Maureen O'Sullivan (Dublin Central, Independent)
Link to this: Individually | In context

It is very significant that as well taking statements on the interdepartmental working group on mortgage arrears this week, at the same time Fianna Fáil is tabling a Private Members' Bill on debt settlement and mortgage resolution.

We have taken far too long to get to this point. The issue of mortgage arrears and difficulties did not happen overnight, so this debate is long overdue. Perhaps the situation would not be at crisis point for many mortgage holders if the situation had been treated swiftly and efficiently when the cracks began to appear in the system some years ago. In his discussion on the Private Members' Bill, Deputy Michael McGrath made the point that it is a duty for all of us, whether in a political party or not, to try to come up with solutions to assist those struggling with high levels of personal debt, and those having difficulties in making mortgage repayments on their family homes, that there is a need for this debate not to be a "them or us" debate, Government versus Opposition, but that all suggestions should be listened to in order to bring about a solution.

There are those who say that people chose to take out 100% mortgages for houses that everyone knew were not worth half that amount, and in some cases were not worth even a quarter of that, and that we should acknowledge personal responsibility. That has to be balanced with the arguments that banks and financial institutions practically threw money at people, with no real discussion of the implications and the "what ifs". There were no allowances for job losses or for the slump in the market. Who at that stage would not have taken the opportunity to have a 100% mortgage? Media hype also contributed to the crisis, as people were told that they had to get on the property ladder and that if they did not do so now, they would lose out. The hype was that the good times would last forever, and we know that does not happen. The crisis was also fuelled by bad planning decisions, tax breaks, property speculation and the property bubble. We know that bubbles burst, and this one certainly did.

The interdepartmental group on mortgage arrears was composed of civil servants who are probably on a salary scale and with many years of service, and so not unduly affected by mortgage difficulties. Bankers were also on the group, while the chairman was originally with an accountancy firm. I am amazed it did not strike anyone that when discussing mortgage arrears, they might talk to those in arrears. The bankers will come at this problem from a banking perspective, and who welcomed the report? The Irish Banking Federation welcomed it. We know that bankers are into making profits, often at the expense of the customer.

Who should have been asked to contribute to the report? I would have suggested a random selection from a variety of banks of those in arrears with various types of difficulty, and organisations like MABS, the Society of St. Vincent de Paul and FLAC, which are in direct contact with people who are struggling. The policies and practices of banks and bankers have brought about the problem, yet we are expecting them to come up with the solution. They will come up with solutions, but for whose benefit?

The need for an independent body is worth considering, and this was in Deputy McGrath's proposal and in the Keane report as well. That independent body is vital. It will look at each case, listen to the bank situation, listen to the householder in arrears and then come up with proposals for restructuring or solving the problem.

I looked at the MABS response to the Keane report, and I know that the Minister has some reservations and made some points about MABS in his statement. However, I think the service has much to contribute. It has been in existence for 20 years. It has been giving expert advice to families struggling with managing money and dealing with debt. The service has a skilled staff with much expertise, but most particularly, it comes at the matter with people in mind, and not just figures on the balance sheet. As debt matters worsened in recent years, the State looked to MABS for its expertise in the area of indebtedness, and MABS responded, so I do not understand why its representatives were not included on the group that produced the Keane report. People were turning to MABS at the time the report was being compiled as their banks and their financial institutions were letting them down and were not considering the human cost. I share the disappointment expressed by the representatives of MABS that they were not included and that the Keane group did not seek their expert advice. My understanding is that MABS is an international model of good practice in debt resolution.

In its own report, MABS welcomes the provision of additional resources to assist families in mortgage difficulty, but makes the important point that those in mortgage difficulty are also experiencing difficulties with other types of debt. That brings me back to the irresponsibility of lending institutions in throwing money at people. Yes, people took the money, but there is a major "but". At least the Keane report tacitly acknowledges the relationship between mortgage debt and other types of debt, so MABS calls for a total solution if we are really looking for effective solutions. Mortgage arrears must be dealt with along with the arrears along the issue of personal debt, so there is a need for a comprehensive and complete solution, where the debtor must be given the right to regain control of his or her finances. The report suggests 100 additional advisers and protocols, but I hope they will not be buried in layers of bureaucracy. I hope they will work with the MABS advisers and within that process.

The Keane report appears to suggest that the mortgage advice services could be linked with MABS. I agreed with the AIB comment that all solutions, short term or long term, need the customer working with the lender to reach a solution. Working "with" is the key. The bottom line is that people paid astronomical prices for houses. This began in 1999, but the situation became much worse after 2003. It is far too late to be dealing with the situation, because the writing was on the wall years ago. Those who bought their homes between 2003 and 2007 played a totally uneconomic price in a false market. That has led to Ireland having an extremely high, if not the highest household debt per capita in the developed world. If the mortgage loans are too high, they cannot be repaid.

