Seán Crowe (Dublin South West, Sinn Fein) | Oireachtas source

Like other speakers, I welcome this debate on this long overdue Bill. In my view, the Government has enabled and even empowered vulture funds. The sale of loan books to unregulated entities was the policy of this Government. The only reason this Bill is being introduced is because the citizens affected campaigned and lobbied on this issue.

The sale of IBRC was a brutal, calculated sale of citizens' loans to unregulated vultures to temporarily sort out a Government headache. I am sure the Minister of State will agree that this is an ongoing issue in that the sale of loans books to unregulated entities continues. While Sinn Féin hopes this Bill will do what it proposes concerns about it have been already raised. There are potential gaps in this legislation that need to be closely scrutinised. Simply put, it appears the Government has taken the path of least resistance and opted to regulate the middle man. In terms of ensuring the rights of mortgage holders it is unclear whether this approach will be satisfactory. The rights of mortgage holders with performing loans or in arrears must be central in this Bill. I am concerned that this focus may or has already shifted in terms of this legislation.

When a mortgage is sold the householder should be given the full details in regard to whom the loan has been sold and should also be provided with a list of his or her rights. This basic demand from campaigners and those who have lobbied on this issue is normal in business or other fields. Traditionally, when a person took out a mortgage he or she travelled the term of that mortgage with the lender. People of my generation, who often had to think long and hard about whether to take out a mortgage, had other options. Young people today do not have many options because the option of social housing no longer exists and the option of rented accommodation is limited and provides no security of tenure. Unlike in other progressive countries across Europe there is no security here in terms of rental costs.

People are being forced down the route of home ownership and mortgages. It is regularly said that Irish people have a fixation on property ownership. It is because there are few options available to them that people are choosing to go the home ownership route. For many people, it probably was not in their best interests to go the route of buying a house but they felt they had no other option but to do so. While there have been many glib statements as to the reason they did so, the main reason was security of tenure. Many people had hoped when opting to buy a home that their wages would improve into the future and allow them to repay their mortgages. As we know for many, unfortunately, this did not happen.

This Bill regulates credit servicing. However, the definition of what is not a credit servicing agency needs to be tightened up. The wording in this section is at best unclear and at worst indecipherable.

That lack of clarity could have real effects which mean home owners are still left exposed. Even the core aims of ensuring home owners have access to the Financial Services Ombudsman and the code of conduct on mortgage arrears, CCMA, is potentially not met in the legislation as drafted.

Thousands of families have been waiting - some would say praying - for this legislation. Some have been campaigning for it for a long time. Others are only waking up to the fact their mortgage is owned by a vulture fund as new letters with new demands and unusual letterheads start dropping in their letter boxes. Similarly with e-mails, people tend to ignore them as scams. Sinn Féin stands ready to engage fully on Committee and Report Stages and in the Seanad to get this legislation right and eliminate any gaps in it. Families thrown to the vultures want and need to get their rights back. My party will table amendments to bring clarity to and strengthen the effect of regulation of this area.

There is also the related issue of mortgage distress. The number of households now two years or more in arrears on their mortgages has risen to 37,500. It is estimated 118,000 household are in mortgage arrears and 110,000 mortgage accounts were restructured by the end of September 2014. That provides us with a snapshot of the difficulties experienced by many.

Life loans are loans for the over-65s where no interest or capital is repaid on home loans until the borrower passes away. At that point, the borrower’s executor sorts out any surplus with the lender for distribution as per the will. While many banks and lending institutions have dropped these financial products, I recently had an example of a woman who had taken out one of these loans several years ago. She had started work at 14 years of age, ending up working in the Civil Service. She was single and very proud. In her late 70s, she took out a loan because she had been advised by the Garda to get more secure windows and an alarm system in her house after it had been broken into on two separate occasions. She was convinced by the bank to take out a loan for more than €20,000 which is now the maximum for such loans. With the loan, she paid for the new windows, the new alarm, gave some to her family and the rest she put into a deposit account, thinking that the interest on that would assist with the repayments. A long time afterwards, the repayments began to increase, however, while the value of her house, essentially her legacy which she wanted to pass on to her nephews and nieces, was disappearing, going from €400,000 to €250,000 because of the recession. She realised the way her loan was going not much would be left when she passed away.

The woman in question tried to negotiate with the bank on the terms of the loan but the individual she had originally dealt with was on maternity leave and there were different personnel in place. The situation, even after a year, is still waiting to be resolved. It is an example of where the system can go wrong. The top bankers are due to appear before the banking inquiry in due course and no doubt the area of debt write-down will be raised with them. This activity was morally wrong. We have sold people a pup. Well-known personalities are still selling these types of products on the airwaves.

I know of another individual who took out such a life loan but his wife is now in a nursing home and he is covered by the fair deal scheme. Again, the value of their home is shrinking because of the interest to pay on this life loan, meaning there will be very little left in the end. While this might not be the subject of this legislation, if we are concerned about the impact of these financial products on consumers, it is worth examining this area. I hope some of the smart alecks in the banks will take notice of this. The banks sold these life loans very slickly, promising people could go on holidays and so forth without any worry. In fact, judging from the two cases I have encountered, these loans are worrying people into an early grave rather than them having a few bob as they get older.

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