Ciarán Lynch (Cork South Central, Labour)
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I move:

That Dáil Éireann:

— notes the rapid rise in unemployment in the past 12 months and the resulting difficulties that many families are having in meeting mortgage payments;

— notes that the number of families in mortgage arrears could be as high 35,000;

— notes the irresponsible lending practices engaged in by many financial institutions that have contributed to the growing problem of mortgage arrears;

— notes the unprecedented assistance that has been provided to the banks through the blanket guarantee, recapitalisation and the NAMA proposals;

— notes with concern that the number of repossession orders issued in the High Court increased by 120% in 2008, and the prospect of a significant increase in home repossessions once the NAMA legislation has been passed and legal proceedings in these cases are transferred to the Circuit Court after 1 December 2009; and

— believes that, in the majority of cases, the public interest is best served by ensuring that families can remain in their homes for as long as possible, so long as reasonable efforts are made to meet the borrowers obligations;

calls on the Government to:

— bring forward a moratorium scheme that would provide for a minimum period of 24 months from the time that mortgages first go into arrears, before repossession proceedings can be taken, where a borrower makes reasonable efforts to meet their obligations to pay the mortgage on a principal private residence;

— apply the scheme to all banks covered by the guarantee or participating in NAMA;

— establish the scheme on a statutory basis;

— provide for mediation services under the scheme to assist borrowers in coming to satisfactory arrangements with lenders, such as extending the period of a mortgage, putting a mortgage on an interest-only basis, or rolling up interest for a period, and to act on behalf of borrowers in negotiating with financial institutions and public authorities in working out viable repayment arrangements; and

— establish as a principle of public policy that, where possible and subject to reasonable limits, a family making a reasonable and honest effort to meet their obligations should be assisted to remain in the family home.

I wish to share time with Deputies Liz McManus, Willie Penrose, Jan O'Sullivan and Aengus Ó Snodaigh.

Brendan Howlin (Wexford, Labour)
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That is agreed.

Ciarán Lynch (Cork South Central, Labour)
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The Labour Party is calling this evening for a two year moratorium on family home repossessions by all banks covered by the NAMA scheme, the provision of a service to assist mortgage holders in difficulty in coming to an arrangement with lenders and to establish as a principle of public policy, where possible and subject to reasonable limits, that a family making a reasonable effort to meet their obligations should be assisted in their efforts to remain in the family home.

The dramatic downturn in the economy, and particularly the massive increase in unemployment, has created huge difficulties for families in meeting mortgage arrears. As a result of the increase in numbers on the live register and the collapse of many small businesses, couples who bought their homes in the past decade and who took on heavy mortgages in good faith and based on their income, suddenly find that the loss of one or both jobs leaves them unable to meet their monthly repayments. While the number of repossessions to date has been modest, there is a significant increase in the number of applications coming before the courts, as is clear from today's newspapers. There is a real fear that when the position of the banks is solidified by the enactment of the National Asset Management Agency, NAMA, legislation a flood of repossession orders will be unleashed.

The recent estimate that there could be as many as 35,000 mortgage holders in trouble is a ticking social time bomb that must be defused. Apart from the social consequences for families, repossessions will do little for the financial institutions. They may well be able to repossess a home but in the current economic climate they will have great difficulty selling it. Given the number of households facing negative equity, banks will face large losses in selling repossessed homes. Other actions, such as rescheduling mortgages, would mean the banks will eventually get their money back.

The Labour Party motion sets out a number of actions the Government should take to avoid this potential disaster. The most urgent is a statutorily based 24 month moratorium on repossessions where reasonable efforts are being made to meet obligations. We also propose the establishment of a mediation service to assist borrowers in coming to satisfactory arrangements with lenders, such as extending the period of the mortgage, putting the mortgage on an interest-only basis or rolling up interest for a period, and to act on behalf of borrowers in negotiating with financial institutions and public authorities in working out viable repayment arrangements.

I wish to put this debate in its proper context. An examination of the census figures demonstrates how unsustainable the Irish property market was. Between 2002 and 2006, a net 181,563 additional households were created. During the same period an additional 260,718 housing units were built. Nearly 80,000 houses were built as holiday homes or as empty investment properties. It was clearly unsustainable to have 30% of new housing empty. However, the great mystery is that house and land prices continued to rise during this period, suggesting that demand was even greater than the unsustainable supply. It was a false demand. It was a demand buoyed up by falling credit standards, light touch regulation and lower interest rates, along with encouraged speculation and tax incentives on property.

During this period we witnessed a financial game. It was a game created by an unholy trinity - a union of a Fianna Fáil-led Government, banks and greedy developers. Why should the public believe this union has ended? The property bubble might have burst but who said the relationship died along with the game? This was a game of passing on the liability for this recklessness to homeowners. This is how it was played.

The developer would purchase an over-valued asset and the bank would provide the over-valued loan. The housing units were built and sold at an over-inflated price to home buyers, who had over-valued loans provided by banks. These mortgages were then sold on the international market and the banks released this money to developers once again to purchase more over-valued sites. The net consequence is that the liability for these loans and loose banking practice has been passed to the homeowners. Of course, as part of the game, with the end of every football season the developer made his way to the Galway tent in September and paid over his contribution.

Another aspect of this game is how lending rules went out the window. Take the example of the typical home mortgage. Loan to value along with borrowing ratios and schedules of payment were allowed to increase without intervention. The concept of somebody buying a home priced at four to five times their annual income was stretched to ten to 12 times their annual income, mortgage schedules went from 20 years to 35 years and the concept of 10% deposits was abandoned with the provision of 100% mortgages. Matters got so out of hand that affordable housing was no longer affordable. We saw houses being bought for €250,000 under the affordable housing scheme. Today's prices for those affordable housing units show how far off the mark the property market had become.

As for duty of care, it did not exist on the part of the Government or lending institutions. The only duty of care that was attended to here was getting re-elected to office and delivering for the shareholders in the banks. The idea that homeowners would be financially stressed or that there might be difficulties coming down the line were not part of the creed of greed driven by the unholy trinity. The attitude was that it did not matter if people could not meet the loan repayments after a few months because it was assumed the property value would increase in that period and the bank would make a tidy profit in the event of foreclosure. There was no harm in foreclosure because the bank would still make money.

What is the position now? It is estimated that the number of families in mortgage arrears is 35,000. From 1 December, legal proceedings for repossessions will move from the High Court to the Circuit Court. It is imperative that action is taken now and new measures are put in place to slow down the rate of repossession cases coming before the courts. The issue of people being able to keep a roof over their heads is an issue of real systemic importance.

What must be done? In developing policy in this area it is important to move quickly but also to take account of the complex technical and legal issues that arise and the wide range of individual circumstances that are experienced by borrowers. Policy must take cognisance of this diversity and, accordingly, I wish to set out a number of actions which must be taken by the Government.

The core value of our policy must be that, whenever possible, families should be assisted to continue residing in their homes. This will offer the least costly approach for the State and the best outcome for the families concerned. It cannot, however, be seen as an absolute commitment. Great care must be taken in circumscribing the rights of lenders and mortgage holders because, in the first instance, the relationship between the lending institution and the borrower is governed by contract and those mortgage documents are, in all cases, prepared by the lending institutions. They are loaded against the borrowers and in favour of the lender. Such mortgage agreements, therefore, create very extensive rights and interests in favour of lenders. These rights are protected as property rights under the Constitution and under the European Convention on Human Rights.

I am of the view that it would be possible, as an emergency measure and in the public interest, to unpick these extensive rights - even if only for a limited number of years - particularly in light of the current exceptional economic upheaval and uncertainty. In-built into this process must be a provision that borrowers must make an honest and reasonable effort to meet and discharge their obligations in full. Such a scheme or provision cannot be applied in respect of very large or expensive houses and the dominant intention clearly must be that provision is being made for families residing in typical family homes.