We cannot confuse the word "home" with those who are speculators on the property market and who bought property to let for tax purposes, or holiday homes here and abroad.

I am talking about helping people to hold on to their homes. If their incomes are declining, they cannot repay crippling mortgages that should never have been given in the first place.

Repossession has been discussed but I do not believe it is an option as it would place an intolerable burden on housing authorities. As someone who is involved with Dublin City Council, I know the housing lists at this stage are far too high and to add more people to the waiting list would cripple the system. The other question is what will happen to repossessed properties. That will leave room for speculators of the future.

We are in difficult times and they may get worse. Mortgages are based on ability to pay so if people are losing their jobs or have reduced working hours, their ability to pay is seriously affected. Rising prices will also affect them seriously. A range of tools is needed to deal with this situation, including debt forgiveness which should be considered in some cases. We must acknowledge the need to write off certain borrowings which should never have been allowed in the first place.

The bankruptcy laws need to be reformed. Other suggestions include trading down mortgages, splitting mortgages, selling by agreement, interest-only arrangements, mortgage-to-rent schemes and extending the years of a mortgage. Part of the proposal has approved housing bodies taking ownership of houses in certain circumstances, and the leasing of houses by banks to local authorities if that is deemed to be more appropriate. I know there is going to be an announcement on this. I have doubts about it and only time will tell if it will work. The bottom line is that there is no one-size-fits-all solution.

The Minister's report referred to forbearance and it is important to acknowledge that circumstances do change. They have changed for the people who took out mortgages in the past, so circumstances could change again and we must allow for that.

Olivia Mitchell (Dublin South, Fine Gael)
Link to this: Individually | In context

I wish to share time with Deputy Dara Murphy.

Peter Mathews (Dublin South, Fine Gael)
Link to this: Individually | In context

Is that agreed? Agreed.

Olivia Mitchell (Dublin South, Fine Gael)
Link to this: Individually | In context

I welcome this report and its guiding principles, including primarily the acceptance that those who can pay must pay. This report is not about those people, rather it is about those who absolutely cannot pay. The report also recognises that there is no automatic entitlement to a solution and that all solutions have consequences both for those seeking a solution and those who are required to fund it.

There were high expectations about this report and there has been disappointment that there is no blanket debt forgiveness scheme. Those who expected one are not really facing up to reality. It is undoubtedly heartbreaking to see what has happened to so many young people who bought houses in the Celtic tiger boom and are now unable to meet the repayments. I understand people's instinctive desire to make banks or building societies who loaned recklessly to young people take a hit. The reality is that every time the banks take a hit, the taxpayer funds the bill. To be honest, the taxpayer can no longer afford it. That is the reality and there is nowhere to borrow.

We hope banks are sufficiently capitalised to deal with the bad debts that will inevitably arise. That said, recognising that there will be bad debts and actually setting up a scheme of blanket debt forgiveness are two very different things. Taxpayers cannot afford it. They have already covered the banks' borrowings as well as the banks' major lending through NAMA. There just is no more money. I realise that is not fair but it is how things are, however unfair that may be.

On a related issue, I realise the need for more realistic personal insolvency rules, which are recommended in this report. I completely agree with that recommendation. I have highlighted the abuse by some company directors of the company insolvency procedures, whereby they can walk away from debt and restart the next day with the same staff in the same premises and with the same customers. I do not want to see a system of personal insolvency legislation which facilitates similar abuse. The easy option route should never be taken because it is easier than paying one's debts. I am conscious that an easy option insolvency regime would be great for some people who bought property towards the end of the boom, may have had 100% mortgages or more, and probably never made any repayments or very few. They could just walk away and lose nothing, but someone has to pay the bill for them. I do not think that is what this report intends to happen. We must be very careful that we do not introduce a system like that in any new legislation.

I wish to make a substantial case for mortgage holders in negative equity. One hears every day about distressed mortgages and that case has been well made in the course of this debate. The sort of cases I hear about in my constituency concern people in negative equity who can continue to pay their mortgages but simply need to move house. In many cases they are couples who bought one or two-bedroom apartments as starter homes and now require a bigger home as they have started their families. Others may need to move because of their work. The economy needs a mobile workforce and, in addition, it needs mortgage holders to remain in employment and keep paying their bills. Broadly speaking, banks will not allow negative equity mortgage holders to sell up, buy a new house and take the negative equity with them.

