Joan Burton (Dublin West, Labour)

I appreciate the concerns expressed by Deputies. However, one must bear in mind the interests of those who have unfortunately found themselves without a job or, as in many cases, with a job but who have difficulty repaying their mortgages.

As Minister, I am very conscious that the Department of Social Protection will pay more than €50 million this year addressing mortgage interest arrears on behalf of approximately 18,000 people. The money goes to the banks, not to the people. The object of public policy is to ensure people stay in their homes, even though they may have financial or employment difficulties. For the €50 million, are we getting what we want from the banks? Deputies have described the difficult circumstances people face. Are the people involved and the taxpayers getting a good deal on foot of the banks' activities?

The code of conduct on mortgage arrears requires all licensed and registered banks and financial entities that give mortgages to subscribe thereto. My Department spends approximately €47 million employing professional advisers in the Citizens Information Board and financial advisers in MABS. The Department, therefore, is spending a lot of money on offering advice and information. I was not clear on what Deputy Collins was suggesting. Was she saying the services are an irritant to people in that they must fill out forms and talk to MABS?

I reiterate what I said yesterday, namely, one must get the lenders and those who are heavily indebted together. Ultimately, they must be in a position to strike a deal. The Government is developing a series of alternatives, on the basis of the Keane report and its predecessor, the Cooney report. These include the mortgage-to-rent option. In some cases, unfortunately, people may not be able to sustain their mortgages. The object is to keep these people in the family home. There is considerable work taking place to develop alternative mechanisms of resolution that ensure people can stay in the family home. To date, only a mortgage interest rate supplement is paid over. If this does not work out, however, there is not necessarily a resolution for the family. It is meant as a short-term support.

One must try to establish a core relationship between the lender and borrower and determine realistically and genuinely what a lender can do, and what the borrower can pay. The lender ultimately must be realistic about what the borrower can pay. If the Deputies are suggesting that the Department of Social Protection should step in without bringing together the lender and the borrower to work seriously towards a settlement and ascertain the best outcome, they are misguided. The first desired outcome is to keep the family in the home. The second is to find the best mechanism by which to do so. As I stated, the Government is working on new mechanisms.

The code of conduct on mortgage arrears is not an option for the lenders; they must sign up to it. Many of these lenders are being kept alive by the Irish taxpayer and have been for a long time. The people who signed the bank guarantee ensured the Irish taxpayer took responsibility for all these lenders, so I invite the Deputies to think about this and about how we get the best outcomes. The best outcomes may not be the fastest ones or simply what was done before because over the period of the crisis, the Department has been spending an increasing amount of money - €50 million this year - on this area. I would like to say all of the people ended up very happy but they are in a very serious financial position, in particular if their loss of income, loss of wealth or loss of employment is long term or if they went onto the mortgage interest supplement and cannot get out of it. That is why the Government is arranging alternative products which give people an alternative route, such as mortgage to rent for a period of time. People who were on local authorities will remember that years ago. There were other ways to buy a house rather than by taking out a mortgage, such as co-ownership and shared ownership.

I invite colleagues to think about it in a creative way because this is another €50 million - I know we talk in terms of billions of euro - which is just going to the banks. I would like to see us genuinely getting as much comfort and security for as many families out of those scarce resources. Why, for instance, are we paying all the interest without let or hindrance just because it was done when the numbers were very small? What interest rates are paid? Is it just whatever interest rate the bank has decreed? Much serious examination and thought needs to go into this.

The code of conduct sets out how lenders must treat borrowers who are in, or facing, mortgage arrears with due regard to the fact that each case is unique and that it needs to be considered on its own merits. The lenders have to set out and use a framework when dealing with borrowers in mortgage arrear or pre-arrears and all cases must be handled sympathetically and positively with the objective of assisting the borrower to meet his or her obligations or, as we develop new mechanisms, to perhaps enter into different arrangements which allow them to keep his or her family home. A lender must explore all the options for alternative repayment arrangements.

The options, with which Members will be familiar, are an interest only arrangement for a specified period of time; an arrangement to pay interest on part of normal capital element for a specified period of time; deferring payment of all or part of the instalment repayment for a period of time; extending the term of the mortgage; changing the type of the mortgage, except in the case of tracker mortgages; capitalising the arrears and interest; and any voluntary scheme to which the lender has signed up, for instance, a deferred interest scheme. There is a series of options which the lender is obliged to offer to the borrower. Members must bear in mind that many of the people who present to MABS have very complex debt problems with not just mortgage interest debts, but car loans, credit union loans, credit card bills and perhaps other secondary loans. We are trying to deal with a complicated issue. We should not just hand over €50 million to the banks, because that is where it is going. Some of the banks complain that some people who get the money do not pay it to them but that is a separate issue and involves a small number of people.

The case to which Deputy Ó Snodaigh referred is somebody who has been in difficulties for two years and is getting mortgage interest supplement. That kind of proves the point. That bank is actually being paid the mortgage interest supplement for that individual by the State. It is getting its money and yet it is not treating the customer with the respect, sympathy or understanding required. We are actually paying the bank. I am not saying I have a solution to that but, to some extent, perhaps it has been a bit too easy for those financial institutions that the State will just pay and they can still continue to be not terribly nice to the poor unfortunate person who has got into financial difficulties.

I do not know if Deputy Ó Snodaigh has a view. The bank is getting its interest. What does it want? Does it think the person has other sources of money or is it that it simply wants to repossess the house?

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