Enda Kenny (Mayo, Fine Gael) | Oireachtas source

The Cabinet sub-committee on mortgage arrears met eight times in recent months. As the Deputy is aware, the sub-committee was established last March and its remit is to oversee the implementation, on a cross-Departmental basis, of the Government's response to mortgage arrears, agree a detailed implementation plan for the recommendations of the report of the interdepartmental working group on mortgage arrears, ensure appropriate prioritisation of the delivery of this plan is put in place across all relevant Departments, and develop any further issues relating to mortgage arrears that are required arising from publication. The Government focused on four areas, which included resolution strategies by the banks and the new personal insolvency framework.

The Deputy will be aware that the Personal Insolvency Bill was published in June 2011, completed Fifth Stage in the Seanad last week, and is back in the Dáil for Report and Final Stages this week. It will be completed by the end of the year and will create a modern and fairer approach to dealing with unsustainable debt. Work is also under way on the establishment of the Insolvency Service of Ireland to ensure it is ready to provide the new service following the enactment of the legislation. The director of the service is in place along with a number of staff to oversee the establishment of the service early in 2013.

Deputy Adams rightly raised the issue of repossession of homes. He is aware that when banks lend money to borrowers for the purchase of houses, there are conditions attached to those lendings. This means that if the borrower is not in a position to pay, the right of acquisition or repossession of the house applies. In this country, the number of repossessions has been very low and we want to keep it that way. We did not want to present the issue raised by the Dunne judgement, which was a loophole in the legislation identified with regard to certain circumstances for some loans, until the Insolvency Service of Ireland was in place. The issue required clarification under the memorandum of understanding with the troika, and this will be done afterwards. It does not mean there will be a rash of house repossessions, as some people have said. The Ceann Comhairle knows better than most that everybody in this country has pride in their homes and that ownership of a home is of exceptional importance.

The homes of the most distressed mortgage holders can be protected through a mortgage-to-rent scheme, where the ownership of the house passes to the approved housing body, subject to eligibility criteria. There is also the question of comprehensive guidance and advice. I note that AIB said recently that it hoped to be in a position to deal with 2,000 mortgages per month that are either in arrears or distress or where there is a problem. I am sure that the best news many households can get is that a solution has been worked out that does not require the repossession of the home. We hope that can continue and that as prosperity increases and the economy grows, many single people and couples who own houses and are unemployed have the opportunity to secure employment and will, therefore, be able to meet the mortgage payments set out for them.

The Central Bank, which is the regulator of credit institutions, asked all mortgage lenders to prepare and submit to it mortgage arrears resolution strategies and implementation plans. Mr. Matthew Elderfield explained this when we met him on a number of occasions. Following the submission of those plans, the Central Bank commenced an in-depth engagement process with all lenders to assess their validity, the sectors into which they were divided, and the areas of the country to which these referred. The reason for that was to ensure every lender had an effective strategy in place to deal with all mortgage holders experiencing difficulties. Arising from this, banks had to refine their proposals because the regulator was not happy with them and they committed to the Central Bank to build on existing so-called forbearance solutions to extend the range of alternative solutions to deal with genuinely distressed mortgage holders. The main lenders have completed the segmentation of their loan books and submitted to the Central Bank the options they propose to implement to deal with distressed mortgages. These include split and trade-down mortgages, restructuring of mortgage payments and forbearance.

I hope that in dealing with persons with distressed mortgages or who are in difficulties, the solutions required by the Central Bank of the lenders to which the banks have committed themselves and the introduction of the Insolvency Service of Ireland will provide alternatives to the banks that are open to anybody to avail of if they so wish. It is hoped the Bill will be passed this week and be in operation in the early spring. That is one element of dealing with complex and sensitive issues. The other is to drive the economy to a point where people who are unemployed or on low incomes or who may have lost their jobs will be able to get back into the world of employment, contribute and meet the requirements under the conditions of their mortgages. In some cases, as has been pointed out, banks must look at some element of write-down in particular circumstances, but I hope the level of repossessions will be very small.

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