Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

While previous speakers spoke about hypocrisy, there cannot be enough debate in the Chamber about the mortgage arrears crisis. The more we debate the issues involved, the more we can come up with solutions. There is no perfect solution, however, because the crisis is too big, but by focusing on it I hope the Government and the Central Bank will be encouraged to act. It is welcome that the motion has been tabled on the first day of the new Dáil session.

A couple of weeks ago I was lighting a fire in my house with some old newspapers when my attention was caught by a half-page advertisement placed by Sherry FitzGerald. The advertisement contained a picture of a young girl of about five or six years who was sitting on a swing with a big smile. The headline read "investing in the next generation" and it was proclaimed in bold lettering that in 25 years the girl could need €329,000 to make a deposit on a new home and suggested that if property continued to perform in the way it had over the previous 25 years, the average price of a new home in Dublin would be €3.29 million. The advertisement went on to argue that, while there were no guarantees in life, the economic indicators suggested residential property would continue to be a safe, sound and lucrative investment.

I refer to this advertisement because it is important to put into context what was happening eight years ago. Although we lived through that period, when we look at current property prices, the collapse of the economy and the issue of mortgage distress, we can forget that people were bombarded with this type of advertising to persuade them to get on the property ladder. These advertisements exploited their fears. Three years after that advertisement was published, 3.3% of family homes had mortgages in arrears for more than 90 days. When the Government took office in March 2011, the figure had almost doubled to 6.3% and it has increased to 12.3% in the first two years of the Fine Gael-Labour Party Government. There is no doubt that the Government and its predecessor buried their heads in the sand and ignored the problem. The reports were commissioned and ignored. The crisis has escalated to the point where it has gone out of control. We need to consider the future for the families who cannot sleep at night because of the fear of repossession or simply not being able to pay their way in life. I am aware of families in which husbands have emigrated in order to earn a better income that will allow them to afford their own house. I have met couples who have emigrated to Australia because they can find better jobs with higher incomes to repay their mortgages in Ireland and allow them to return in five or six years time when the economy picks up.

When the Minister announced the targets last March, I stated in this Chamber that while I was not convinced they were the right solution and that we needed to take a carrot and stick approach, I hoped they would work. However, they have not worked thus far. We will resolve the crisis at some stage, but will it be this year, next year or 2016? In the meantime all of that mental anguish and suffering will continue. The economy will also be affected because spending power will remain constrained.

When the fourth quarter figures were published, the Minister expressed disappointment at the banks' inaction. There is no doubt that the targets he set have since resulted in action on the part of the banks. However, the action took the form of 14,721 letters from the four main banks threatening repossession. That is how they have met their targets and they boasted that they had surpassed them. They fiddled with the figures by using the threat of repossession on a massive scale to fulfil the targets set. When I put this question directly to a senior representative of one of the banks, he replied that a board of a bank would take the easy option when it was faced with serious regulatory sanction. The easy option in this case is repossession. It is galling that the Minister has not stated letters threatening repossession of family homes do not represent a sustainable long-term solution which meets the targets set. Given that the Minister of State at the Department of Finance, Deputy Brian Hayes, has said they are wrong, it is regrettable that the Minister has not made similar comments.

Some of the people who have received letters have not engaged with the banks for lengthy periods. That is wrong. However, others have engaged with the banks. Yesterday I received a letter that Permanent TSB had sent to one of its customer. I outlined examples to Permanent TSB in regard to how it was asking for the voluntary surrender of houses on the basis of arrears of €300. Permanent TSB told one customer who had arrears of €1,000 that a voluntary surrender of the family home would be the best outcome. That is how it is meeting the targets. Yesterday we heard from a Deputy that Permanent TSB had issued a letter to somebody who was €100 in arrears.

These are examples of what they are doing. It is a tick-the-box exercise.