At present, the core of Government policy is the code of conduct introduced in February last. This requires banks or building societies not to commence repossession proceedings until mortgages are six months in arrears. In the case of AIB, the period is extended to 12 months. Labour's position is that this period should be extended to 24 months from the time the arrears first arise and that this should apply in respect of all institutions. Such a course of action would ensure that lending institutions would be strongly incentivised to actively engage with borrowers, rather than entering into an empty formula and circulating a few preprinted letters for the purposes of demonstrating technical compliance in the event that issues might arise with the Financial Regulator in respect of the consumer protection code.

In practice, banks view the moratorium period of six to 12 months as a hit they must take. However, they remain certain in the knowledge that they have an entitlement to interest on an ongoing basis and view the code's provisions as entirely manageable from their perspective. The scheme we advocate, with its extensive extension of time, would ensure strong incentivisation on the part of the banks to enter into a process of restructuring whereby they could accommodate borrowers. This process could take a number of different forms and could include, for example, extending the lifetime of a mortgage, adjusting the number of repayments per annum, accommodating for-interest-only repayments for a period or other arrangements that would suit the individual needs or expectations of the borrower.

We made suggestions in respect of such changes during the Committee Stage debate on the National Asset Management Agency Bill and we intend to table suitable amendments on Report Stage. There is a need to put in place legislation which recognises the profound inequality of bargaining power that exists in respect of borrowers and banks. This is not a level playing field. Stressed borrowers require professional assistance and support in negotiating with their lending institutions. In addition, it is vital that the code of conduct is strengthened and is adequately policed and enforced with a proper effective and efficient grievance mechanism. It is important that the latter should be underpinned by legislation.

To achieve our objectives a national home mortgage service, NHMS, should be established, within a legislative framework, to operate as an advocate for homeowners who face difficulties paying their mortgages. The NHMS would, by means of a legislative framework, set out the criteria and rules as to how mortgage difficulties would be addressed and managed and would identify the obligations of Government lending institutions and borrowers. In my view, the legislation to which I refer would have to deal with and outlaw penalties, surcharges and the endless adding on of fees and handling charges. The legislation would also probably have to expressly provide that all such charges, other than those relating to the basic rate of interest, should be deemed to constitute a penalty or should be prohibited as being unfair under the terms of the consumer contracts directive.

We envisage that the NHMS would be complementary to, but quite separate and distinct from, MABS and other voluntary groups. Some amount of rigour would have to be attached to the operation of the process and under no circumstances is it envisaged that borrowers who make no effort whatever to meet their repayments would be granted security of occupation on an indefinite. There would have to be a rebalancing of rights between the conflicting interests. It is envisaged that in all instances borrowers who remain in possession would be obliged to make repayments on an ongoing periodic basis.

The NHMS could set out other eligibility factors including: that the mortgage variation would have to be fair to the borrower and fair to the lender; that an independent assessment of the borrower's true circumstances would have to be prepared and vouched; that assistance or relief could be made available only to owner-occupiers; or that an evaluation would have to be carried out to ascertain whether adverse changes in circumstances are irreversible or merely temporary in expected duration. The latter point is particularly relevant because many of the mortgages that have been issued in recent years are unsustainable.

Having give careful consideration to this matter, I am driven to the conclusion that a viable, robust mortgage modification programme can be delivered only by means of a statutory legislative code and that there is a need to establish a national home mortgage service.

I commend the motion to the House.

Liz McManus (Wicklow, Labour)
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This motion is designed to address an urgent and growing need. The number of people in mortgage arrears is likely to reach 35,000 in the coming year. The number of repossession orders in the courts has doubled during the past 12 months and there is a real concern that when the banks get back into gear, they will rev up to evict rather than assist those in trouble. There is a need for the Government to show leadership. The measures in this motion set out the way forward.

It serves no public good to force families out of their homes because they can no longer meet their mortgage repayments. These are families who are caught in a property spiral caused by the greed, hubris and gross incompetence of developers, banks and a Fianna Fáil Government. These people are so desperate that they rely on the Society of St. Vincent De Paul. They are the self-employed, the recently unemployed - the new middle class poor. They are young couples who bought under the shared ownership scheme run by local councils, often going to the very limits of their incomes in order to purchase homes. Incredibly, there is no national data relating to arrears on this scheme but any Deputy will be aware of cases where people are in arrears.

It is vital that the Government adopt this motion. I congratulate Deputy Ciarán Lynch on introducing it. The Government must do much more to address the housing crisis. We must assist householders who are unable to meet their mortgage payments. The motion should be also the springboard for a much wider policy approach.

The position relating to housing practice has been completely transformed. A change in housing policy is now required. The old way of incentivising people at work to buy in the private market no longer works. We are operating in a new landscape. From a reasonable level, the construction of local authority housing has dwindled to a trickle. According to the CIF, there are now more than 80,000 privately built housing units lying idle. There are approximately 35,000 families and individuals who are seeking council housing but who cannot afford to buy. Even if they could do so, the banks will not lend to them. Rent supports, particularly the rent supplement, are being reduced and threatened with further cuts in the budget. The Government expects that tenants can negotiate lower rents with their landlords. However, many tenants are too insecure to do this. We must, therefore, get real.

Opportunities exist in the context of policy development. A carbon tax is promised in the budget. The revenue generated by such a tax could be used to address the fuel poverty of householders in both public and private housing. A housing strategy should provide for retrofitting older public housing stock, in particular. Therefore, a new housing strategy is required. By supporting this motion, which is aimed at dealing with an urgent demand which has arisen and which was largely created as a result of its own reckless policies, the Government would be taking a first step.

Willie Penrose (Longford-Westmeath, Labour)
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I welcome the opportunity to contribute to the debate on this motion. I compliment Deputy Ciarán Lynch on its introduction. This is one of the most important and practical motions to be placed before the House for many years and the Government should embrace it in its totality. There should be no ifs, buts or maybes. The Government should not hide behind the concept of the voluntary code of conduct for banks and credit institutions that was put in place last February. The gap between something that is voluntary and something that is statutory is as wide as the Gap of Dunloe. It means nothing. One could drive a coach and four through it.

The spectre of repossession of and consequent eviction from one's home is an horrific prospect for anybody, in particular the families involved. It leaves an indelible footprint on a person's mind and is an experience one never forgets. I know of a family who emigrated in 1965. I sought them out some 30 years later and spoke to the children, with some of whom I had attended school. The spectre of emigration is once again raising its head. We will be in severe dereliction of duty if we do not address it. For this reason, the Government should embrace the motion before the House.

During the debate on NAMA, I stated that it must definitively end the notion of housing as a speculative asset rather than a basic social need. This debased approach has left us with more than 50,000 people on the housing waiting list while there are thousands of unsold houses in many towns and villages. Weeds are growing through their windows and the builders are being rescued by NAMA. If NAMA is to have the support of the taxpayers who fund it, we must ensure a social dividend for the wider community commensurate with the normal sums of taxpayers' money necessary to fund it.

Of concern to the Labour Party and many people we encounter on the streets or in our clinics is the significant increase in the number of people, in particular young people, who paid exorbitant or unsustainable prices for their homes. They now find themselves unable to meet their loan commitments and in the zone of negative equity. People say to me that there is no form of NAMA for people who find themselves in that position. There is no NAMA to deal with the type of dilemma in which these people find themselves.

It would be a significant dereliction of the duty of this House if the banks were not required, as part of the conditions for receiving the unprecedented injection of taxpayers' cash, to recognise the difficulties these people are now in and to devise appropriate measures and schemes tailored to ensure that their homes will not be subject to repossession orders. The banks have a recognisably defined obligation in this regard as set out so eloquently tonight by Deputy Ciarán Lynch. It will be some kick in the teeth to taxpayers and the public if, as soon as the President signs the NAMA legislation into law, there is a frenzy of court applications for repossessions because unfortunate people have defaulted on their loans.

