Stephen Donnelly (Wicklow, Independent) | Oireachtas source

I commend Deputy Pearse Doherty for introducing this Bill which seeks to amend the Land and Conveyancing Law Reform Act which was passed last year and Part 1 of which reversed the Dunne judgment. That was the judgment that meant no bank could take possession of any house. It is regrettable that the judgment needed to be reversed, but the harsh reality is that if banks were not able to take possession of a property on which money was secured, there would be no future mortgage market in this country or it would be treated as unsecured lending, in which case mortgages would have 10%, 12% or 13% interest rates attached. Unfortunately, Part 1 of the Act is a necessary evil. However, it needs to be balanced with an obligation on behalf of the State and the banks on how and when possession is taken.

Part 2 of the Land and Conveyancing Law Reform Act is essentially a version of the Family Home Protection (Miscellaneous Provisions) Bill which I introduced in 2011. It allows a judge, for the first time in the history of the State, when dealing with an appeal from a bank for possession, to consider a wide range of new criteria never before considered. The judge may adjourn proceedings, if that is considered appropriate, to allow for consultation with a personal insolvency practitioner and may instruct the personal insolvency practitioner to make a proposal. Further, the judge may consider whether the mortgager, that is, the bank, has participated in any process relating to mortgage arrears and whether the borrower has made any payment to the bank. Critically, the judge may consider the conduct of all parties before the court. The Master of the High Court, Mr. Edmund Honohan, described this change as significant. I developed that legislation with Mr. Ross Maguire, senior counsel, and I am very happy that it passed into law.

Deputy Pearse Doherty's Bill would add several criteria to the Land and Conveyancing Law Reform Act. It would allow a judge to adjourn proceedings for six months rather than the current period of three months; to insist on parties engaging in an insolvency process; to insist on the code of conduct on mortgage arrears being adhered to; and, critically, to refuse to grant permission unless the bank, the vulture fund or whoever owns the mortgage, had exhausted every reasonable option other than possession. The Bill would further allow the judge to insist on the residual debt being dealt with as part of the possession order and direct that evicted families be given sufficient time to find a new home. In the context of what is going on in this country, every single one of these proposals would be a fair and reasonable change to the Land and Conveyancing Law Reform Act.

The Government has set targets for the banks. It has told them that if they do not make a certain number of offers of sustainable restructures by certain dates, they will be penalised financially. At the time, with others, I said these targets were not only misplaced but would also be very damaging and that they were only one part of the solution. The Government has focused on the quantity of offers made, but it has done nothing about the quality of these offers or the consistency, or rather the complete lack of consistency, of these offers not only between banks but within individual banks. What is the reality of a Government that is insisting on banks hitting targets on quantity, targets they can define? Let us remember, the banks are allowed to define what is deemed to be a sustainable offer. What has happened? We heard really shocking testimony this week. The four banks that appeared before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform estimated that there would be around 6,500 evictions, based on the mortgages under consideration thus far. This estimate does not include any of the other unsustainable mortgages which they still have to examine. It does not include any of the mortgages which are unsustainable but still not in arrears and does not consider any institution beyond the four banks that appeared before the committee. As we know, there are many other banks and funds in the country, with a further two from America which are debt specialists.

What else do we know? We now know that the banks are vetoing insolvency service proposals. The insolvency legislation had promise, but it was neutered by giving the banks a veto. About 50 protective certificates have been issued to date, in the context of 175,000 mortgages in arrears. Mr. Richie Boucher, the chief executive of Bank of Ireland, told the committee yesterday that it would veto any proposal that involved any write-down of secured debt.

See this speech in context