When he announced this plan with Matthew Elderfield, the Minister stated progress would be monitored closely by the cross-Government mortgage arrears steering group and the enhanced Cabinet committee on mortgage arrears and credit availability and that the Government would take any further action it deemed necessary. This evening, the Minister praised the members of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform for getting information from the banks, and I believe we did a good job with regard to trying to get as much information as possible from the banks. He also stated there is a requirement for an audit. We know there is a requirement for an audit; it was announced in March. What astonishes me is that the Minister told us in March the committee chaired by the Taoiseach on which the Minister and the Central Bank sits would monitor this closely. Did the Minister have to wait for me, Deputy Michael McGrath and other Deputies to extract from the banks that they met the target through issuing 14,721 letters threatening repossession? This is not the confidence he portrayed when he made the statement in March that not only the steering group but the Cabinet committee would monitor this closely, and that the Government would take any further action it deemed necessary. The Minister is completely and utterly impotent on this issue and his failure to state that issuing these letters is not a way to reach the targets is simply wrong.

Earlier we heard Government Deputies giving out that issuing threatening legal letters is not a long-term sustainable solution, but we also heard the bankers very clearly tell the committee that the Governor of the Central Bank told them it was okay. We are in a charade; the Minister of State goes on the radio to huff and puff and say it is wrong, while the Minister with the calm cool head who judges his words very carefully will not say it is wrong. I am sure he knows the Central Bank told the banks the letters issued by AIB, Bank of Ireland, Permanent TSB and Ulster Bank are allowed under the code of conduct. The Minister should be truthful and up-front with Members of the House about this. If the Minister does not know, he should send a very clear message to the banks today stating it is simply wrong. They were very bolshie and stated the Central Bank told them it was acceptable.

On one occasion when he came before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, Mr. Honohan stated if targets are set the banks will find a way to meet them, and this is what they have done. One problem with the targets is that they lack ambition. The target for the end of next March is that 25% of those in arrears for 90 days or more will have a sustainable solution offered to them, agreed and completed. This seriously lacks ambition. A year from the day the Minister addressed the more than 140,000 people in mortgage arrears and stated targets were being set and that the Government would crack down on the banks and monitor the situation, the Minister's biggest ambition on mortgage distress is that 75% of them will not have concluded an agreement with the banks. This seriously lacks ambition.

The problem is that because the Minister allows repossession as an option, the banks will take the easy option and repossess family homes and buy-to-let properties. They will take the easy option and will not engage with those who are genuinely struggling to pay their mortgages, who know they are unsustainable and want one of the solutions available. Numerous people have come to my office or phoned me from throughout the State to tell me they have phoned the banks but could not get a response. What is happening is unbelievable. I am aware of letters that state that the bank has examined a person's circumstances and wants to repossess. The person is told he or she has 30 days in which to take independent advice, for which the bank will pay €200. This is absolute nonsense if a person is in arrears of €300. When such a person finally gets to speak to the bank he or she is told the bank will do another type of deal. Many such letters are sent in error and I believe the audit will show this. Families are being put through mental torture; the banks holding the title deeds of their houses, where they have children, tell them they must agree within 30 days to vacate and sell their houses. It is absolutely pathetic and the banks are making a mistake.

The strategy on which the Government has embarked has serious problems. Interest should not be charged on split mortgages and the residual debt needs to be written off. Sinn Féin has been very consistent on this. There must be partial debt write-down for people who simply will not be able to pay their full mortgages over a long period. We must allow people a clean break. Personal insolvency practitioners have clearly stated on the radio that if the only debt a person has is a mortgage with AIB or Bank of Ireland, this person should not to go to them because they are for those with multiple debts with various institutions. The problem is that people with mortgages have been left at the mercy of the banks. Even after a few weeks it is clear there is a need for a public personal insolvency service, which should have been established from day one. The Minister should continue to monitor the situation and allow this. The Sinn Féin amendment includes the introduction, even at this late stage, of an independent mechanism which could arbitrate between the banks and mortgage holders and make and impose adjudications. It is clear from all of our discussions and everything we have seen from the banks they will do the bare minimum.

The banks have taken the Minister on a merry dance, or perhaps the Minister, along with the banks, is taking us on a merry dance. He stood here and told us all about the Mercer report and said the bankers would pay. I asked all four banks and not one of the 2,700 officials in any of the four banks who earn above €100,000 has taken one cent of a reduction in base salary. Changes have been made across the board to pension schemes and there have been large redundancies, which have reduced the payroll by the 6% to 8% target set by the Minister, but not one individual at the very high levels, including Mr. Boucher, has taken a pay reduction. This is simply wrong. We discussed this at the same time as the Government discussed public sector workers taking pay cuts through the Haddington Road agreement. I am sure the Minister will also dish out pain in the budget next month.

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