Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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Mortgage arrears and house repossessions present an increasing problem for tens of thousands of families. According to the most recent statistics, 5.7% of residential mortgages, or 44,508 mortgage accounts, are in arrears for longer than 90 days, an increase of 25,000 since 2009. Given the recent European Central Bank interest rate increases, with current levels of unemployment and wage cuts, this figure is certain to increase further, perhaps dramatically.

My party has proposed measures that could be taken to address this problem. Last year a group of respected economists urged the banks to introduce some form of debt resolution and accept part of the losses as their own. While I note the expert group on mortgage arrears did not go that far, individual members have called for similar measures. It is now time to consider writing off some of the negative equity on properties which are principal family homes where people are in arrears on mortgages that are clearly unsustainable. Mortgages should be calculated on the basis of current house values rather than the price at the time of purchase, when unscrupulous lenders gave massive mortgages to people who could not repay them. This would constitute not only a massive relief for those suffering the burden of unsustainable mortgages through no fault of their own, but it would also recognise the significant changes that have occurred in the property market and banking sector in the past four to five years.

Last Monday morning a young couple, Sharon and John-Patrick, with two young children came into my constituency office in Tralee. Several years ago they procured a mortgage to the value of €220,000 from Start Mortgages, of which they have drawn down €160,000 to build their home. However, they found it difficult to meet the repayments of €1,300 or more per month. They told Start Mortgages about their difficulties and indicated they were prepared to pay €400 per month to cover their mortgage. Last Friday in the court in Tralee Start Mortgages secured repossession of the house and the inevitable eviction of the two people concerned. That is happening throughout the country. It is happening to young couples who had employment secured loans and built their own homes. Most of those people are now in considerable difficulty. More than 90,000 people are in difficulty at this point.

A proactive approach must be taken to try to deal with this. What is happening is illogical in that people evicted as a result of the repossession of their homes by unscrupulous lenders, including the banks, inevitably find themselves on local authority housing lists. They must secure rent allowance from the HSE to rent a house and the taxpayer and the State are paying for that. We need to be imaginative and firm in how we approach this.

There are unoccupied houses throughout the country which have been taken over by the banks and mortgage lenders. I suggest State bodies, in particular local authorities, working together might be able to secure these houses by buying them at the current market value, rent them to the previous owners and give them the opportunity when the economy recovers, hopefully as a result of a progressive job creation programme when people will find work again, to meet mortgage repayments and live in their dream houses which they bought initially.

In regard to the two people about whom I spoke, one went public this morning on Radio Kerry which was inundated with calls from people throughout county who were in a similar position. Together we must stand up to sub-prime mortgage institutions which are effectively vultures. I cannot think of a word bad enough to describe them other than to say they are vultures. They penalise people even if they are a few days' late with their repayments. Collectively we must stand up and say that is wrong as we must stand up to the banks. We now own the banks so we should be in a position to do everything in our power to help people in difficulty.

We must be cognisant of the reality of today. The reality is that people who purchased houses between 2004 and 2008 did so at totally inflated values. That must be taken into account in order that we can address this terrible grievance.

Brian Hayes (Dublin South West, Fine Gael)
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I thank Deputy Martin Ferris for raising this important matter and giving me the opportunity to respond. It is not an exaggeration to say Irish people value the ownership of their own home. It is a deeply rooted cultural tradition and characteristic. Unfortunately, the financial crisis has created conditions in which many home owners through no fault of their own now find themselves in arrears with their mortgage repayments and at risk of losing their homes. It is time, therefore, that society through the agencies of State, should seek to assist mortgage holders in arrears in a measured and proportionate way. This is happening. There are supports available to assist mortgage holders who are in arrears with their repayments in respect of their principal private residence.

However, before considering some of the aspects of that support, I would like to point out that the level of repossessions in Ireland has been very low. The Central Bank's quarterly data series on residential mortgage arrears and repossessions show that the level of repossession activity in the courts, with respect to the primary residence of borrowers, is not high when compared with the scale of mortgage arrears pertaining.

For example, the level of home repossessions per 100,000 mortgages in the UK is more than five times greater than the Irish rate. It can also be observed that the majority of repossessions taking place are not by way of a court order but rather via voluntary surrenders and abandonments.

The supports available to assist people in arrears with their mortgage repayments in respect of their principal private residences can be grouped under four headings. The first is the mortgage interest supplement scheme. The second is the availability of advice through the Money Advice and Budgeting Service. The third is the protection to mortgage holders provided by the Central Bank's code of conduct on mortgage arrears and the fourth is lender forbearance.

The mortgage interest supplement scheme managed by the Department of Social Protection provides assistance where the mortgage relates to a person's principal private residence. It currently supports approximately 18,000 mortgage holders. The Money Advice and Budgeting Service provides a national, free, confidential and independent service operating from 53 offices nationwide. The House will be familiar with these schemes and how they operate. Rather than recount them in detail, I wish to look more closely at the code of conduct on mortgage arrears.

The code of conduct on mortgage arrears sets out how mortgage lenders must treat borrowers in or facing mortgage arrears with due regard to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits. The code sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or in pre-arrears. For the purposes of the code, a pre-arrears case arises where the borrower contacts the lender stating that he or she is in danger of going into financial difficulties and-or is concerned about going into mortgage arrears.

The code has been amended twice since it was first introduced in 2009 to provide additional protections for mortgage holders. The most recent revision of the code was published on 6 December 2010 and came into effect on 1 January 2011. Lenders are required to comply with the revised code as a matter of law but have been given a period of six months grace, ending on 30 June 2011, to put in place some of the provisions of the code. The revised code contains a new provision on arrears charges. Lenders have been directed not to impose arrears charges or surcharge interest on borrowers who are in arrears and who are co-operating with the new mortgage arrears resolution process with effect from 1 January 2011.

The revised code also includes more detailed requirements for lenders when dealing with borrowers arrears and financial difficulties. I have provided the Deputy with the main aspects of the code in place since 1 January 2011 and I will not rehearse them here. Many of these changes follow on from the work of the expert group on mortgage arrears and personal debt. This group produced two reports - an interim report published in July last year and a final report published in November last year. The expert group, which was chaired by Mr. Hugh Cooney, included Mr. Matthew Elderfield, head of Financial Regulation at the Central Bank, as well as other external experts and senior officials from Departments.

One of the main recommendations of the expert group on mortgage arrears and personal debt was that a deferred interest scheme should be put in place. This was intended to allow borrowers to pay at least 66% of their mortgage interest but less than 100% and defer payment of the balance for up to five years. Mortgage lenders have been requested to commit to the scheme. Lenders representing the majority of the market have already indicated their willingness to implement the expert group's proposals for a deferred interest scheme or a variation of it. These are AIB, EBS, Bank of Ireland, Irish Life & Permanent, Irish Nationwide Building Society, Springboard and Start. While the deferred interest scheme is voluntary for all lenders, those who have signed up in support of the scheme will be monitored by the Central Bank to ensure compliance.

I welcome AIB's announcement that it is examining new ways to assist those in mortgage arrears.

Joe Costello (Dublin Central, Labour)
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The Minister of State has exceeded the time.

Brian Hayes (Dublin South West, Fine Gael)
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The points raised by Deputy Martin Ferris are crucial. There is a code in place and it is the job of Government to ensure it is enforced. I accept the new scheme from the expert group in regard to parking part of the mortgage interest repayment must be monitored by the Central Bank and the Department of Finance to ensure options are available to people.