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

I welcome the opportunity to contribute to this Private Members' motion. I will be sharing my time with Deputy Brassil. At the outset, I thank Deputy Mattie McGrath and his colleagues from the Rural Independent Group for bringing this motion to the House tonight and for facilitating such an important debate because we are all fresh from the local and European elections and we are fresh from a lot of direct interaction on the doorsteps with constituents, and this is an issue. It is an issue how people are being treated, especially when their loans are sold. There is no doubt about that and there are real concerns. It is our job to assess whether those concerns are well founded, to seek to address them, to come forward with the right policy response, and to deal with that.

There are a number of points that I want to make on behalf of our party as part of this debate. First, there can be a characterisation at times that the loans that are sold to so called vulture funds, whether they be mortgages, farm loans or business loans, are basket cases and a lost cause, but that is not the case. Many of them are deep in arrears and in some cases no repayments have been made for many years, but in a great number of cases, these are inherently good loans. They are loans where the borrower is engaging, where in many cases restructuring agreements have been entered into and are being honoured by both the lender and the borrower. Despite this, the loans are still technically classified as non-performing on the balance sheet of the respective bank, in line with the technical definition of a non-performing loan as defined by the European Banking Authority. These banks are under pressure from Europe to reduce their level of non-performing loans and there is no doubt about that.

The question is, however, whether there is a better way of doing it. The Minister pointed to the undoubted success there has been in bringing down the overall level of arrears. Thankfully, the number and percentage of mortgages in particular that are in arrears has fallen, in line with the growth of the economy.

It is fair to say that while we all have many challenges engaging with banks on behalf of borrowers, in the vast majority of cases, where there is goodwill on both sides, where the borrower is making a genuine effort and where he or she is paying what he or she can, in most cases but not all, a deal can be done and an arrangement can be entered into at least to buy time and perhaps to enter into a split mortgage, to get forbearance through term extension, or to get an interest-only mortgage for a period. Whether that is always the case when public representatives are not involved is another matter and it is up to the Central Bank to assess the data and the evidence on that.

Good loans are being sold as well as loans that are not in such good shape. There are those who would argue that there is a better prospect of getting a deal from a vulture fund than from a financial institution. I have tried to deal with them as well as borrower representative bodies and my experience is that there is a prospect of getting a deal if one is prepared to lose and forfeit the ownership of one's property.

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