This motion is not about people who deliberately refrain from honouring their commitments. We all know there are people who engage in that process. This is about people whose luck has run out and who find themselves on hard times. I do not know whether the Government has given any consideration to the motion. The Minister of State, Deputy Martin Mansergh, is in the House, but where is the Minister with responsibility in this area who should be here to debate the motion?

Deputies:

Hear, hear.

Willie Penrose (Longford-Westmeath, Labour)
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This is a gaping wound that will continue to widen. I do not trust the banks. As soon as the Bill is signed into law, there will be a deluge of applications for repossessions. They are all holding their powder; they are very cute. Also, they will have statutory backing to do this. The Land and Conveyancing Law Reform Act 2009 comes into force on 1 December 2009. Under this legislation, proceedings in respect of mortgage repossessions will be dealt with in the Circuit Court rather than the High Court. This will lead to speedy transactions and less costs. While this may be good from the mortgagees point of view, it also gives less time for the borrower to find his or her feet. One could have one's case processed before one knows what is happening.

Brendan Howlin (Wexford, Labour)
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The Deputy has one minute remaining.

Willie Penrose (Longford-Westmeath, Labour)
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I would like another hour. We must focus on assisting people to continue to live in their homes. What good will speedy repossession orders serve other than to transfer to the State the burden of having to find alternative accommodation for families through the supplementary welfare scheme? We are already spending €550 million in this regard. What is the logic or sense of selling or attempting to sell repossessed properties in a depressed or falling market when it is highly probable that the initial mortgage capital outlay will not be redeemed? It is easy, as Deputy Lynch stated, for a credit institution or bank to purport to comply with a code of practice by merely sending out peremptory demands and engaging in a paper process rather than having proper and full engagement with the borrower in terms of negotiating, for example, interest only repayments, rolled up interest for a period, the extension of the period of a mortgage or an agreement on repayment schedule that suits the individual needs of the borrower.

A question arises as to who is the advocate for the borrower when he or she finds themselves in this position. All mortgage documents are drawn up by the banks who have every legal process behind them. They are the ones who have real power. The inequality of Ireland's provisions are loaded: the presumption of dominance is in favour of the bank and institutions while we, the little people, sit at the table and sign up.

Deputy Lynch has proposed that we should put this into abeyance for a specified period. Twenty four months is a fair period to give people a chance to get back on their feet. This proposal would need to be statutorily backed as a code of conduct is voluntary. We must request the banks and building societies not to initiate repossession proceedings when a person defaults on his or her mortgage repayments for a specified period. It is time the proposal put forward by Deputy Lynch this evening was adopted. He proposed the introduction of a mechanism which would help tilt the balance in favour of the borrower experiencing genuine difficulties at this time.

Jan O'Sullivan (Limerick East, Labour)
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I, too, commend Deputy Lynch on bringing this motion before the House this evening. I concur with Deputy Penrose who expressed disappointment that the Minister is not present tonight.

The wording of the Government amendment to the motion indicates the priorities of Government as opposed to the priorities of the Labour Party. We are focused on the basic right of a person to have a home, to protect it and to remain in it in times of difficulty. The Government's response is in stark contrast to what happened when in the dark of night approximately a year ago the banks went to the Minister for Finance and told him of their troubles. All the guns were brought out blazing and €54 billion of taxpayers' money was put at risk. Everything was turned upside down to protect the banks. There is absolutely no sense, given the Government's amendment to the motion, of caring on the part of the Government about the plight of families who are losing their homes, and there are many of them.

I know of a family, a young husband and wife with two small children, who, when the husband lost his job owing to the downturn, had to walk away from their home and return to live with the wife's parents. We all know of such families. The contrast between the sense of urgency about the difficulties of the banks and the urgency of this matter is in the wording of the amendment which states:

the introduction of a blanket two year moratorium as proposed runs the substantial risk of creating unfavourable perceptions in credit markets about the future performance of a significant part of Irish bank lending and that such a perception could increase funding difficulties and raise funding costs for Irish banks with damaging consequences for all of their customers.

A caring Government should have as much concern for the lives of ordinary citizens of this country who are in difficulties as it has for the banks. The preamble of the Government's response is about putting things off and having no sense of urgency. The amendment also states that the issue of expanding mortgage support measures will be examined and that the renewed programme for Government envisages reform of debt enforcement.

The final sentence of the Government's amendment states:

expresses its confidence in the success of the Government's efforts to deal with the world wide financial crisis and its impact on Ireland.

The Government is delusional about the fact that there is a difference between cyclical and structural difficulties and in absolute and total denial of the part caused by mismanagement by Government during the past 12 months. I despair, when I read statements like that, at the ability of Government to care about the ordinary citizens of this country and their right to a home and a job, the type of issues of concern to the Labour Party.

The reason people are unable to repay their mortgages is that they were sold overpriced houses, given unsustainable loans, as outlined by Deputy Ciarán Lynch in detail, and they have lost their jobs-----

Ciarán Lynch (Cork South Central, Labour)
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Yes.

Jan O'Sullivan (Limerick East, Labour)
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-----none of which is the fault of the people who took out the mortgages. It is, as again outlined by Deputy Lynch, the fault of the triumvirate, the banks, the developers and the Government, who, in cahoots, totally inflated the price of houses for ordinary people. These ordinary people are now in trouble, but it is obvious from the wording of the amendment that the Government does not care about their plight.

I strongly support Deputy Ciarán Lynch's proposal, which is reasoned and well thought out, which seeks a two year moratorium for mortgage holders given the circumstances in which we find ourselves with hundreds of thousands of people losing their jobs. Most of those people have a genuine hope of getting back to work if we can get together and create a programme of national recovery, as outlined by the Labour Party leader this morning. If we get together and figure out how to sort out the problems of the country, there is a prospect these people will be able to begin to pay their mortgages again in two years, but they cannot do it in six months. There seems to be no engagement by the Government with the ordinary people who are affected by the downturn. It is doing everything it can to sort out the problems of the banks and the developers, but nothing for the ordinary people.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Ba mhaith liom buíochas a ghabháil le Páirtí an Lucht Oibre as deis a thabhairt dom labhairt ar an rún rí-thábhachtach seo. Bhí an ceart ag an Teachta O'Sullivan nuair a dúirt sí go raibh gá leis an rún seo a ghlacadh anois. Cé go bhfuil an t-am thart le rud a dhéanamh do go leor daoine, tá an t-am tagtha le rud éigin a dhéanamh agus ba chóir dúinn déileáil leis an fhadhb seo go práinneach.

This is an appropriate and timely motion and the Labour Party, Deputy Ciarán Lynch in particular, has put forward a sensible proposal. I welcome the motion and agree it is urgent to deal with the issue. If one was unaware of the urgency, one would only need to look at the ESRI report of two weeks ago which stated that a further 35,000 families would be unable to pay their mortgages next year. What is in store for these people? They are at the mercy of the banks and credit companies who harass them and they face legal repossession and all that entails.

We should remember that when people take out a mortgage their intention is to purchase a home in which they will live and put their personal mark. They invest in a property and their future. They do not want to be in a situation where they default and endanger their investment and home. They want to be able to come up with some way to hold on to their home until such time as they can overcome the financial problems they face currently. In the main, these financial problems and the predicament in which they find themselves are not of their making. I know nobody who would gladly walk away from his or her investment. The problem is these people are faced with no alternative, because the Government, despite warnings this was what was going to happen, has not moved in any urgent way to address the problem.

