Joe Costello (Dublin Central, Labour) | Oireachtas source

I move amendment No. 1:

To delete all words after “Dáil Éireann” and substitute the following:

“acknowledges that this Government inherited a severe mortgage arrears crisis;

recognises that the Government has already taken a number of significant steps to address the mortgage arrears problem and also to stabilise the banking and wider economic situation; in particular, acknowledges that the present Government established the Inter-Departmental Mortgage Arrears Working Group and subsequently published the Group’s Report in October 2011;

notes that the Report indicated that the mortgage arrears problem is complex and that a range of measures, such as personal insolvency reform, the development of mortgage to rent, the provision of mortgage advice, direct engagement by banks and the development of sustainable options by banks for their customers who are experiencing mortgage difficulties, will need to be advanced to address the problem;

recognises that the Government has moved to implement the main recommendations of the Report and that a special Government committee, chaired by an Taoiseach, is overseeing the implementation of the measures across Government;

acknowledges that significant progress has now been made on this implementation agenda, including the fact that:

— the Personal Insolvency Bill 2012, which introduces new insolvency frameworks to allow for the resolution of unsustainable debt situations in a manner that is as fair as possible to debtors and creditors, has been enacted;

— the Central Bank has obtained mortgage arrears resolution strategies and implementation plans from regulated mortgage lenders;

— the Mortgage to Rent Scheme is now available across the country; and

— a mortgage advisory function is now in place;

encourages the Government and other authorities to continue this work; in particular to bring the new insolvency frameworks, as provided in the Personal Insolvency Act 2012, into operation as soon as possible and to enhance action by mortgage lenders to appropriately address unsustainable mortgage loans;

notes the statement by the Governor of the Central Bank of Ireland at a recent conference on distressed property markets that, having ensured that the banks are much better staffed and organised for dealing with arrears, the Central Bank will be setting out its quantitative expectations for their effectiveness in achieving lasting solutions;

notes the Government commitment to responding more quickly, and on a larger scale, to social housing support needs through a variety of mechanisms, including through increased provision of social housing and a restructuring of investment in social housing, to allow for the delivery of new social housing through more flexible funding models;

supports the Government in developing new funding mechanisms that will increase the supply of permanent new social housing, including options to purchase on lease agreements, build-to-lease and the sourcing of loan finance by approved housing bodies for construction and acquisition;

acknowledges that the National Asset Management Agency (NAMA) has identified in excess of 2,000 units that are suitable for social housing and are working with housing authorities to bring these into beneficial use for those in need;

supports the Government’s overall housing policy statement; in particular, that a priority for Government action will be to meet the acute needs of households applying for social housing support, and in that context, notes and supports the Government’s continued commitment to meet the accommodation needs of Travellers; and

notes that the Government’s overall social housing programme is framed in a manner which both optimises the delivery of social housing and maximises the return from the scarce resources available for that purpose.”

I thank the Sinn Féin Deputies for their contributions, and for the ideas they have put forward and the issues they have raised, all of which will be listened to and considered. I welcome the opportunity to set out the Government's achievements in this area and our strategy for the future.

The context for the mortgage arrears and high level of indebtedness is the economic downturn, as the Deputies have acknowledged. The Government is deeply committed to addressing the challenge of economic recovery, growth and jobs in the first instance in order to produce the environment where mortgage holders can pay for and stay in their homes. The Government is very aware of the difficulties some homeowners are facing in meeting their mortgage obligations and we are committed to advancing appropriate measures to assist those mortgage holders who are experiencing genuine difficulty. I will outline to the Deputies the steps we have taken, as well as our continued efforts in assisting our citizens who face difficulties with mortgage arrears.

One of the important steps to protect mortgage holders who are experiencing such difficulty is the code of conduct on mortgage arrears. This code remains a key framework to govern the relationship between mortgage holders in difficulty and their bank and it offers very worthwhile protections for distressed households. The code provides that each bank must put in place a formal mortgage arrears resolution process to deal with its mortgage customers who are in arrears or pre-arrears and for the establishment of dedicated arrears support units and appeals processes to handle such cases.

Forbearance is a very worthwhile and an appropriate response to most people experiencing mortgage difficulty. The approaches set out in the code of conduct on mortgage arrears can provide a household experiencing temporary mortgage difficulty with the necessary and important breathing space to enable that the household can get back on their feet and resume meeting their full mortgage commitments at a future time. The Central Bank has commenced a review of the code of conduct on mortgage arrears which will involve a public consultation process. The review of the code will have to take account, as appropriate, of recent developments such as the new insolvency legislation.