During the boom years in Dublin almost all home building was in apartments. As the Acting Chairman knows, thousands of young people in our constituency had no choice but to buy a home which they never intended to be a long-term residence but simply a starter home. As the babies arrive and because they cannot sell, many of them are now forced to move out and rent bigger houses. To put the tin hat on their woes, they then become liable for the non-principal private residence tax.

The Keane report recommends negative equity mortgages in a trading-down situation. I ask the Minister to ensure there is flexibility for those wishing to trade sideways or upwards. No one wants a reckless overlending regime. Where it is clear to lenders, however, that customers - usually their existing customers - have the ability to pay, are genuine cases and have a real need to relocate, then I can see no reason such cases should not be facilitated. I understand the Financial Regulator would have to approve any such new product and he, of course, must be mindful of the danger of fuelling a new property boom. To be honest, we are a million miles from such a boom. It would not be a bad thing for the housing market to facilitate those who can pay and wish to move. I ask the Minister to encourage the regulator in this regard.

Dara Murphy (Cork North Central, Fine Gael)
Link to this: Individually | In context

I welcome the opportunity speak on this report and note that the Fianna Fáil Private Members' Bill covers the same topic. From what I have heard this evening, it will have support from all sides. When those in political life attend their clinics, there is a constant stream of people who find they cannot escape mortgage arrears. All those who have attended my office have found themselves in this position through no fault of their own. They were encouraged by society, the banking industry and governments to get onto to the housing ladder as quickly as possible. That has left many of them unable to get off the housing ladder now. Deputy Olivia Mitchell spoke about the huge problem facing those in apartments who are starting to have families. When they bought property initially, their ambition was to move up to a semi-detached house and they thought that people coming up behind them would purchase their apartment. They expected to go through the normal progression, moving forward from starter homes. That option is not possible at the moment for many thousands of people. I welcome the fact the Government is preparing legislation, which I hope will find a solution for these people. It could also involve a stimulus for the housing market.

I want to refer, in particular, to other forms of debt. The Minister's response to the Keane report, as outlined this evening, implies that since the MABS has 52 offices, there is perhaps a need for one agency or group to propose guidelines, if not regulations. The response states the banking industry is now operating from a more centralised point. I have a difficulty with this. One of the reasons for our problems is the removal of the relationship between customers and individual branch managers. I refer to individual branch managers who are not pressurised into achieving targets, selling more houses and cars or increasing credit card limits. With a hands-on approach, local managers could consider the total debt of individuals and seek to find a solution in each case. There are excellent staff in the banking sector, particularly in the branch structure. However, they have been much maligned. They have a humane approach and also a great sense of who they are dealing with and how to deal with them. I warn against the aspiration of sticking to the centralised approach. There ought be a case-by-case approach to dealing with people's debt.

A large number of the self-employed, many of whom have for many years been the most innovative and hard working in society, have found it extremely difficult to obtain social welfare. We need to find a system under which the skills of these individuals who have proved they can run businesses and create employment could be rehabilitated, even if, like the country and the world in general, they have run into financial difficulties. If, as seems to be the case, we are moving towards restoring economic growth, sorting out the banks and restoring our status as a sovereign, independent nation, we will have to allow small businesses to move towards economic recovery along with everybody else.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

I will not be able to do justice to this very complicated subject in ten minutes, but I hope to lay down some basic principles, the first of which is that we should acknowledge what has long been a basic characteristic of Irish society, namely, that families desire to own their own homes. Second, we must recognise that the vast majority at risk of losing the family home bought it in good faith.

The reasons people are in difficulty vary greatly from person to person and from family to family. Some problems arise because loans were not sustainable in the first instance. In some extreme cases which I have encountered, it is fair to say the banks put down fictitious information on income when granting loans. Statements were also made on the ability to obtain a lot of income from renting a room. This income never materialised in many cases. Some problems arise owing to a loss of or a reduction in employment, particularly in two income households. In the latter case, a couple - for example, a construction worker who formerly had the largest income and a person with a State job - may be trying to survive on income from one job, or on much reduced overall income.

We must recognise that, even in the good times, there were people who could not repay their mortgages because of alcoholism, marriage break-up, gambling problems, etc. These will always have to be dealt with, ultimately under the social housing system. This, however, is not what we are talking about; we are talking about those persons who bought homes in good faith and who, for genuine reasons addressable over time, cannot pay for their houses.

