Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

Today 143,000 family home mortgages are in arrears and there is no easy solution to the problem. No one suggests the banks can throw away the capital the taxpayers have given them and they must be prudent. One thing is certain; the problem will not be solved if banks are allowed to continue to run the show. Last March the Central Bank issued targets for the banks to offer sustainable solutions to those in arrears. The Government warmly welcomed the new targets programme but it has since been shown conclusively the banks have effectively made a mockery of the process, relying on threatening legal letters to reach their targets. The Minister stated he does not regard a threatening legal letter to be a sustainable solution. Let us back up these words with actions. We await confirmation from the Central Bank as to whether this is acceptable.

In the majority of cases presented to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform the bank's solution was to tell the borrower it wanted the home back and the person either had to sell it or give the bank the keys, or the bank would go to court to repossess it. This was the message from the banks in the majority of cases. In many cases these threats were made to people before any other forbearance measure was even tried. The message from the Government has been that repossession is the last resort, but the reality in very many cases about which I personally know - and I am sure every Deputy also knows of cases - is that such a letter was the first action the banks took in respect of people in mortgage arrears. It is simply not good enough. The banks in this country owe their very existence to our citizens and the least they can afford to do is show some compassion and civic-mindedness in dealing with mortgage arrears. We need more proper long-term sustainable solutions and not mere sticking plasters in the short term. We need more permanent interest rate reductions, sustainable split mortgages and debt for equity arrangements. We all know it makes far more sense economically and socially to keep people in the family home where it is at all possible.

The establishment of the new insolvency service was a welcome initiative, but there is growing evidence already that thousands of the most distressed borrowers in the country who most need access to the service are being locked out because they have no ability at all to repay any of their debts within the insolvency guidelines. In many cases they simply cannot afford the fees being charged upfront by the personal insolvency practitioners. The Government's singular response to the mortgage arrears crisis was to abolish mortgage interest supplement for new entrants. This is the one payment people rely on to make interest payments on mortgages, to try to keep the wolf from the door and prevent banks from coming at them.

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