The only criticism I would have of the motion is that it does not deal with the issue of the banks which are not covered by the guarantee. We need to find a mechanism to ensure that those institutions are covered by the proposal put forward in the motion. All of them operate under a licence given by the State. Therefore, there is a mechanism to deal with the issue, but we must ensure we enforce it. We must ensure that all banks and lending institutions, such as the Smart Mortgages or Start Mortgages are included. These companies seem to be intent on throwing out anybody who defaults for even one week or month on a mortgage. Such companies operate under licence here, but the State has not moved to ensure they respect and have compassion for the people undergoing great financial strife.

I do not expect the Government to do anything about this, because this is the same Government that allowed the financial institutions to have 190% interest rates in some cases. Some credit companies are licensed by the State to charge that amount. Therefore, I do not expect the Government to act. However, we on the Opposition side of the House must try to force the Government to pay heed to what is happening. We should remember that this is the Government that allowed a situation develop where mortgages of 100% and even 110% were offered to people who could not afford the repayments. These are now the people stuck with a noose around their necks. They have 30 and 40 year mortgages, but given their age they will not be able to reschedule them.

There has been wanton breaches of the guidelines and the laws laid down by the Central Bank on lending. However, the people who will be punished for the breaches are not the bank managers or the financial institutions that allowed these practices but those who took out mortgages. They were encouraged by the Government and many others to invest and had no alternative. The Government wanted people to have mortgages because this gave them the cash cow called stamp duty. It raked in the duty for years but now is not willing to pay back people who paid duty. If even a small portion of the amount of money taken in stamp duty had been set aside to help people in trouble in the current difficulties to reschedule their mortgages, bail them out or buy some type of equity in their homes in order to prevent repossessions, the stamp duty they paid would at least have some benefit. However this is not the case. All the benefit went to the Government. Not only did the Government get stamp duty, it also gained significantly from VAT.

The only people who benefited were property speculators with friends in the construction industry who managed to avail of special tax incentives and reliefs. They did not play their part as taxpayers but benefited from the Celtic tiger. They may be struggling now, but they are the ones who are being bailed out. I guarantee that many of them have personal wealth hidden away which will not see the light of day here. We on the Opposition side of the House are being encouraged by the Government to support the bailout of these people through NAMA.

What should happen is that empty and completed houses all around the country should be confiscated and given to local authorities so that if people end up on the street because of repossession there will be some kind of social housing available for them. We already have a huge crisis with regard to local authority housing because local authorities do not have sufficient stock. There are some 40,000 families on waiting lists. If we consider the 35,000 families facing repossession next year because they will not be able to afford their mortgages, we could end up with 75,000 families on the housing waiting list then, with no Government plans to build or purchase any more social housing.

The Minister has an opportunity to act now. Given that the State is bailing out developers, he has the opportunity to confiscate - not subsidise, pay for or compulsorily purchase - and transfer free of charge these homes and half-completed estates to local authorities. He could even transfer them to co-operatives of residents or tenants who would be able to put some money towards completing them. I put that suggestion to the Minister. It is a pity the Minister of State with responsibility for housing, the Minister for Environment, Heritage and Local Government or the Minister for Finance is are present. We are going through major negotiations with banks and once NAMA is enacted, that will be the end of the negotiations and we will no longer have any opportunity to have these remedies pushed through.

This motion is a credible attempt to address the problem. However, we also need to address the scandal of fixed rate mortgages. People on these mortgages are being screwed day in and out by banks we are bailing out, yet they are making no attempt to help those caught in the bind of a fixed rate mortgage. We need to address this issue and ensure that no penalties are applied to those who want to reschedule their mortgages to take account of the substantially lower interest rate that pertains currently.

The big challenge for us is that enactment of the legislation means we need a property boom in the future if NAMA is to be successful. That means that interest rates will increase and those who are currently in dire straits will not benefit. Unless we address their problems now, they will not be in the housing market in the future, they will be homeless and the State will have to pick up the tab. That is why I encourage the transfer, free of charge, to local authorities of empty housing stock across the country.

Martin Mansergh (Tipperary South, Fianna Fail)
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I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"notes that:

- legal repossessions of home owners reported by the institutions covered by the guarantee amount to 20 in the first nine months of this year;

- the mortgage interest subsidy scheme provides an important safety net for mortgage borrowers who get into difficulties and that more than 14,000 families are now benefiting from this support;

- the number of home owners in arrears (90 days) with institutions covered by the State guarantee is currently of the order 15,000-16,000 and that the rate of increase in arrears has moderated notably since the early months of this year;

- the introduction of a statutory code of conduct on mortgage arrears earlier this year reinforces existing practices at mainstream mortgage lenders and extends legally obligatory protection to all mortgage borrowers;

- the code of conduct on mortgage arrears already requires lenders to explore alternatives with borrowers in difficulty and prohibits seeking repossession "until every reasonable effort has been made to agree an alternative payment schedule";

- the code of conduct on mortgage arrears already provides that, where circumstances warrant it, the lender must refer the borrower for guidance to the Money Advice and Budgeting Service (MABS) or an appropriate alternative;

- the renewed programme for Government envisages an examination of ways of expanding mortgage support measures and new measures to protect families having difficulties including the introduction of new measures to protect families having difficulties with their home mortgage payments;

- the renewed programme for Government also provides for the existing statutory code of conduct on mortgage arrears and the recently agreed protocol between the Irish Bankers Federation (IBF) and the MABS on debt default to be further reviewed with a view to expanding the options available for dealing with debt situations, including for example, the use by banks and lenders of more flexible mechanisms to avoid foreclosure in appropriate circumstances and that these could include:

- reduced rates;

- longer maturity dates;

- rolling-up of outstanding interest;

- bank taking equity in the house; and

- bank taking ownership and leasing back the property to the resident with rent payments coming off the loan;

- the renewed programme for Government envisages that ways of expanding mortgage support measures will be examined with reference to the measures adopted in other jurisdictions;

- the renewed programme for Government envisages reform of debt enforcement in light of the deliberation of the Law Reform Commission, which has recently published a consultation paper on the matter, the regulation of debt collection agencies, a new system of personal insolvency regulations allowing for a statutory non-court-based debt settlement system, and the establishment of a central debt enforcement office to remove as many debt enforcement proceedings from the courts as possible;

- Irish banks continue to rely on international credit markets for a substantial part of their funding and that conditions in those markets, though easier than earlier this year, remain difficult;

- rating agencies, perhaps influenced by the high rates of default and repossession on mortgages in the US and UK, are known to be sensitive to anything affecting mortgage lending and are aware that it makes up a large portion of Irish banks balance sheets; and

- the introduction of a blanket two year moratorium, as proposed, runs a substantial risk of creating unfavourable perceptions in credit markets about the future performance of a significant part of Irish bank lending, and that such a perception could increase funding difficulties and raise funding costs for Irish banks, with damaging consequences for all of their customers;

commends:

- the Government for its actions to stabilise the financial system and to restore the public finances thereby protecting jobs and home ownership

- the Government for its increased support for the mortgage interest subsidy scheme; and

- the introduction of the statutory code of conduct on mortgage arrears;

expresses its confidence in the success of the Government's efforts to deal with the world-wide financial crisis and its impact on Ireland."

The Government is conscious of the high value placed on home ownership in Ireland and of the efforts Irish people make to secure and retain their own home. Wolfe Tone and Todd Andrews's "men of no property" have become, in 90 years of independence, in most cases the men and women of some property. There has been a huge improvement in housing conditions to which all parties have contributed. I hope the current experience will cure us for good of what Deputy Penrose referred to as seeing residential property as a speculative asset.

The Government's objective from both a social and an economic policy point of view, an objective shared on all sides of the House, is that homeowners who lose their jobs should be assisted to retain their homes during their period of unemployment. This is being done through the application of the new code of conduct on mortgage arrears, support from the mortgage interest scheme under the supplementary welfare allowance system and the provision of advice on debt management through the Money Advice Budgeting Service.