The Government also recognised that, in certain circumstances, other approaches may be required. In view of this, the Government's Economic Management Council established an interdepartmental group, which was chaired by Mr. Declan Keane, to consider what additional measures could be introduced to assist people who are dealing with more significant mortgage difficulties. Two main objectives were set for the group. First, there was a desire, where appropriate and possible, to assist people who are experiencing real difficulties with their mortgage commitments to remain in their home. Second, incentives should not be created that would encourage people who can pay their mortgage to stop doing so. The Government has accepted these Keane report recommendations and has put in place an implementation framework to advance this work agenda. The Government attaches a very high importance to this work as evidenced by the fact that a special Government sub-committee has been in place since March 2012 to address the mortgage arrears problem. This committee is chaired by the Taoiseach and includes all other relevant Ministers, and reflects the need for accelerated progress in this area. More recently the remit of the committee has been expanded to include a greater focus on meeting the challenges facing small business.

The Government's strategy to assist those in mortgage difficulty is built around measures in four distinct areas: personal insolvency; a mortgage advisory service; the mortgage-to-rent scheme; and engagement with the banks. Considerable progress has now been achieved across this agenda. This cross-departmental strategy reflects that there is no single solution to the mortgage arrears problem and it is being tackled on many fronts.

The Keane report indicated that, given the recourse nature of mortgages, personal insolvency reform and in particular the introduction of new more accessible insolvency-resolution frameworks were essential for the resolution of the mortgage arrears problem. The Personal Insolvency Act is now law and the introduction of this new and very important Act should be a catalyst to incentivise banks to reach an agreed solution with individual borrowers in resolving mortgage arrears cases. We expect that the majority of agreements between borrowers and lenders can be made outside of the provisions of the Act as bilateral agreements between borrowers and lenders, without recourse to the new insolvency framework or the courts, would in many cases be in the interest of all parties. However, the new insolvency framework will be necessary for some cases and the Insolvency Service of Ireland is now urgently preparing the ground to make them operational as soon as possible. The director-designate of the Insolvency Service of Ireland, who took up his position last October, has been tasked with setting up an insolvency service to administer the new personal insolvency framework. He has established an implementation team to address all operational matters necessary for the office and he is working towards a launch date at the end of next month with a website, an information campaign, and the issuing of publications and relevant guidelines.

The vast majority of mortgage holders in distress also have unsecured debt, for example, credit card, personal loans and credit union loans. Therefore the Personal Insolvency Act will allow mortgage holders in distress to address both their secured and unsecured debt effectively and in a holistic way. As this is a formal process lenders are bound by the final agreement and thus this will provide the mortgage holder with greater certainty.

There is a three-phased approach to provide a comprehensive mortgage arrears information and advice service to assist people in mortgage distress. The approach differentiates between mortgage information and mortgage advice. The first two elements involve the enhancement of the website www.keepingyourhome.ie and the establishment of a mortgage arrears information helpline within the Citizens Information Board, both of which focus on the provision of comprehensive mortgage-arrears information in particular to people in arrears or pre-arrears. The third element of the service is the provision of independent financial advice to mortgage holders who are being presented with long-term mortgage-resolution proposals by their lenders. This advice is provided by a panel of accountants drawn from members of the main accountancy institutes in Ireland who have agreed to participate and support this independent service.

When a lender is proposing longer-term mortgage resolutions, the lender will advise the borrower to obtain independent financial advice on the proposed arrangement and if the borrower wishes to avail of this option, the lender will pay €250 to an accountant of the borrower's choosing for the provision of this advice. The independent financial advice is available to all holders of a mortgage secured on a primary residence, who have been offered long-term forbearance options by their lenders. An operating protocol for the provision of this advice has been agreed between the main accountancy bodies and the Irish Banking Federation. To date, some 2,700 accountants have confirmed to their accounting body that they wish to be part of the panel and their details are listed on a county-by-county basis on the website www.keepingyourhome.ie.