We must recognise that if people can only pay a certain sum of money - one must work out how much every person can pay - it will cost the taxpayer, no matter what approach is taken. The State often does not recognise this. If one decides on a write-off for the banks or allows people not to pay the banks, one must recapitalise the banks even further since the State now owns them. The idea of investing €10 billion in the banks to arrive at a base level from which one could start writing off willy-nilly without having to top up the fund seems to defy logic. If one decides to allow repossessions, on the other hand, one is choosing the dearest answer of all because the State must step in and provide social housing. It must buy the whole house for a person to pay for part of it.

The third option proposed is a half and half option, whereby one might own half the house and pay half the mortgage. In this regard, there were some very interesting proposals made by New Beginning today. There is another version in the Keane report where it is proposed that half the house would be purchased and rented back to the client. My experience of the shared ownership scheme was that it was immensely complicated legally. Ultimately, this moves away from the fact that most want to own their house outright. They do not want to wind up as tenants in a house they bought 30 years previously.

My final point concerns a practice in which the State has always engaged but which, for some reason, faced resistance from all the groups set up. We set up the Cooney group and now have the Keane report. I refer to the State directly helping those who need help temporarily until their income grows once more. It is a matter of parking the issue of negative equity.

Deputy Mitchell's point was very interesting. She stated the immediate crisis for people concerned their keeping up mortgage and interest repayments in order that they could retain a certain degree of ownership of their houses and not go to bed at night in total fear of repossession.

I have been told that pursuing the third option would be too dear. Would it be dearer than the first two solutions? I refer to the totally crazy set of circumstances where one does not know what the banks will have to write off. I refer to Allied Irish Banks and building societies, for example. The option would certainly be no dearer than investing the money in social housing.

I will give two examples of schemes under which the State gives direct assistance: the mortgage interest supplement scheme and the mortgage interest relief scheme. The latter used to be much more generous when we were poor because a marginal rate of tax applied. The standard rate now applies. We had proposed and decided to reform the mortgage interest supplement scheme, on which I have documentation to hand. The scheme involves working out one's basic weekly income and stipulates one cannot live on less than the supplementary welfare allowance. It is implied that, in the event of one's financial problem being caused by unemployment, 100% of the interest, up to a certain limit, will be paid directly to the bank on one's behalf. One could develop that scheme, as Fianna Fáil was going to do, because the payer of the money could begin to call the shots. We were going to get rid of a stupid rule stipulating that if one's partner was working for more than 20 hours per week, one was not entitled to the mortgage interest supplement, no matter what financial difficulties one faced. We proposed that this rule be abolished in the spring social welfare Bill to help a large number of distressed individuals at the very bottom. I cannot understand why the Minister, Deputy Burton, did not introduce that change. It was a one-line change, it had been agreed and my officials stated it could go into the spring social welfare Bill. It would have been a get-out-of-jail clause.

However, we were not giving a free lunch because in return for all of this we said the banks would have to carry the first six months of any problem with arrears. Furthermore, we said that since the State would pay the banks directly, the banks would not be allowed to charge more than the basic interest rate and there could be no penalty interest because the risk was no longer there as long as the mortgage interest supplement was being paid. In addition, we stated that if those involved in the sub-prime market wanted the mortgage interest supplement payment, they would have to cut the interest to a core rate. We could have set it at 4% and asked them whether they wanted the interest. We could have paid it directly to the bank as long as the person was entitled to the supplement and the rate was 4%. It would have been on a take it or leave it basis and those concerned would not have been allowed to pay any money themselves because we would have already determined that they could not.

My experience of those involved in the sub-prime market is that, faced with that situation, they would take the money because it would amount to a question of some money or no money. They have argued that the reason they charge high interest is because of risk but if one takes away the risk for the moment, why should they get a premium for the risk?

As a result of multiple debts everywhere, the Bill we discussed earlier is crucial. There is no one-size-fits-all solution. I do not believe that the fundamental approach in the Keane report is the right way to go. It will cause residual problems in future which are unfair on a generation. We should address the issue by direct investment, set it aside in our priorities and help those who need it and given them a reasonable family income. The supplementary welfare allowance income is too low for families with higher expectations and I have some ideas in this regard. Since they are involved in rearing the next generation, the money would be well-invested and, in time, one would get back one's investment.

People may say we cannot afford this. Two figures in the Department of Social Protection have always intrigued me. One is always informed that one cannot afford certain things that might be socially affordable. I am not convinced that if one makes a given choice one cannot afford it because there would be great savings for the banks since there would be no excuse for people not paying. Let us remember two figures. We were paying €69 million in mortgage interest supplement per annum to help people own their own homes, with all the attendant value; we know the social value of people owning their own homes. We were paying €900 million plus to people to rent properties in the State. Let us think about that. We paid more than €900 million as opposed to €69 million. The latter sum has the great social advantage of enabling people to own their own homes while the former sum has all the disadvantages associated with temporary accommodation, such as bad thermal conditions.