The housing market has been particularly hard hit by the economic downturn. I have a clear recollection in the other House of Deputy Noel Ahern, as Minister of State with responsibility for housing, expressing grave reservations about 100% mortgages, let alone anything higher.

Ciarán Lynch (Cork South Central, Labour)
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On a point of order, am I to understand that not only is the Minister not coming into the House, the script being read by the Minister of State on the Government position is not being distributed?

Brendan Howlin (Wexford, Labour)
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There is no requirement for a Minister to circulate a script.

Martin Mansergh (Tipperary South, Fianna Fail)
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I believe the script will be circulated nonetheless.

Most of the proposals by parties in advance of the last election were measures to keep the housing boom going. As far as Government revenues from stamp and other duties were concerned, they were used for economic and social purposes, such as extra special needs assistants, roads, higher pensions, child benefit and benchmarking for the public service. It was not just used for the benefit of property developers.

It is a large and complex sector but I want to focus initially on the proposals for a moratorium scheme that would provide a minimum period of 24 months from the time the mortgages first go into arrears. It is a priority of the Government to ensure as far as possible that difficulties in relation to mortgage arrears do not result in legal proceedings for home repossession. Home repossession should be and generally has been the last resort for the lender.

The new code of conduct on mortgage arrears which was published by the Financial Regulator last February applies to all regulated lenders on a statutory basis and replaces an earlier voluntary code operated by the mainstream lenders. This code applies only to mortgage lending activities to consumers in respect of their principal private residence in Ireland. Lenders must distinguish between borrowers who are genuinely unable to pay and those who could pay some or all of the arrears but will not. All genuine cases must be handled sympathetically and positively by the lender, who must explore with the borrower a number of alternate repayment measures.

The requirements of the consumer protection code, including those on mortgage arrears, continue to apply. The Financial Regulator will monitor compliance with the codes through its programme of on and off-site inspections. In 2009 the Financial Regulator undertook an on-site themed inspection on arrears and repossessions handling in selected mortgage lenders. This work is ongoing.

The main features of the code include early recognition of problems, where as soon as even one payment is missed, lenders must communicate with the borrower to establish in the first instance why the repayment schedule has not been adhered to and, second, how the situation may be rectified. There is also provision for active management of arrears problems - a plan for clearing the mortgage arrears can be developed that is consistent with the interests of both the lender and the borrower and having regard to all viable options open to the borrower. Furthermore, there should be an examination of alternative solutions, where the lender must explore with the borrower alternative repayment measures including an arrangement changing the amount of monthly repayment to help address the arrears situation; deferring payment for a period where there is a temporary shortfall of income; extending the term of the mortgage; and changing the type of the mortgage. Even where legal action is being taken, if agreement can be reached, and agreed regular repayments are being maintained, the lender must put a hold on proceedings.

The lender must not seek repossession of the property until every reasonable effort has been made to agree an alternative repayment schedule with the borrower. The code requires a lender to wait at least six months from the time arrears first arise before applying to the courts to commence enforcement of any legal action on repossession. AIB and Bank of Ireland, which have been recapitalised by the State, have extended this moratorium period to 12 months for the duration of the subscription agreement.

Comprehensive statistics on mortgage repossessions have not been kept, but the Department of Finance has obtained reports from lenders covered by the State guarantee. The total of legal repossessions of owner-occupier homes in this year to the end of September by those lenders is 20. In all cases, mortgages were in arrears for over 24 months at time of repossession.

Media reports of repossession cases taken through the courts show that most involve "sub-prime" lenders, who made mortgages available to borrowers who would not have been customers of the mainstream lenders, often because of perceived higher risks. Cases where borrowers stopped payment after a few months, or failed to respond to repeated attempts to contact them, or even abandoned the house, feature regularly in media reports of repossession cases before the courts.

A comparison of repossession figures for IBF members who are the mainstream lenders, not including sub-prime, with figures from the UK Council of Mortgage Lenders indicates UK repossession rates per 100,000 mortgages at 30 times those in Ireland. The number of residential properties taken into possession by Irish Banking Federation members in 2008 was only 99 and, for the first half of 2009, the number was only 70. These figures include some voluntary repossessions and buy-to-let properties. There were very few legal repossessions of owner-occupiers.

Since activity in the property market has remained low, it is very difficult to assess realistic price levels. Many who bought at high loan-to-value rates close to the peak of the market are in negative equity now, but any estimate of how many there are, or how long the position is likely to last is largely speculative. In any event, being in negative equity does not change the level of mortgage payments, so the problems it may cause are more long-term. The Financial Regulator has estimated that only a small proportion of borrowers with the covered institutions who are in negative equity are in arrears on their payments. For the moment interest rates have fallen considerably.

Mortgage arrears continue to be closely watched. The percentage of homeowners in arrears is notably lower than for investors according to the Financial Regulator's retail credit report on the covered institutions. While the numbers in arrears are still rising, figures for the second quarter show a marked slowdown in the growth of arrears from the first quarter. The number of homeowners in arrears for 90 days or more with institutions covered by the State guarantee is currently of the order 15,000-16,000.

The proposal to extend moratoria has the potential to cause serious funding problems for Irish banks, and ultimately for the State itself. It must be emphasised that Irish banks continue to rely to a significant extent on international credit markets for funding. Those markets are aware that Irish banks are heavily exposed to the residential mortgage market. Given that mortgage default rates are much higher in some other countries than here, there is already a perception of risk in connection with the Irish banks mortgage loan books that is higher than is justified. When the 12 month moratorium by AIB Bank and Bank of Ireland was announced as part of the recapitalisation, Moody's rating agency was quite critical. Recently the Fitch rating agency published comment with some negative material about mortgage lending in Ireland. While the banks' funding position has improved in recent months, it is still quite difficult, even with the benefit of the guarantee. It is essential, therefore, that nothing is done to raise further fears about the quality of mortgage loan books. It is fine to have caring attitudes, and we all share them, but we must be careful not to do things that will make matters very much worse for everybody. That also applies to Deputy Ó Snodaigh's proposal for confiscation of properties which may sound good in a rhetorical sense but if it causes a collapse of confidence in the Irish economy, it is not a very bright idea.

The mortgage interest subsidy scheme under the supplementary welfare allowance system provides money, subject to a means test, towards the interest payments on a home mortgage. The number of people being assisted by the scheme has risen sharply from a low base and stands at over 14,000 since the end of September. Applications to the scheme are regarded as lagging unemployment by some months and the increase in numbers is expected to continue for some time. Funding for the scheme has been substantially increased for 2009. A review of the scheme is under way and is expected to be completed later this year.

Those availing of part-time employment, that is, up to 30 hours a week, and-or training opportunities or who are in receipt of basic social welfare payments can receive mortgage interest supplement subject to satisfying the standard means assessment rules. A person is disqualified from mortgage interest supplement while she or he, or her or his spouse, is engaged in full-time employment in excess of 30 hours a week. The assessment for the existing mortgage interest supplement scheme, however, provides for a gradual withdrawal of payment as employment and earnings increase.

Mortgage interest supplement is normally only paid for the duration of the period to which entitlement exists. A community welfare officer may, however, award mortgage interest supplement for a period of not more than 12 months, where the amount of mortgage interest exceeds such amount as the community welfare officer considers reasonable to meet residential needs. This allows time for the person to make alternative housing arrangements.

In excess of 14,000 people are in receipt of mortgage interest supplement, an increase of over 200% over those receiving payment at the end of 2007. Over 71% of those are in payment for less than a year and almost 2,300 are in payment for 18 months or more. Expenditure on mortgage interest supplement was €12.2 million in 2007, some €27.6 million in 2008 and €40 million was included in the 2009 supplementary budget, although it is expected that final out-turn for 2009 may be €60 million. People are expected to make a contribution of €24 from 1 June 2009.

