Joan Collins (Dublin South Central, People Before Profit Alliance)

The ULA will be supporting this Bill on Second Stage, although with severe reservations. We all know mortgage resolution is a key area for people and the economy. The real issue, however, is not resolved in this Bill - the 90,000 people who find themselves in arrears and in danger of losing the family home. As with the Keane report, their fate is being left in the hands of the banks and mortgage providers. The creditors have a veto and can refuse to acknowledge a debt settlement.

The idea that this can be resolved case by case, with options under Central Bank guidelines such as interest only, lower payments or deferral of payments for a period will not solve the problem. Is it inevitable that repossession, whether agreed mutually by the bank and the mortgagor or by the courts, along with the humiliation of eviction by the sheriff and bailiffs, is to be the fate of tens of thousands of families in the 21st century, a repeat of the 1900s? Do we face that scenario? The only benefit this Bill has at this stage is that people will be able to declare themselves insolvent after three years and the negative equity left over after repossession and disposal of the home will no longer hang over them.

It is time to face reality. I am talking about debts on the average family home. I am not talking about trophy homes or the Quinn family scenario. These people did not behave irresponsibly, they did not go mad, and I would like Enda Kenny to hear that reference. These are people who, to provide a home for themselves and their families, were forced to borrow to buy homes in a market where prices were deliberately inflated as a result of the policies pursued by Government, developers and the bankers. We all remember the advertisements on television appealing to parents to remortgage their homes to get their children on the property ladder. It was madness. The newspapers made huge amounts from their property supplements. Those people did not cause the banking crisis or the collapse in house prices but they now find themselves having lost their incomes through unemployment or a decline of self-employment income and unable to service their mortgage debt. These people are not welchers who are deliberately choosing not to pay; they cannot pay the full monthly payments. There is reality here also for the banks and mortgage providers. If people cannot pay, the debt will not be paid, it is that simple. Repossessing a home now only equates in general to 50% of the loan, meaning banks and mortgage providers will take a loss. There is no way around that.

The banks recapitalisation at the expense of citizens took account of that fact, as Deputy Murphy pointed out. This reality must be made clear to banks and mortgage providers. A high percentage of mortgages that are in arrears are not going to be paid off. We must accept this reality and devise a system that allows people to pay what they can and stay in their homes. It is not difficult and has been done in a number of countries, especially in Northern Europe. I would point to the benefits for both owners and creditors, and to the State, of the approach taken in Norway when it faced a similar crisis in 1990. The Norwegian insolvency legislation specifically dealt with these problems. It established a system of independent insolvency offices - a key point. A person in difficulty can apply to the office for assistance in the formulation of a voluntary agreement with his or her creditors. Where a loan is secured on the family home, the family has a right to stay in it. In the cases where people cannot afford to stay in their home, if their property is sold, they must have enough money from the sale of the house to be able to buy a property that meets their needs in the same area. The mortgage is revalued on the basis of the present value of the security. If a house has a mortgage of €300,000 and is worth €150,000, only the €150,000 portion of the mortgage is secured against the home. The balance, the negative equity, becomes an unsecured debt and is treated like other unsecured debt. The debtor then pays what he can reasonably afford on the reduced mortgage. If he does this for five years, the unsecured debt, including negative equity, is written off. If a voluntary agreement is not reached, the case goes to court for a compulsory arrangement. All of the safeguards to stop abuse can be written into the legislation. Debtors who do not co-operate in providing information on their full financial situation cannot avail of the scheme while false declarations and hiding of assets is a criminal offence.

The United Left Alliance has been working on a Bill along these lines. We will move these ideas as amendments and if they are not accepted, we will introduce a Bill on this topic in the autumn. Our Bill will not be a full solution to the crisis. It will deal with those paying their mortgages but trapped in unsuitable accommodation by negative equity.

There is a crisis that has not been addressed and I would like the Minister to share his ideas on it. Shared ownership schemes, run by local authorities, require a separate solution. These people are in dire circumstances and local authorities have been seeking advice on how to deal with these mortgage debts. Up to 70% of shared ownership properties are in crisis. There is a scandalous shortage of social housing, which was raised this morning by Deputy Richard Boyd Barrett. That is linked to the fact that when people lose their homes, they must go on the local authority list and then are put into private rented accommodation, where we again line the pockets of private interests.

All of these issues must be addressed, along with the mortgage interest supplement issue. The Minister for Social Protection should never have introduced the changes in this area.

I have been trying to represent people who have contacted me from all over the country about their situation with banks. In my experience there are differences between how many of these creditors operate in terms of the spirit and the letter of the guidelines. The key problem is the huge range of families and the distress, ill health and strain on relationships this is causing. There is a real social cost arising from the situation and it is incumbent on us to deal with it and to provide a debt resolution system that people can use in the confidence that they will not be evicted from the family home and will not find themselves paying off unsustainable debts for the next 30 years.

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