It is necessary to decide on priorities. The way forward is to sustain those mainly within the 30 to 45 years age group in reasonable comfort through a radical scheme. What we have under discussion amounts to tinkering at the edges, deferring the problem and creating a further serious problem that will arise in 20 years time.

Brendan Ryan (Dublin North, Labour)
Link to this: Individually | In context

I welcome the opportunity to speak on the Keane report. Like many in the country, I awaited the publication of the report with some anticipation. Given the scale of the mortgage arrears crisis which, we should remember, is a human and family crisis, the report is too shallow in its findings to deal adequately with the crisis.

I am keen to focus on two points. The significant limitations of the interdepartmental group's procedures are highlighted by the working group and there are issues relating to the mortgage-to-rent proposals recommended in the report. It is disappointing that the working group met only eight times, too few meetings given the scale of the crisis. The working group did not carry out in-depth reviews of the loan books and operations of the lending institutions. In addition, there were no data available to the working group on the proportion of those mortgage holders currently making scheduled repayments but on the verge of going into arrears. While this is not the fault of the working group, it is the duty of the Government to seek out these data and I believe it will do so. Those on the verge of arrears today will be in arrears next week or month and if this crisis is to be met head-on the Government must plan based on the problem as it exists today but also on the problem as it may develop in coming weeks and months.

The second issue I wish to raise relates to the recommendations for mortgage-to-rent schemes included in the report and, specifically, the leasing scheme from local authorities. I understand the proposal calls for the local authority to enter into a 20-year lease with the mortgage lender. The mortgage holder would then become a tenant of the local authority and pay a differential rent to the authority. The difference between the differential rent and the amount owed to the lender would be met by the Department of the Environment, Community and Local Government. My fear is that given the gap in data available to the working group, the potential costs for the Department of the Environment, Community and Local Government have not been calculated or assessed adequately. We must ensure we have fully costed such a scheme before we consider introducing and implementing it and, based on the report alone, I am not confident that these calculations have been done. More work must be done in this area. Home owners who enter such mortgage-to-rent schemes should have the opportunity, if their circumstances improve in future, to avail of tenant purchase schemes.

I am also concerned about the capacity of local authorities to cope with the possibility of thousands of extra properties falling under their remit for repair and maintenance. Fingal County Council, which is in my constituency, is pinned to its collar as it stands. Regrettably, at the end of the month we will see an end to Fingal County Council's bin service due to lack of funding and resources. The Keane report recommends the potential handing over of properties in mortgage arrears to local authorities and this has the potential to cause major problems for them.

During the past week we saw residents of the Priory Hall apartment complex in Donaghmede in my neighbouring constituency of Dublin North-East having to evacuate their homes due to critical safety concerns related to the buildings' construction. Some Deputies spoke on these matters today. There are estates in Dublin North and elsewhere afflicted with pyrite heave and many of the families living in pyrite-affected homes are in mortgage arrears as well. It is important that the pyrite working group addresses the fact that many home owners will not be able to sort out these pyrite issues by themselves and, in many cases, the developer is gone.

Will the local authorities be able to repair and maintain these homes should the mortgage holders fall into a mortgage-to-rent scheme? Home owners with such fire safety issues or pyrite problems should not be excluded from the schemes available. The Government must address these major issues when deciding on policy. While I support the Government and I realise it is trying earnestly to tackle the mortgage arrears problem in the context of wider economic problems, I voice my dissatisfaction with the depth and recommendations of the report. I recognise that the report is only one part of a process that will feed into a resolution of mortgage arrears issues.

I welcome the report as an important stepping stone and I commend the work done but the people have put us into this House to push further, to dig deeper and to work harder to find the right course of action to deal with these important issues. This is an important debate and it will continue on Thursday. The Government should accept ideas - I know it will - from all sides of the House in trying to come up with solutions because no one side of the House has a monopoly on the solution. I look forward to the remainder of the debate.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context

Upon publication six days ago I was prepared to give the Keane report and its measures a broad welcome. One week on and following a significant amount of media comment in recent days my position has not changed. The report could have benefited greatly from formal input at review group membership level from housing agencies, academics and people who have proven to be innovators in the area of housing and debt resolution. That is not to say the report fails in its mission. The overall aim is to ensure no one loses the roof over their head and, in that respect, the suite of options contained in the report can and will achieve that purpose. Apart from joblessness, no other single concern ranks higher in the minds of those who were forced to buy homes at inflated prices during the so-called boom years than the fear of losing one's home. Culturally and for all sorts of historical reasons people in Ireland are wedded to home ownership and the legitimate and valid expectation and ambition of owning their own home. Further, the historical experience of the loss of property is deeply ingrained in the Irish psyche. As legislators, while we may differ in terms of our nuanced position on this issue, our motivation and action should be directed towards reasonably and fairly recognising this challenge and historical issue for Irish society.