A review of the mortgage interest supplement scheme is ongoing and this involves representation from the Departments of Social and Family Affairs, Finance and the Environment, Heritage and Local Government with a representative from the Financial Regulator. The purpose of the review is to examine how the scheme can better meet its objective of catering effectively for those who need short-term assistance when they are unable to meet their mortgage interest payments in particular, given the increased number of those in receipt of mortgage interest supplement. All aspects of the existing scheme are being examined and the group hopes to issue recommendations by the end of 2009. The initial output from the review has been the issue of guidance notes on specific and operational issues for community welfare officers operating the scheme.

In addition, the Government funds the Money Advice Budgeting Service, MABS, which provides valuable help to those in difficulty. A new debt protocol agreement has been finalised with MABS and the Irish Bankers Federation, which provides added reassurance for borrowers with the most difficult issues. MABS is the main Government-funded service which provides assistance to people who are over-indebted and need help and advice in coping with debt problems. It is important that people coping with debt difficulties take early action and approach MABS for help and guidance. This can be the first positive step for people in addressing debt difficulties. The role of money advisers is to help clients to assess their financial situation, make a budget plan and deal with creditors.

MABS is now dealing with increasingly complex debt situations in respect of clients who present with multiple creditors and debts. There are 53 independent MABS companies with voluntary boards of management operating the local MABS services from 65 locations throughout the country. In 2008, over 16,600 new clients approached MABS for assistance with debt difficulties and the telephone helpline dealt with almost 11,000 callers. In the first nine months of 2009, MABS staff saw some 14,700 new clients. The MABS helpline received over 18,000 calls in the same period.

Funding of almost €18 million has again been provided to MABS to deliver its services in 2009. An additional 19 staff are being recruited for MABS and this will bring money advice staff to over 270 in 65 locations around the country.

The Government is committed under the renewed programme for Government to introducing new measures to protect families having difficulties with their home mortgage payments. The existing statutory code of conduct on mortgage arrears and the recently agreed protocol between the Irish Bankers Federation and MABS on debt default will be further reviewed with a view to expanding the options available for dealing with debt situations, including, for example, the use by banks and lenders of more flexible mechanisms to avoid foreclosure in appropriate circumstances. These could include reduced rates, longer maturity dates, rolling-up of outstanding interest, the bank taking equity in the house or the bank taking ownership and leasing back the property to the resident with rent payments coming off the loan. With reference to the measures adopted in other jurisdictions, the Government will examine ways of expanding its own mortgage-support measures.

In light of the facts I have outlined and having regard to the steps the Government has taken in respect of the code of conduct on mortgage arrears, the additional requirements we have insisted on with the recapitalised banks, the additional resources we have committed to the mortgage interest subsidy and to MABS and to the long tradition in mainstream Irish mortgage lending of repossession being a very rare event, it is disturbing that certain commentators seem to take delight in producing horror stories about what has been called in this House an orgy of repossessions that is always just over the horizon. We heard these stories almost a year ago and we are hearing them again in recent times, yet the number of actual repossessions remains very small.

James Bannon (Longford-Westmeath, Fine Gael)
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The Minister of State did not read The Irish Times today.

Martin Mansergh (Tipperary South, Fianna Fail)
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The suggestion that some commentators make again and again that thousands of ordinary families are at risk of being evicted from their homes shortly is very far from the truth.

Ciarán Lynch (Cork South Central, Labour)
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That is a song we have heard before.

Martin Mansergh (Tipperary South, Fianna Fail)
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I accept the situation needs to be very closely monitored and this suggestion was made often during the debate on the National Asset Management Agency, NAMA, but there is no evidence to date of an increase in repossessions.

The proposal for a lengthy moratorium is highly dangerous in terms of financial market perceptions and the effect they might have on the funding of the banks on which the whole economy ultimately depends. Furthermore, the proposed moratorium is unnecessary because of the supports the Government has already put in place, especially through the mortgage interest subsidy, and the code of conduct on mortgage arrears and the improvements in protection for families envisaged in the renewed programme for Government.

Charlie O'Connor (Dublin South West, Fianna Fail)
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I welcome the opportunity to make a brief contribution to this debate. I thank the Minister of State at the Department of Finance, Deputy Martin Mansergh, for giving me these few minutes. I welcome Deputy Ciarán Lynch's initiative and congratulate him on it because, as Bill Clinton might remind us, "It's the economy, stupid". That came home to many of us who went across the road to Buswell's Hotel today for the launch of the St. Vincent de Paul pre-budget submission for budget 2010, Don't Push Them Over the Edge. I suspect we will take the opportunity in other debates to raise many of the issues mentioned in that document.

I am a member of Fianna Fáil and believe strongly that my party must continue to represent the needs and vulnerability of those who need assistance. I am not of the view that social welfare cuts are inevitable. I do not wish to draw attention to IBEC but I was disappointed by it recently. As the employers' group, representing those employers who have had to make workers redundant, it should find another way of dealing with the issue without saying that-----

James Bannon (Longford-Westmeath, Fine Gael)
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The Deputy is not feeling very sorry for the old age pensioners.

Charlie O'Connor (Dublin South West, Fianna Fail)
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Will the Leas-Cheann Comhairle please tell the Fine Gael three that if I was in good form, I would deal with their heckling?

Brendan Howlin (Wexford, Labour)
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I am sure that the Deputy is well able to look after himself, but I will certainly ensure he is allowed to speak without interruption.

Charlie O'Connor (Dublin South West, Fianna Fail)
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The Leas-Cheann Comhairle might protect me.

It is important we challenge IBEC's statement that social welfare payments should not be immune from cutbacks. There is a new poor which all Members are aware of in their constituencies. They are people who were in good jobs until recently and kept up with their mortgage repayments but who now find themselves under pressure. I am sympathetic to the points made in the Private Members' business motion but the Minister of State's speech did address some of these. We need to represent those who find themselves challenged by their banks on mortgage repayments.

The Minister of State referred to MABS which reminded me to mention Tallaght.

Kieran O'Donnell (Limerick East, Fine Gael)
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The antibiotics must be kicking in.

Charlie O'Connor (Dublin South West, Fianna Fail)
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The MABS offices across the country do a tremendous job. I want to put on the record my praise for the organisation in Tallaght, the third largest population centre in the country. The office does a great job from its premises on High Street, Tallaght. I ensured the Minister for Social and Family Affairs, Deputy Mary Hanafin, visited the centre to see the work it was doing, the challenges it faced and the progress it was making. I look forward to further debates on this issue.

Thomas Byrne (Meath East, Fianna Fail)
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I am glad this debate is taking place in the House tonight. It should not, however, take place in an atmosphere of fear, worrying people, but of hope, letting people know options are available. One of the most irresponsible statements I heard in this House since I was elected was that of the Labour Party leader claiming the world and its mother knows that as soon as the NAMA legislation is passed, there will be an avalanche of repossessions. How frightening was that wrong statement for people genuinely suffering from arrears but not facing the prospect of repossession.

Terence Flanagan (Dublin North East, Fine Gael)
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There will be. The President of the High Court said there will be.

Ciarán Lynch (Cork South Central, Labour)
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It is fundamentally sound to say there will.

Thomas Byrne (Meath East, Fianna Fail)
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The banks with certain exceptions are working with borrowers. That is not to say what the banks are doing is always right; there are many flaws to their approaches to the matter. By and large, on a case-by-case basis, the main banks covered by the State guarantee are working with their borrowers.

I propose that the mortgages of the sub-prime lenders be bought by the main financial institutions. Those with such mortgages are the most vulnerable in the repossession situation, examples of which we saw on television yesterday and in today's newspapers. They are the people who are getting the constant calls from their lenders. That is not happening, from my experience at constituency level, with the main banks.

