Thomas Pringle (Donegal South West, Independent) | Oireachtas source

I welcome the opportunity to contribute to the debate on mortgage arrears. I commend Deputy Stephen Donnelly on the work he has done in presenting the motion to the House this evening.

It is ironic that the spring economic statement was debated today with talk of €1.5 billion in wriggle room available for the upcoming budget while on this side of the House we are talking about families who are still struggling to keep their homes. These people have no wriggle room because the banks will not allow it. In my constituency in Donegal, the situation for homeowners is grim. There are 271 repossession cases before the courts in Donegal and 15% of homeowners are in serious mortgage arrears according to the Central Bank.

Although the motion welcomes the recent reductions in total mortgage arrears levels, we must be wary of the Central Bank's warning that the rate of house repossession in Ireland is likely to ramp up significantly in the coming months with new figures showing nearly half of the proposed solutions for distressed borrowers involve the loss of properties. I therefore support this motion because it brings in solutions now and not later. Like many other motions that have come before this one, it offers a borrower-focused solution to the mortgage crisis. That has been the primary problem with any solution presented by the Government. Its policies are not borrower-centred; they are bank-centred. This forces the stakeholders involved and the borrower to ultimately heed the demands and wishes of the banks.

The range of policies seen over the lifetime of this Government attempting to address the mortgage crisis include the Insolvency Service of Ireland, the code of conduct on mortgage arrears, the mortgage-to-rent scheme, a reduction in the bankruptcy term and the Central Bank's mortgage arrears targets. Some were positive attempts to tackle the overwhelming mortgage crisis executed in typically bad form, while others were clearly bank-centred with no room for the borrower to negotiate. While believing the Government is far too late in addressing the mortgage crisis and that it ignored warnings given within this House of an impending crisis, I also believe that by shifting policy direction towards the borrower - the home owner and the family - we can work towards unravelling the damage already done.

This motion calls on the Government to act in a multi-pronged approach through funding mechanisms, introducing legislation, amending previous legislation and introducing new schemes and reviews of current practices. We must turn around completely in the opposite direction and undo the damage caused by previous policies and implement better ones, but this time with the home owner at the centre. I draw the House's attention to the motion's policy objectives which reflect that turnaround. These include the minimising of socioeconomic harm, avoiding repossessions when it is the family home, ensuring the dignity of all parties and equity in the resolution of unsustainable debts, ensuring sustainability is at the heart of procedures, avoiding rehousing as a solution and ensuring adequate advice and representation is provided for borrowers. The last point is particularly important. This has been a consistent complaint by home owners, especially under circumstances where they cannot afford effective advice or representation throughout the process.

If we look closely at the policies currently in place, we can see how bank-centred they are. The Insolvency Service of Ireland was established in 2013. When analysed, the figures for deals done in 2014 showed that nearly half, some 448, were not deals but bankruptcies and a further 230 were arrangements relating to debts below €20,000. There were 199 personal insolvency arrangements including property and 98 debt settlement arrangements on unsecured debt.

How do we make this system more borrower-friendly? We need to get rid of the banks' veto power to force them to engage with their customers. The mortgage-to-rent scheme has been bank-centred and has failed to provide a last resort to prevent repossession while saving the Exchequer from funding families who have lost their home. As the banks control the process and other stakeholders managing it have to take advice from the banks, the scheme was doomed to fail and so it has. Just two cases have been completed in the north west since the scheme's launch in 2012. Neither of them was in Donegal. Nationwide, the figure is a shocking 88.

The code of conduct on mortgage arrears has also proved contentious. Currently no bank has been sanctioned over breaches of the code, which is incredible as the code is statutory and many housing authorities insist breaches have been made. If those in arrears are declared by their lender to be unco-operative under the code, the borrowers can lose all their protections, up to the point of having their homes repossessed. This is an incredibly imbalanced relationship between lender and borrower. The bank has far too strong a hold. How can a borrower compete with this amount of authority? How can it trust that the law would be on its side if not one lender has been sanctioned for breaches that are obviously occurring?

The picture is very clear. Significant profiteering is taking place on the backs of very vulnerable people who are struggling to meet their mortgage payments and struggling through this recession. Much has been made over recent months of the banks returning to profitability, but the debate has exposed how that has happened, namely, by screwing people on variable rate mortgages. We see the facade that is the banks having returned to profitability, which has happened on the backs of vulnerable people who are struggling to keep roofs over their heads. This Government has allowed that to happen. It has lain down before the banks at every opportunity and allowed them to continue to ride roughshod over the citizens of this society. The Government needs to act now.

More than 300,000 families are on variable rate mortgages with interest rates of up to 4.5% while the banks are borrowing money at between 1.1% and 1.5%. If all those 300,000 people were paying an extra €6,000 per year in interest, compared with what they would be paying if they had reasonable rates on their mortgages, it would contribute more than €1.8 billion in profits to the banks. That is what we have, namely, a picture where the banks are fuelling the recovery on the backs of distressed mortgage holders and people who are struggling to meet their repayments. The Government must act and act now. It must stop lying down before the banks and bending over for them every time they demand it.

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