The issues are complex and demand a multifaceted approach. The mortgage arrears report provides such an approach, even if it does not, in many respects, provide a complete road map to fully meet the challenge. Any comprehensive approach to the issue of mortgage arrears must also address Ireland's Dickensian, anachronistic and punitive bankruptcy and debt resolution regimen. To address the crisis and return confidence to citizens two steps must be taken. First, legislation to protect the interests of distressed mortgage holders must be fast-tracked and prioritised. In parallel with this initiative, radical personal debt resolution legislation must be implemented to address the wider problems of indebtedness across society and ensure the banks which got us into the current mess do not continue to hold all the cards. If advanced properly, the introduction of such measures could be a decisive game changer for home owners. They would also provide the first genuine, sincere and comprehensive approach to the crisis, three years after the banking collapse.

I look forward to the publication and enactment of legislation to give effect to the measures proposed in the report and the critical debt resolution measures required to reinforce them. These measures must be presented to the House as soon as is humanly possible to ensure the misery being endured by tens of thousands of people and their lack of confidence in the system are addressed and we free up much needed resources to be spent in the economy so that jobs will be secured and economic growth achieved.

Dessie Ellis (Dublin North West, Sinn Fein)
Link to this: Individually | In context

I would be lying to the House if I stated that the failure of the Keane report on mortgage arrears to provide real solutions for those with distressed mortgages was surprising. It would be naive to expect anything more from this Government and a collection of civil servants and bankers. Nevertheless, many families will be disappointed that the Government they voted into power in desperation owing to their worsening circumstances has failed to deliver the goods. The Fine Gael-Labour Party programme for Government promised much but has delivered little. Despite a commitment to deal with distressed mortgages, none of the measures laid down in the programme for Government have been brought to fruition. Instead, we have the Keane report which states in its preamble that mortgage holders are not entitled to a particular solution and all solutions carry consequences. These consequences will apply not to those who caused the crisis, namely, those in government and the financial institutions who urged people to take out large, unsustainable mortgages, but to those who are struggling to pay a mortgage on the roof over their heads. It is these individuals who must now decide whether to forgo paying the electricity bill or another household bill to pay their mortgage and keep their heads above water. They will face the consequences of a solution if one is to be offered. They also fear the impending household charge.

Almost 100,000 people have residential mortgages which have been restructured or are in arrears of more than 90 days. This proportion of mortgages is much too large to be described as "distressed" and does not take account of the significant problem of general household debt. We have an entirely new housing crisis which must be addressed as quickly as possible. This will require providing people with real and meaningful opportunities to emerge from their desperate circumstances and, through whatever means, have a secure home.

Just as the previous Government failed those on massive housing waiting lists - a problem which persists to this day - the current Government is failing distressed mortgage holders. The solution cannot be found in the banks or by blaming mortgage holders. As my party has outlined, we need an independent distressed mortgage resolution process backed up by legislation to give mortgage holders the solutions they need. This is not a wholly new idea as similar proposals have been made by others, including the free legal advice centres. While responses must be tailored towards individual cases, the principles underpinning the process must be the same in all cases. The principle underpinning the process is not, as the Keane report suggests, to punish people for buying into the hype of the pre-collapse mortgage market or daring to believe that they, too, could own a home but one of sustainability. If a mortgage holder can, with proper support, remain in his or her home and manage his or her debt, that option should be supported, while those who cannot manage their debts must be assured their housing needs will be met. The practice of making citizens pay for the crisis must end. We have paid far too much for far too little. The banks must begin to play their part in developing a more sustainable debt position.

The problem of distressed mortgages and the costs of not dealing with them are spiralling. Inaction will make any solution more expensive. We cannot afford to get this wrong or wait any longer. We must begin the process of restructuring the debt of the thousands of people in mortgage arrears and build a sustainable process which can be shown to be addressing the issues and providing hope that the affected families will not be left alone in the mire or punished for transgressions they did not commit. Reports which blame people for not being au fait with sub-prime market risks or global economic forecasts are worthless, especially when they overlook the failings of the banking sector in creating the crisis and in failing to address it.