However, because of fears propagated people have become afraid of repossession. Last week a constituent attended my clinic who had built up several months of arrears and had received letters from her bank. She knew nothing, however, of the 12-month moratorium that applied to her lender, ICS Building Society. When I gave her this news, it gave her meaningful hope. This is the message we must get across.

The banks are dealing with repossession cases on an ad hoc basis. When I checked the website of CitiMortgage, a major US mortgage provider, its most prominent part was its home owner assistance programme which sets out the standards on how it deals with borrowers in arrears. This was in strong contrast with the Irish banks' ad hoc approach. Their websites do not contain any information on assistance for borrowers in arrears.

I welcome the assistance measures detailed in the programme for Government, particularly in cases where the State or the banks could take part ownership of the House in exchange for reducing the mortgage. That will be an attractive proposition for many borrowers which will serve to give them hope and encouragement that they will retain their houses. It is noteworthy that only 20 houses have been repossessed by banks covered by the State guarantee. This debate must show people with mortgage arrears there is hope and the banks will work them if they are prepared to work with their banks. The code of conduct on handling mortgage arrears has worked well but there is room for improvement. The one missed payment is not enough. It should be six months or 12-months cumulative arrears rather than the Labour Party's proposal for two years.

The programme for Government contains proposals for reducing rates, longer maturity dates and banks taking equity in houses under a rent and lease back scheme. Many constituents have suggested these to me but these need to be systemised into a proper format. However, we must give people in arrears hope and not unnecessary fears of repossession.

Frank Fahey (Galway West, Fianna Fail)
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I thank the Labour Party for tabling this motion. However, I believe no family home would be repossessed when the home owner is making a genuine attempt to repay his or her mortgage. While extending the moratorium to 24 months may be helpful, the measures being taken by the Government to ensure the banks and building societies address this issue in an overarching way is significant.

There is a need for banks to reduce interest rates or allow people to pay only the interest when they are in repayment difficulties. The same applies to longer maturity dates and the rolling up of outstanding interest which can be added to the principal of the loan. The other initiative of where the bank would either take equity or even ownership of a house and lease it back to the borrower using the rent as repayment of the loan is a good development. It is important that people with mortgage arrears are not frightened. While we criticise the banks and building societies in many ways, they are all anxious to engage with and be of assistance to their customers to ensure they can remain in their houses and make repayments to the best of their ability.

Problems only arise when borrowers ignore the pleadings of the bank or building society to deal with the issue of arrears. I have found in my constituency that borrowers get into trouble when they ignore the pleadings of the banks, not knowing there is assistance for them. Those unemployed are able to draw the mortgage supplement from community welfare officers. Many are not aware that if they pay only interest on their mortgage, the community welfare officer will refund them the interest or a portion of it. I urge the Minister to ensure that for the duration of this recession those who are genuinely unemployed will have the 12-month period extended on a yearly basis until such time as they come through their problems. The Government has come up with a series of initiatives. There is no need for people to be worried about not being able pay their mortgage. Substantial assistance and various support mechanisms are in place to assist those who cannot repay their mortgages. When this recession works itself through, they will be back in employment and be able to repay their mortgages, both interest and principal.

Kieran O'Donnell (Limerick East, Fine Gael)
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I wish to share my time with Deputies Terence Flanagan and Bannon. Deputy Bruton will speak on the Bill tomorrow evening.

Brendan Howlin (Wexford, Labour)
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That is agreed.

Kieran O'Donnell (Limerick East, Fine Gael)
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It is ironic that we are debating the plight of homeowners who are at risk of losing their homes during Opposition Private Members' time, having regard to the amount of time that was spent debating the NAMA legislation. One would have to question if we have our priorities right. We have all met people who are experiencing such difficulties in our clinics. They are typically young people who bought houses in 2004 to 2006, many of them having been granted 100% mortgages. They have availed of the statutory code of practice from the mortgage providers, but the period covered is due to expire next February. The Government amendment to the motion states that "the number of home owners in arrears ... with institutions covered by the State Guarantee is currently of the order 15,000 - 16,000 and that the rate of increase in arrears has moderated notably since the early months of the year". The only reason it has moderated is because the statutory code of conduct that was agreed with the mortgage providers is preventing that from happening. Furthermore, mortgage interest supplement is being paid by the State to mortgage holders to enable them to keep their mortgage repayments under some control.

For the Government to say that this issue is not a problem shows that it is completely out of touch. It has no idea of what is happening on the ground. This is an extremely serious issue. If the moratorium on house repossessions is lifted, people who have incurred major arrears of mortgage repayments will face difficulties next February. In many cases people are only making interest payments and many people cannot even make those payments. Their mortgage repayments have accumulated and they face major arrears of payment. They are under severe pressure and in many cases one partner has lost his or her job and in some cases both partners have lost their jobs. This will have enormous repercussions for the banking sector and for home owners. We are talking about people's homes.

People were encouraged by the Taoiseach, Deputy Cowen, when he was Minister for Finance, to buy houses, on the basis that the fundamentals were sound. People took him at his word and bought houses that were grossly overvalued. Some people obtained their mortgages by a range of means, through subprime lenders, mortgage brokers and the guaranteed banks who granted them 100% mortgages at factors of five and six times their income, which were ludicrous. No proper stress testing of mortgage applicants was done.

The Government was remiss in not working with the Central Bank to impose stricter capital ratio requirements to prevent the banks from giving 100% mortgages. The Minister of State who is present understands this very well. Such stricter regulatory requirements were imposed in other countries, including in Spain and in Canada. The major beneficiary of all the houses that were built was the Government. It received €30,000 per unit sold. Every sale was like all three bars coming up on a slot machine for the Government. It got €90,000 for the sale for three houses. Ultimately it was negligent, its thinking was short-term and it took the easy option. We are now borrowing €26 billion, virtually half of our current expenditure this year, just to keep the country afloat.

The other consequence of the Government's actions is that people are fearful of losing their homes. Countless people at this stage have fallen into negative equity. The ESRI forecast that 200,000 will be in negative equity by next year. Some 25,000 families face repossession of their homes. The Minister had the gall to say there is not a problem in this respect. A severe problem is coming down the tracks, as a consequence of the NAMA legislation. We need to be mindful that this affects real people's lives, their homes and their families. A man and woman's home is their castle. The Government has created a situation where these people are at risk of losing their homes. The Government is saying that it is not its problem, it did not cause it. It provided the mechanism of a lack of regulation to allow this to happen. Furthermore, the Taoiseach, Deputy Cowen, was a cheerleader and said, "Build on, buy on, we will all benefit". The only person who benefited was the Minister for Finance in terms of the public coffers.

We in Fine Gael have put forward a home owner scheme. We are pleased to be given this opportunity by the Labour Party to support its motion and speak on it. We want to put on record our proposal to put in place a homeowner scheme. We believe a moratorium on house repossessions is important. A mechanism must be put in place to deal with this issue. We propose to allow NAMA to do something of major use, to support home owners. It should compulsorily buy properties from mortgage companies, allow people to continue to live in their homes, take a discount on buying the mortgage and allow the people to buy back their homes if they are in a position to do so, but at least allow them to have the security that they will not risk being thrown out of their homes, which would be soul destroying for people.

Our amendment in this context to the NAMA Bill was ruled out of order because it posed a charge on the Exchequer. Significantly, the charge it would pose would come nowhere near the charge posed to the Exchequer by NAMA. This House must get its priorities right. The key term here is "equity". There must be equity in everything we do here for all the people we represent. That has not happened to date with the Government. We must do something for home owners.

Terence Flanagan (Dublin North East, Fine Gael)
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I thank the Labour Party and, particularly, Deputy Ciarán Lynch, for bringing forward this motion, which aims to give homeowners some breathing space through the introduction of a two-year moratorium for those homeowners who find themselves unable to pay their mortgage arrears.

