Michelle Mulherin (Mayo, Fine Gael) | Oireachtas source

I welcome the opportunity to speak on the Land and Conveyancing Law Reform Bill 2013. My colleague, Deputy Durkan, and other speakers clearly outlined the predicament families and individuals face as a result of the reckless lending of the banks. Much of the debate on the issue of repossession is not very truthful and merely seeks the headlines.

As a solicitor who practised in conveyancing, I may view this issue from a particular perspective but anyone who argues that repossessions must never be permitted is not telling the truth. When borrowers sign a deed of mortgage it is explained to them that the ultimate penalty for failing to repay their mortgage is the loss of their home. This is the starting point, although it must also be recognised that banks played a major part in creating the difficulties in which people currently find themselves.

The Bill seeks to remedy a problem that was created by the Land and Conveyancing Law Reform Act 2009, an unintended consequence of which was that it rendered useless some clauses in mortgage agreements, thus making them unenforceable. The system works on the basis that people who borrow large sums from a bank consent to losing their property if they cannot stick to their side of the mortgage agreement.

As elected politicians who represent our constituents, we must address the human side of the mortgage problem by recognising in legislation the hardship imposed on people in mortgage arrears. They do not know where to turn and face the trauma of losing their family home. Our task, therefore, is to ascertain what we can do to ensure the repossession of a family home is the last resort, while taking into account the commercial realities and legalities involved when people obtain a loan. We must be cognisant that the lending system works on the basis that borrowers who cannot make repayments ultimately face the threat of repossession. The Minister recognises the problem facing borrowers whose family home or principal private residence is threatened with repossession. Where a bank issues repossession proceedings in a court, the Bill provides that the judge can order an adjournment of the case to ascertain whether alternative solutions can be found, in particular, whether a personal insolvency arrangement under the Personal Insolvency Act would be a more appropriate and advantageous course for the borrower in question. This provision recognises that the family home is different from other types of properties on which borrowers may have mortgages and should be protected to the greatest possible extent. The Minister is endeavouring to negotiate the legalities of achieving this objective.

The legislation presents us with an opportunity to throw down challenges to the banks before courts make orders for repossession. The free legal advice centres have made a number of helpful suggestions in this regard. The Central Bank has introduced a thorough code of conduct for banks. As Deputies will be aware from speaking to their constituents, the code has not always been adhered to and many borrowers who are up to their necks in debt are unaware of their rights and the options available to them. Many of those who are in a vulnerable position because they are unable to repay a mortgage believe they do not have any say. The Bill provides that where a bank cannot demonstrate full compliance with the Central Bank's code of conduct, it should not be given a repossession order for a family home.

As I stated, most borrowers are not lawyers but people trying to make ends meet. I concur to some extent with Deputy Ross on the lack of resources available to the Money Advice and Budgeting Service, MABS, and free legal advice centres. In my constituency, the waiting time for an appointment with a free legal advice centre is six months or more, although I acknowledge that the primary function of the centres is to deal with family law cases, an important area. Individuals who may wish to challenge aspects of their loan or mortgage agreement are unable to obtain legal advice and are in some cases signing repossession orders without having taken legal advice. Many are unaware of the Central Bank's code of conduct and do not know that the Government is in the process of introducing protections and rights for borrowers which will empower them as they seek to secure the best outcome. Something had to be done because it was clear that we could no longer continue in the same vein. The personal insolvency legislation was introduced to give people options.

Serious consideration should be given to increasing the resources available to the free legal advice centres and Money Advice and Budgeting Service. People are not able to obtain the legal advice they require. As Deputy Durkan stated, they are seeking help from politicians. We are willing to try to help but these matters can have serious legal and personal consequences. For this reason, greater resources should be made available to enable people who are in a distressed state to obtain legal advice and assistance.

It is common practice for lending institutions to bring repossession applications before the High Court. This increases costs because ultimately, it is the borrower who must pay the loan amount, interest, penalties and legal costs. The Circuit Court would be a more appropriate forum for hearing repossession cases.

Banks must be challenged when they refuse to co-operate with borrowers. I dealt with a case where a bank refused a borrower permission to sell a property. As a result, the property is probably worth less than previously, whereas the borrower's circumstances have not changed. The banks have the upper hand in lending relationships as borrowers and banks do not have equal negotiating power. For this reason, we must hold the banks to account by requiring that repossessions can only proceed where no other recourse is available.

The resources needed by MABS and the free legal advice centres to provide support and advice to borrowers are sorely lacking and need to be beefed up.

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