Michael Kitt (Galway East, Fianna Fail) | Oireachtas source

I commend Deputy Michael McGrath on his tabling the motion and on his work on mortgage debt. The latest figures underline the need for the Government to fulfil its pledge to deal with the mortgage arrears crisis. The figures published almost three weeks ago show that approximately 186,000 family home mortgages, with a total mortgage value of more than €30 billion, are in some form of distress. The crisis has had a serious impact on the daily lives of people who are not able to pay their mortgages. In the last quarter, an additional 6,500 families have fallen into some form of mortgage distress. The level of arrears represents a crisis and requires a decisive policy response from the Government.

Deputy Michael McGrath stated that 40 split-mortgage arrangements had been implemented in the last quarter, bringing the total to 52. Splitting mortgages must be central to the effort to resolve the crisis. I would like to see the banks accelerate the roll-out of this option for eligible mortgage holders. Deputy Michael McGrath proposed affording the mortgage resolution office a number of options which could be included in a mortgage resolution order. These include the option of a split mortgage, whereby part of a loan is parked for up to ten years. He also proposed interest-only payments for up to four years, extension of the period of a mortgage by up to 20 years, a repayment holiday for up to 12 months and participation in a deferred-interest scheme. Deputy McGrath proposed that in the event of voluntary surrenders, financial institutions should lease family homes to borrowers at market rents.

I quote from an article in the The Connacht Tribune on the 8,500 home owners across Galway who are in mortgage arrears or have restructured home loans and who face the prospect of leaving a legacy of debt and even repossession. It is certainly very serious when it is revealed that additional debts incurred through default on mortgage payments or the restructuring of loans are not covered by mortgage protection life cover. The article states:

One of the country’s biggest life assurance companies has issued a warning that while life cover always 'cleared' the balance of a mortgage in the event of a death, average debts of up to €27,000 could be left behind after the policy pays out, which could ultimately lead to a repossession. Central Bank figures published this week show that the number of problem mortgages in Ireland grew sharply in the last three months of 2011, putting further pressure on its banks and highlighting the challenges the government faces in reviving the moribund domestic economy. Nearly one in seven Irish home loans are not being fully repaid and repayment is getting more difficult as unemployment remains stubbornly high and house prices continue to fall, according to the Central Bank findings. Some 70,911 private residential mortgages – out of a total 768,917 in Ireland - had lapsed into arrears of 90 days or more by the end of last year, the latest figures confirm.

It is important to set out clear guidelines on what the word "sustainable" actually means. Currently, banks have vastly different interpretations of what constitutes reasonable living expenses. It is ludicrous to suggest the insolvency service should micromanage family finances, particularly if it means telling families that one parent cannot work outside the family home. The Vincentian Partnership for Social Justice has undertaken excellent work on minimum income standards and set out the actual cost of living. This work should be relied on to inform the debate fully as to what arrangements should be put in place for distressed borrowers.

The Mortgage Resolution Bill offers practical and urgent assistance to those in mortgage difficulty. This is the time for action, which is what people want. We do not want banks retaining a veto over any proposal to restructure a mortgage. The best solution is to ensure that families can remain in their homes as long as reasonable efforts are made to meet mortgage commitments.

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