We are facing a serious repossession timebomb in this country, as Deputy O'Donnell said. Thousands of young people and families are facing mortgage difficulties as a result of they or their spouses having become unemployed or having had to take a cut in their take-home pay. Therefore, they are unable to adequately service their mortgage payments. Clearly, it is not all the fault of the homeowners. The banks offered them 100% mortgages and the Government helped create and fuel the artificial property bubble and did not cry stop at any stage to end the property madness.

According to housing agency, Respond, 25,000 families currently in mortgage arrears face the possibility of repossession of their home next February when the mortgage moratorium expires. This is a very real issue for people. It is a major timebomb that needs to be defused by the Government, which is in a state of denial. It is not listening to what is happening on the streets and in every town and city. This problem will not go away.

The ESRI forecast that by next year 200,000 families will face negative equity, whereby the value of their mortgage will exceed the value of their home. It is shocking for these people to find themselves in that position. They will have to continue to pay their mortgages for the next 20 to 30 years but their homes will be worth less than what they paid for them.

The problem of repossessions has been exacerbated by the fact that 15,000 people took out subprime mortgages during the past five years. This is a concern. When we read in the newspapers of companies such as Start Mortgages, Springboard Mortgages and others taking repossession orders, clearly, there is something wrong.

The Government should have been worried as well when we heard the Master of the High Court state, in February of this year, that there will be an avalanche of repossession cases over time and that repossessions will be of historic proportions.

The Government has turned a blind eye to the problem of sub prime and has not tackled it. That is why we see, through the High Court, the number of homes being repossessed. For instance, yesterday in the High Court 18 repossessions were granted. The Minister of State's amendment, stating that only 20 houses have been repossessed to date, is clearly incorrect. The number is double that amount. Some 38 houses have been repossessed, when one considers the 18 that were repossessed yesterday. These are real cases involving real families. I accept the point that some of the houses were not occupied, but the others were. Families are distressed and are being put on to local authority waiting lists which are long enough already, and this should not be the case. Of the 76 cases heard yesterday, 28 were taken by sub-prime lenders, which highlights the Government's failure to regulate the sub-prime industry.

The Courts Service annual report for 2008 reported 238 High Court possession orders in 2008, compared to 109 in 2007 and 61 in 2006. The numbers are on the increase and the Government is in denial by stating that they are not. The total number of houses repossessed last year was 99.

There are homeowners who have received redundancy lump sums and that money is being used to service their mortgages. We have not seen the full effects of the current recession, and all that will happen in time. In addition, when the NAMA legislation, which is on Report Stage here this week, is passed next week other lenders will go ahead and look to repossess homes.

The Government needs to get real on this issue. It needs to extend the moratorium, as the Labour Party has looked for. Homeowners cannot be reliant on the mercy of judges to ensure they remain in their homes. What we have in place is grossly inadequate - a voluntary code of practice for banks and an unregulated sub-prime industry.

Since January last I have called continuously on the regulator to draft new industry guidelines on reckless mortgage lending and to create new penalties for mortgage lenders and professionals found guilty of reckless lending and deception. Sadly, these calls have been ignored and we continue to see the results of the regulator's inaction, with the number of repossession cases escalating every month. The Minister must move urgently to regulate the sub-prime industry and also introduce proper penalties for those who commit a crime.

Clearly, the mortgage interest subsidy scheme is not working because one partner must be at work. It also provides assistance only for the interest part of a loan and excludes those with sub-prime mortgages, at whose cases the Minister might look again.

As much as moratoriums provide breathing space and help for homeowners in difficulty, they do not deal with the underlying problem of those in mortgage difficulty. That is why we, in Fine Gael, looked to introduce an amendment to the National Asset Management Agency Bill which was shot down on Committee Stage but which we will re-introduce, as Deputy O'Donnell stated, on Report Stage. The amendment would provide a social benefit for homeowners and ensure that NAMA would take over the loans of those whose homes are about to be repossessed and take an equity share, the homeowners would deal directly with NAMA on the matter, and there would be strict eligibility criteria.

The Minister needs to look at what other jurisdictions have done to rectify this situation and take on board what has been stated already in this debate.

James Bannon (Longford-Westmeath, Fine Gael)
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I am pleased to have an opportunity to contribute to this debate on the motion tabled by the Labour Party. I support the motion in principal but would like to see certain Fine Gael proposals, such as the NAMA homeowner support scheme, adopted.

As Deputy Terence Flanagan stated, the Master of the High Court warned that an avalanche of home repossession cases is anticipated in the courts in what he described as a recession of historic proportions. He stated that most borrowers were not to blame for their arrears, as we go through this recession.

The same cannot be said about the banks or, indeed, the Government, as I am sure the Minister of State, Deputy Mansergh, will agree. In the interest of fairness, there must be something akin to a moratorium on house repossessions or other proposals to achieve a similar outcome. As the Master of the High Court stated, in the current climate where there are almost no house sales, there is really no good reason to grant an immediate order for repossession unless there was credible evidence that a sale might be on the cards. There are no gains for anybody in rows and rows of houses being shuttered up and ghost estates developing throughout the length and breadth of this country. This is not desirable.

Not so long ago the much repeated catch-phrase in this House was "getting a foot on the property ladder". Ministers sung from hymn sheets all over the country on this issue, and the difficulties associated with such for young and not so young first-time buyers. Now we see where the problem has arisen. For those lucky enough to do so, or should I say, with the wisdom of hindsight, not so lucky in many cases, the trick is to avoid the grasping hands waiting to rip them off the ladder and crush the rungs under their feet, as is the case for many.

The Financial Regulator stated that up to June 2008 almost 14,000 mortgages were more than three months in arrears. Every day of the week there are frantic constituents ringing and calling to see me, wanting to know what they can do to save their homes from repossession. They are extremely anxious to know what relief is available to them to meet the mortgage that they could afford before they lost their jobs, or had their wages cut by the Government. This is one of the biggest problems for people already pushed to the limit. Help is hard to come by. The waiting period for mortgage relief, even if one meets the narrow criteria, is excessive. I have come across constituents who have waited up to six months to get some such relief from the State, and this is unfair and unjust.

The Department of Health and Children is unable to meet the demand and people with young families, who took on mortgages in line with different economic circumstances, are facing bureaucracy, red-tape and cruel delays before they can see hope on the horizon. Many, however, are being refused mortgage assistance by community welfare officers because the eligibility criteria are too stringent.

Currently, there are more than 14,000 households dependent on mortgage interest supplement, an increase of 244% - rather than 200% as the Minister of State said earlier - since the end of 2007. This is factual. The Minister of State can gloss over it any way he wishes, but what he stated earlier is untrue.

I am aware that the Government is currently reviewing this scheme. Were it to turn out that the aim of the review, which is not currently clear, was as is suspected, to make it more not less difficult for people to be eligible for payment, this would be a particularly cruel blow, even by Fianna Fáil-Green Party standards. None of the Greens has come into the House this evening even to listen to this debate, which shows the interest they have in the matter.

When considering the current problems with the criteria for eligibility, anything is possible. At present, claimants are not eligible for mortgage interest relief if, for example, their mortgage is considered to be too expensive. Apart from the obvious leeway in interpretation by different community welfare officers leading to a lack of uniformity around the country, this begs the question as to who encouraged the mortgage holder to take out the loan. It was the banks, with the co-operation and collusion of this Fianna Fáil-led Government - mostly those who attended the Galway tent in years gone by.

By any standard, it is ironic that the very people who caused the economic fall-out are being helped by the very people who colluded in their mistakes, and the innocent are left to carry the can. As they say, "truth is stranger than fiction." If the extraordinary cronyism and shady dealings of the Government were to be made into a movie, it would be considered unbelievable and a bestseller.

Terence Flanagan (Dublin North East, Fine Gael)
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D'Unbelievables.