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

I move: "That the Bill be now read a Second Time."

I am delighted to speak on the Mortgage Arrears Resolution (Family Home) Bill 2017. The fundamental premise of this Bill is that our party, Fianna Fáil, believes that it is good social and economic policy to protect the family home. We believe the State should support people who are making a genuine effort to face up to their responsibilities and should ensure it has a system that is fit for purpose and protects the family home. We must recognise that there is still a significant problem with mortgage arrears and that the system must be improved. For example, there are still more than 76,000 private dwelling home, PDH, or family home mortgages in arrears. Of those, 41,000 are in arrears of a year or more. The total debt in respect of those mortgages is approximately €8.8 billion and the amount of actual arrears for mortgages in arrears of a year or more is approximately €2.5 billion. That is the scale of the problem.

While some restructures are happening and some deals are being done, it is very inconsistent and patchy across the different institutions and, indeed, depends on who one might be dealing with within the institutions. Many of those who oppose this Bill will say that the number of repossessions is low. However, I point to the recent statistics from the Central Bank which show that in the first quarter of 2017 alone, legal proceedings were issued in respect of 1,645 cases. I accept that the proceedings are issued, not concluded. Nonetheless, it is the start of the process. For every house or apartment that is repossessed by way of court order, many others are lost to the individual or the family by way of voluntary surrender or voluntary sale. That is very common in our system.

Of course, the ideal scenario is that an individual mortgage arrears case would be resolved by agreement between the lender and the borrower under the code of conduct on mortgage arrears, CCMA, and the mortgage arrears resolution process, MARP. That is happening in some cases, but certainly not in others. Under the CCMA that has been established, the odds are stacked against the borrower. It is the lender who makes the final decision as to whether a mortgage is sustainable and the lender makes the final decision on whether a mortgage holder is entitled to receive a restructuring offer under the terms of the code. Where agreement cannot be reached, the State's solution is that people should engage with the Insolvency Service of Ireland.

When the service was established under the 2012 legislation, Fianna Fáil described the Government decision to give the banks a veto as a bad idea which would not work. The then Government stated it would be unconstitutional not to give the banks such a veto. Under pressure from my party and others, amending legislation was passed in 2015 to provide for an appeals mechanism to an insolvency court under certain criteria. This system is simply not working, however. I have spoken to a number of borrowers who have been caught up in the system, as well as personal insolvency practitioners who act independently rather than solely on behalf of the borrower. They inform me that it can take up to and beyond one year to conclude a case. They also note that the banks are providing significant resources to defend cases. The result is that mortgage holders have been put on the never-never and left in limbo because it is not clear whether their cases will be resolved.

The Minister may ask why cases should go this far. The most recent statistics from the Insolvency Service of Ireland confirm that in the first quarter of 2017, 43% of applications for personal insolvency arrangements, which involve secured debt and typically mortgage debt, were unsuccessful because they were either rejected by the creditor by way of a vote against the arrangement or the protective certificate expired because it was not possible to reach a deal.

There does not appear to be an end point in the current arrangement other than the loss of the home, whether through a court order, forced surrender or so-called voluntary sale. We are proposing that an independent office in the Insolvency Service of Ireland have the final say on a proposal to restructure mortgage arrears involving the home of an individual or family. This would be a fundamental reform of the current system, one which would remove the veto over personal insolvency arrangements and give individuals and families the real prospect of achieving the outcome they desire.

The Bill is not a charter for chancers or people seeking to avoid their responsibilities. Many important safeguards are built into its provisions and the independent office will have significant powers in this regard. However, it provides a pathway to protect the family home and sets out a way in which the debt associated with the home can be prioritised. Other indebtedness that an individual may have would be dealt with under the normal insolvency system.

As I will wrap up the debate, I will cede time to my many colleagues who wish to contribute. I look forward to the debate and call on Deputies across the House to support the Bill when the House divides on it tomorrow.

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