Stephen Donnelly (Wicklow, Independent) | Oireachtas source

He is one of two chief executives who told us that.

Let us look at the offers that have been made. Four out of every ten of these so-called offers actually represent legal proceedings, while another 10% are so-called assisted voluntary sales. Let us remember that some of these assisted voluntary sales may be exactly that, but I will tell the House what a lot of the others are. They involve the bank giving customers two options, the first of which is to agree to leave the house and the bank will sell it or else it will evict the mortgage holder and charge an additional €10,000 in legal fees. Let us not forget that these so-called assisted voluntary sales are not always such. Therefore, 40% represent legal proceedings, while 10% are so-called assisted voluntary sales, representing half of the offers made so far. A further 35% of the offers made so far actually increase the total payments that borrowers will make to banks over the life time of the loan. These include interest-only arrangements, term extensions and recapitalisation of arrears. All of these propose to solve the problem of unsustainable debt by increasing that debt. About 15% or three in every 20 offers made to date by the banks that appeared before the Oireachtas committee this week involve reducing the payment burden on the family. That is the reality in not insisting on quality. That is the reality of a Government which has stated, "We will set targets, but you know best. You go off and deal with your borrowers on a case by case basis."

What could possibly go wrong with allowing a few banks in Ireland to determine what should happen in a mortgage market?

We are seeing complete inconsistency in terms of how the different banks are engaging with their customers. Bank of Ireland deserves special mention in this regard. The legal proceeding numbers its representatives brought before the committee this week were twice as high as those of some of the other banks and four times as high as the figure for Permanent TSB. Bank of Ireland's split mortgage product is a joke. It involves breaking the mortgage in two and charging the same interest rate on both halves. One half of the loan will reduce as the customer pays the capital down, but the other half will increase because the capital on that portion is not being serviced. The Bank of Ireland delegates had straight faces as they told us yesterday that splitting a loan in half and charging the same interest rate on both pieces is actually a solution to an unsustainable mortgage. The reason those four men could look us in the face and make that claim is because this Government is letting them away with it. They are being allowed to come in here and laugh at all of us. I assure the Minister of State that after the past three days of committee hearings, that is exactly what they are doing. It is what they did six months ago and six months before that.

In fairness to some of the banks and some of the people working there, real efforts are being made to address this issue. It certainly is not a case of a curse on all their houses, but Bank of Ireland stands out in all of this. When its delegates told the committee yesterday that they were willing to write down unsecured debt, I asked them about situations where there is residual debt after a sale. Say, for example, a family which owes the bank €300,000 is evicted and their home is sold for €200,000. I pointed out that the remaining €100,000 is, by definition, unsecured debt and must be accounted for as such on Bank of Ireland's books. Was the bank saying that it is prepared to write down debt in those situations? The delegates responded that because the outstanding amount used to be attached to a security, it would continue to be treated as such. They basically acknowledged that if they are so inclined, they will follow people to the grave for that money. We should bear in mind too that the outstanding debt of €100,000 will be liable for interest at 5% per year. In other words, it will cost a family in that situation €5,000 per year just to keep its debt to Bank of Ireland at €100,000.

We know that mortgages are being sold to vulture funds and it seems those funds are being allowed to pick and choose which loans they take. When a special liquidator told me and members of the media that Lone Star and Oak Tree were not being allowed to pick any performing mortgages, we asked for confirmation in writing that this was the case. That produced a change in the story. The written confirmation I have is that Lone Star and Oak Tree did buy all the non-performing loans but also some performing loans. Moreover, the anecdotal evidence we have from mortgage holders is that performing loans that are in equity have been taken by Lone Star and Oak Tree, while performing loans in negative equity are going to the National Asset Management Agency. We have a situation, therefore, where United States-based debt specialists are apparently choosing performing loans with equity and charging variable rates on those loans. I am not referring here to a single variable rate; I am saying that these entities are operating on a loan-by-loan, family-by-family basis, ratcheting up the interest rate as they see fit. If and when a family says it simply has no more money to give, that is not a problem because there is equity in the house and the family can simply be evicted.

These entities are completely unregulated. The Minister has said that if, in his view, these vulture funds are not obeying the code of conduct for mortgage arrears, he will introduce legislation to regulate them. That is an extraordinary position to take. It is like saying it is illegal to burgle all of these houses but not illegal to burgle those houses over there, but if we find that a lot of burglars are breaking into the second set of houses we will make it illegal to do so. What an absolutely preposterous position to take.

There are 175,000 mortgages in arrears in this country. Let us assume there is approximately that number again in pre-arrears, that is, people who are doing everything they can to avoid joining the 175,000 already in arrears. That combined figure equates to some 1 million men, women and children who are directly affected by this situation. It does not take account of the impact on parents or siblings who are helping their loved ones out or the impact on workplaces where, inevitably, people cannot bring their very best to their job because they are worried about whether or not they will have a home to go to at the end of the day.

The mortgage crisis in Ireland has been going on for six years. We are the only country in the world to have allowed it to continue on such a scale for so long. No other country has so spectacularly cocked up its mortgage market. The situation continues as it is because of Government inaction and because the Government is in thrall to the banks and the markets. We need a strategy to deal with the tens and thousands of men, women and children, according to the banks' own figures, who will be kicked out of their homes. We need legislation that mandates a range of solutions for borrowers. The question of whether one gets kicked out of one's home and whether one has money to invest in one's future and that of one's children must not come down to whether it is Bank of Ireland, Allied Irish Banks, Permanent TSB , Oak Tree, Pepper, Apollo or Danske Bank knocking on one's door. It is about ensuring there is equal and fair treatment under law.

The Government should accept this excellent Bill, which goes right to the heart of the power imbalance between citizens in distress and the banks they bailed out. I commend Deputy Pearse Doherty on bringing forward a timely, thoughtful and targeted legislative proposal.

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