A key housing support for those with distressed mortgages is the mortgage-to-rent scheme. The Minister of State with responsibility for housing and planning has now put this scheme on a nationwide basis. The objective is protecting the home of the most distressed mortgage holders through a mortgage-to-rent scheme where the ownership of the house passes to an approved housing body. The existing owner then becomes a social-housing tenant. This option is now available in appropriate cases and will be of benefit to low-income families, whose mortgage situation is unsustainable, to allow that family remain in their home. While the numbers are still relatively small, mortgage-to-rent is an option that is being rolled out and many lenders are actively engaged in this roll-out.

Of course the Central Bank also has a key role to engage with banks and mortgage lenders and to require banks to engage in a meaningful way with their customers who have distressed mortgages.

The Central Bank, under its MARS project, has been for some time intensively working with lenders to ensure that they have a range of long term options, including trade-down and split mortgages, sale by agreement or other appropriate options as may be developed by lenders, available for their distressed mortgage customers and that they have the capacity to implement these in an effective manner. While progress in this area has not been as rapid as desired, greater effort and resources are now being deployed across the banks to this issue and real engagement on resolution options should now be further enhanced. In that context, I welcome the recent statement by the Governor of the Central Bank of Ireland at a conference on distressed property markets that, having ensured that the banks are much better staffed and organised.for dealing with arrears, it will be setting out its quantitative expectations for their effectiveness in achieving lasting solutions.

The Central Bank is focusing in 2013 on the implementation of MARS by lenders and is specifically looking at their operational capability in this regard. Deputies will be aware that the Central Bank compiles and publishes data on mortgage arrears, repossessions and mortgage restructures on a quarterly basis. The Central Bank commenced the publication of such data for the quarter ending September 2009 in respect of principal dwelling mortgages and from September 2012 also in respect of buy-to-let mortgages. In addition, it now publishes pre-arrears data. This data is available on the Central Bank website.

The Government is committed to building on the progress made and to further intensifying its efforts to address the mortgage arrears problem and in that context is proceeding on the basis of the recommendations of the Keane report. However, banks and other lenders also have a very significant obligation and responsibility to address mortgage holders experiencing genuine mortgage arrears. Indeed, given that lenders extended the credit in the first instance, they can be regarded as having the primary responsibility for addressing the debt problems now facing their customers and for resolving the position in a sustainable way for those customers experiencing genuine difficulty. Following the progress achieved so far in other areas, this will be the key focus of our attention.

Many Deputies raised the issue of social housing. The Government's housing policy statement published in June 2011 identifies that the priority for Government will be to meet the most acute needs of households applying for social housing support. The Government is determined to ensure that the social housing programme is framed in a manner which optimises the delivery of social housing and the return for the resources invested. To achieve this it is essential that we tailor the use of available Exchequer supports to prevailing conditions and explore the full range of solutions to address housing needs. This means meeting the needs of the greatest amount of people in the most cost-efficient manner, which has necessitated a shift away, for the time being, from large-scale local authority capital-funded construction programmes.

The mistakes of the previous Government are well documented. One of the consequences of those mistakes has been a reduction in the social housing capital budget from €1.54 billion in 2008 to just over €333 million in 2012. This year's anticipated outturn figure will be in the order of €299 million. Nevertheless, the Government is committed to responding quicker and on a larger scale to social housing support needs through a variety of mechanisms and utilising a range of actors. While the private sector is one of those actors, the Government's housing policy statement also recognises non-profit approved housing bodies as a key delivery agent in the coming years.

In spite of the challenging circumstances within which local authorities are now operating, a tentative outturn of approximately 4,000 housing units was achieved in 2012, which compares well with the figures provided in the Sinn Féin motion. Given the current volatility of the market and different challenges to the channels of supply, it is difficult to estimate the likely output of new units for social housing this year. However, it is provisionally estimated that in region of 5,000 units will be provided for social housing in 2013, which is an increase of 25%. The limited funds available to the Government for social housing must be stretched to meet a wide variety of needs, including those of the elderly, the homeless and people with special needs.

While I would like to speak in detail about a number of issues, time does not permit me to do so. The 5,000 plus units of social housing to be provided in 2013 are broken down as follows: 350 units for people with special housing needs; 150 units specifically for people leaving institutional care; an additional 400 permanent homes delivered through capital expenditure under the social housing investment programme; 300 transfers under the mortgage-to-rent scheme and approximately 4,000 units which will be delivered under social leasing, including property transfers from NAMA, the rental accommodation scheme and mortgage-to-lease scheme.

The Government has also been in discussions with NAMA in regard to 2,000 units of accommodation which it is anxious to acquire for the social housing market as soon as possible.

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