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

As I highlighted to the House on 4 November last, the numbers involved are simply frightening. By way of example, in the first six months of 2013, there were only 44 ejectment civil bills in Cork Circuit Court. In the second half of 2013, however, there were 246 and this figure increased to 335 for the first six months of 2014. In Cork alone, at least 100 cases per week are being brought before the courts. Such is the increase in activity by the banks in enforcement actions that additional court sittings have had to be organised. That scenario is replicated around the country. Even more worryingly, figures released by the Minister for Finance in November last show that for every home repossessed by court order, another three are voluntarily surrendered or abandoned by the owners under pressure from the banks.

Currently, only two options are available to families struggling to meet their mortgage repayments but who wish to stay in their homes. The first is to reach an agreement with their lenders to restructure their mortgages while the second is to enter a Personal Insolvency Arrangement, PIA, under the Personal Insolvency Act 2012. In both cases, however, the bank has a veto and can refuse to accept the homeowner's proposal. The bank can threaten repossession as a means to force a borrower to accept a restructuring that is not suitable for them because no other realistic option is available to the homeowner in which the bank does not have a veto. If the borrower does not accept the bank's wishes, or cannot comply with the level of repayment the bank demands, he or she faces the possibility of eviction from the family home, but also a lifetime of debt if the home is sold for less than the outstanding mortgage. The power imbalance that exists between mortgage lender and homeowner, which is the direct result of the Government's policies, is extraordinary, deeply unfair and out of place in a modern democracy. The banks hold all the cards as a result of their in¬built vetoes and because the consequences for a homeowner are significant if they cannot reach an agreement with their lender.

This legislation would transform the relationship between homeowner and bank, as it would remove a lender's right to an unqualified veto over reasonable solutions proposed on behalf of homeowners who have fallen into arrears on the mortgages for their family homes. Restructuring of mortgage accounts by financial institutions has increased but too many homeowners are falling through the cracks. The Government's solution for those who have been unable to restructure with their mortgage lenders, or who have unsecured debts alongside their mortgage arrears, is a PIA but only tiny numbers have availed of this option. At a time when in excess of 100,000 family home mortgages are in arrears, only 218 people with secured debts were granted protective certificates, the first step towards a PIA, in the final quarter of 2014. An even smaller number had a PIA approved by their creditors, with 119 such arrangements approved that quarter, while almost 30% did not have a successful outcome. Less than 200 PIAs have been approved by the Insolvency Service of Ireland, ISI, since this option became available in 2013. This is based on 16 months of hard data. A total of 199 PIAs involving secured debt were approved by the ISI. This is in the context of 118,000 family home mortgages in arrears. By any measures, this Act is not working. The Government must acknowledge this and face up to the underlying reasons to deal with mortgage debt.

Such low numbers of successful arrangements show the extent of the power of veto given to secured creditors in the Government's personal insolvency legislation. There were more bankruptcies in the fourth quarter of 2014 - 147 - than successful PIAs. To put it in perspective, there were more applications for repossession in Cork Circuit Court alone in 2014 than successful PIAs nationwide.

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