Of the billions of euros the banks have taken from us, practically none of it has been used to help mortgage holders. I remind the Government that it was the distressed mortgage holders and their friends and families who put it where it is in the hope that it would listen to their needs and act accordingly. The bankers have failed the country and continue to fail the people, with no return on the massive amounts of money being pumped into the banks from the pockets of ordinary working people. No solution is possible if it does not reflect the role and culpability of the banks. No solution drawn up by the banks for the banks, as is the case with the Keane report, will resolve the problem. The only value of the report is to show the Government it needs to listen to citizens and organisations such as the free legal advice centres and New Beginning and seek solutions for the people they represent.

Can anyone imagine how people in negative equity feel? Some of them face additional problems caused by the use of pyrite in their homes. Some are upping sticks and leaving their homes, including in my constituency. They are returning their house keys to the banks and local authorities rather than be scourged by the problems of debt. We need a sustainable solution because our citizens deserve it.

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
Link to this: Individually | In context

I will share time with Deputy McLoughlin.

I welcome this debate which I am sure many thousands of mortgage holders will follow with interest. I also welcome the publication of the Keane report as it provides a workable solution for those who are suffering negative equity and unmanageable mortgages. The report takes a considered approach and makes the correct distinction between those who cannot pay and those who will not pay. It does not propose blanket debt or negative equity forgiveness. Its authors have carefully considered the impact of such an approach on the beleaguered taxpayer as well as on those who cannot pay their mortgages.

We cannot view the problem of mortgage arrears purely through the prism of economics. The speculative nature of the property market over the past decade resulted in families paying over the odds for their private residence. The Government has a duty to protect the family home and I am pleased the Minister will address mortgage difficulties. It is important that children have a stable upbringing in their communities. Parents who have mortgage difficulties need help. I commend in particular the mortgage-to-rent scheme whereby families and people in extreme mortgage distress remain in the family homes as social housing tenants. This initiative allows an escape route without the loss of face involved in having to move out of one's home. People can remain in their communities and enjoy the social benefits. Mortgage interest supplement is also a good idea. This is the option whereby the Government pays towards the cost of interest in the short term. It allows people to meet their interest payments without suffering from spiralling debt, in which situation unpaid interest is added to capital debt. Too many families are under severe pressure. Some 45,000 households are 90 or more days in arrears. The Government is committed to assisting those families who are facing difficulties with their mortgages. Fine Gael campaigned on this issue during the general election and our plans formed part of the programme for Government.

I wish to raise another cohort of people who present at my advice clinics in Dún Laoghaire-Rathdown. Divorced and separated women who are rearing families are especially vulnerable to falling into mortgage arrears. In many cases these women have given up their careers to raise their children. They do not have an income yet are saddled with exorbitant mortgages. Through no fault of their own they have had to take out mortgages to save the family home or pay off their partner. With the economic downturn this group has struggled to find suitable employment, is in negative equity and cannot afford basic household bills. I want the Minister to look at this group of women who have massive debts and to offer help to them by means of mortgage resolution or write downs. This group must be helped.

I reiterate my welcome for the report. I genuinely want a workable solution for those people who cannot pay their mortgages.

Tony McLoughlin (Sligo-North Leitrim, Fine Gael)
Link to this: Individually | In context

The decision by the Government's economic management council to establish a working group to consider the great difficulties faced by many mortgage holders in this country was very welcome and is a first step in establishing and framing policy that will try to tackle this widespread difficulty in our communities.

The threat of losing one's home or the roof over one's family must be the most devastating feeling for a mother, father, husband, wife or partner to experience. When the majority of these people entered into mortgage agreements with their banks and building institutions between 2001 and 2007, they were comfortable with their payment terms and the purchase price of their homes. They entered into these agreements in good faith. Today, in late 2011, these same people have gone from having two jobs to having one or none. If they have a job, the income related to it probably has dropped by up to 20%, and in many cases the market price of their house has dropped by up to 55%. It is those people in our society who fall into this category that the Government must target for assistance with the publication of this report. Unfortunately, as in every society, there are people who will never honour their financial obligations, who will use this impasse to refuse to pay and may try to ride on the backs of mortgage holders in genuine difficulty who are simply unable to meet their obligations.

There will be many contributions on this report from all sides of the House. I commend the Minister for Finance, Deputy Michael Noonan, and the Minister of State, Deputy Brian Hayes, who will take into consideration all statements and ideas made in the House this week before formally setting out Government policy. The Minister, Deputy Noonan, stated, "It is incumbent on the State authorities and the banks to fully consider [the problem of mortgage difficulties] and for the financial institutions to bring forward other innovative solutions which will help this difficult and complex problem."

