Tom Fleming (Kerry South, Independent) | Oireachtas source

If this Bill is enacted it will open the floodgates to wholesale evictions and repossessions by the ruthless and unscrupulous banks which lit the fire in the first place with 100% loans and ill-advised mortgage arrangements. Customers who walked in the door of these institutions were practically blindfolded and ended up walking out with loans of up to 130% of the value of the house. Money was thrown around like confetti.

In many cases loss of employment is the reason for distressed mortgages. A study by the Central Bank indicates that 32% of residential mortgages in serious arrears involved mortgage co-payees who were unemployed. Unemployment does explain the remaining 68% of mortgages in arrears. Mortgage payments have been subject to unsustainable increases relative to after tax incomes. Last week AIB increased its rates for the majority of its mortgage customers by 0.4%. This represents a substantial increase in monthly repayments for most mortgage holders.

The consequences of this uncontrolled and unethical system have now come home to roost for thousands of unfortunate victims of an inflated market and soft or non-existent regulations. The former regulator, Mr. Neary, was brushed aside or kept his head in the sand while the fires burned around him. The banks have been rescued with taxpayers' money but they are still in control even though they are State companies at this stage. They are acting in an independent manner and do not appear to feel responsible to anybody, least of all the Government, which is acting in a defeatist manner. Citizens remain at the mercy of these institutions. The German Chancellor, Ms Angela Merkel, and the troika are calling the shots.

We should provide a mechanism in the legislation to afford judges additional powers of direction to deny banks the right to repossession when they are treating their misguided customers in a most unfair manner. The banks do not have any appetite for the personal insolvency legislation, under which a personal insolvency practitioner is required to find ways and means to advise clients on how to avoid being put out of their homes.

I concur with Deputy Joan Collins that the money advice and budgeting service already provides a service on the ground that could have been upgraded. MABS has outstanding staff with great expertise and abilities. If the organisation had been provided with additional staff, it could have provided a much better intermediary service at a much lower cost to customers than that envisaged under the personal insolvency legislation. Unfortunately, the matter is done and dusted. It may still be possible, however, to find a means of integrating the service provided by MABS into this problematic area.

The Bill is premature and should be parked for at least six months to allow the long awaited Personal Insolvency Act to be tried and tested. Those holding the most distressed mortgages will experience dire straits as a result of this Bill, which does not provide an opportunity to explore the limited protections afforded by the Personal Insolvency Act. If robust, practical and pragmatic solutions are found, repossessions will be kept to a minimum.

According to statistics from the Central Bank, more than 20,000 mortgages have been in arrears for more than two years. In some cases, a debt write-down will be required to make these mortgages sustainable. Of the approximately 760,000 mortgages held for private residential properties, more than 140,000 are in arrears. The Bill should be delayed until later in the year to give the most vulnerable mortgage holders time to negotiate and avail of solutions such as interest only or reduced repayments. Other viable options include split mortgages, which involve giving home owners an option to freeze a portion of their mortgage until their finances improve, and the making of a bullet payment at the end of the loan term or when other assets can be converted into cash. The downside of the current arrangements is that split mortgages account for only 12 of the approximately 85,000 mortgages that have been reconfigured thus far. This minute number demonstrates that the split mortgage option has not been adequately pursued. The mortgage arrears resolution process, MARP, is another option available for those who hold distressed mortgages.

The argument that investment properties rather than family homes are the primary focus of the Bill should be taken with a grain of salt. Homes will be targeted in a vigorous and proactive manner. In view of the appalling vista of mortgage indebtedness, every avenue must be explored. The Central Bank must proactively promote the mortgage arrears resolution process. It has indicated that it has established a framework of mortgage arrears resolution performance targets for the six main Irish mortgage credit institutions. Under these targets, the banks in question should have proposed sustainable mortgage solutions to 20% of distressed borrowers by the end of June 2013, 30% of distressed borrowers by September 2013 and 50% of distressed borrowers by the end of 2013. The aim is that the majority of distressed borrowers will have been proposed a solution by the end of 2014. In the circumstances, the Central Bank should ensure that the priority of any proposed solutions should be to enable people to remain in their family home, whether by rolling out the mortgage-to-rent scheme or developing options for the mortgage-to-lease scheme. More comprehensive advice and guidance must be made available on new arrangements for people in arrears.

Immediate action is needed to provide an alternative to the proposals in the Bill as the banks will not show any sympathy to those who are in trouble - their motivation, as they have demonstrated repeatedly, is profit - and the courts will enforce the law. We must tread carefully with this Bill. It should be redesigned to provide some solace to a worried population. I ask the House to assess, evaluate and amend it, rather than rushing to conclusions. We should give the personal insolvency arrangements a chance before proceeding with this legislation. For this reason, I suggest putting it to bed for at least six months.

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