendment is a scandal. It is the first legislative provision by this Government to deal with the issue of mortgage arrears and all it does is penalise the person at the bottom of the ladder on mortgage interest supplement and allow the banks off scot free, which is a disgrace.

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