Many commentators expressed their disappointment in this report, identifying the lack of debt reduction or write-off as their main points, although it is estimated these would cost the State €14 billion. While I agree that a total write-off cannot realistically happen, I agree with the proposal that each case must be treated on its own merits having regard to the individual circumstances. This is the key to moving forward.

How do we propose to advance this proposal and how would it work? The current industry approach for dealing with arrears and pre-arrears is the mortgage arrears resolution process, MARP. This process is an important foundation to the individual case assessment approach in which the mortgage holder completes up-to-date information on his or her current income and commitments and the bank considers alternative repayment arrangements. Eventually the mortgage holder can appeal to the Financial Ombudsman or accept these recommendations.

The Minister, the banks and the mortgage arrears and personal debt group should revisit MARP to beef up the resolution process and should consider setting up an independent agency which would mediate between the mortgage holder and the lending institution. Recommendations from this process would be binding on all sides. Debt reduction must be considered as part of this process. Let us consider a mortgage holder whose income has dropped by 50%, the value of whose property has dropped by 45% and who is now in negative equity. If the borrower has been paying according to the terms agreed up to the time of job loss and has a history of honouring his or her financial commitments, it is important that this borrower is given the opportunity to get back to a position in which he or she can continue to pay for the home as he or she was prepared to do during the good times.

On the other hand, if the bank pursues the borrower to the end, evicts the householder and tries to sell the property, can it realise the principal it invested? It cannot and the lengthy and costly legal issues only exacerbate the bank's position. If the bank were to sign up with an agency along with the borrower, it could allow a percentage of the principal to be written off or parked for ten years in line with property prices and allow an interest-only option for one or two years. Then, if at any time the personal income of the borrower were to improve, the case could be reviewed. It is in the best interest that this approach is embraced or considered by our banks because a plethora of repossessed property on the market would further devalue the properties of the banks' other customers. An agency such as I suggest could be similar to the money advice and budgeting service, MABS. This approach would only be successful if the banks agreed to sign up to a process that is binding on all parties and administered and regulated by the Financial Regulator and the Central Bank.

The idea of split mortgages, as contained in the report, is worthy of consideration and should be so considered by any such agency. It needs to be considered alongside the fact that it may take up to 25 years for property prices to reach the heights they did in 2006. For that reason partial write-off of debt needs to be part of any arbitration process.

I welcome the recommendation on the establishment of a mortgage advice and support function which will act as an adviser to troubled mortgage holders. I argue strongly for the Minister to consider going further and developing an agency that would work case by case and would be financially supported by the banks and the Government to ensure it does not get bogged down and has a realistic chance of working.

There are many other recommendations worth considering in this report. There are many honourable people in my constituency and those of all Members who find themselves in an impossible position. They want to pay but cannot and want to find a solution which involves paying for a house that has a realistic value and a realistic mortgage premium. I call for a mechanism for those people in order that they can meet their obligations in a realistic way through mediation and an input from both this Government and, most importantly, from banks who have been afforded the same opportunity from this State.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context

I thank the Technical Group for allowing me time to speak on this very important matter. As the Members on the Government benches well know, I am not a critic of the Government. I support it when I believe it is doing the right thing and going in the right direction. I am not a knocker for the sake of it. I welcome the report, therefore, even though in my opinion and that of many others it falls short in a number of regards. At the same time, it shows the Government is genuinely committed and is trying to address this horrible situation, namely, the many thousands of people who struggle daily to pay the banks the enormous sums of money they owe every month. I am aware of families which go without heat and the other bare essentials to meet their loan repayments. I do not have a monopoly in this regard because those who fill the other 165 seats in this Chamber are dealing with this matter on a daily basis. This is probably one of the greatest problems with which Members of these Houses and county councillors throughout the country are trying to come to grips. Young families and others are approaching their local politicians seeking information on what they can do in order to honour their commitments to their banks.

Irish people are extremely proud and sincere. When they borrow money, they want to repay their debts to the best of their ability. People are heartbroken because they are struggling to try to pay back the enormous loans they took out. For as long as I live, I will never forgive the bankers and developers who led those to whom I refer up the garden path by allowing them to believe that it was acceptable to borrow €300,000 or €400,000 in order to purchase property. These are ordinary working people who earn average wages and they will be saddled with enormous debts for the remainder of their lives.

It would be an awfully poor politician who would come before the House and criticise a Government that is trying to address this issue. The Government, and the Minister for Finance, Deputy Noonan, and Minister of State, Deputy Brian Hayes, in particular, need us to be both supportive and positive. We must work towards one objective, namely, assisting those who are struggling on a daily basis. There is nothing more terrible than to be visited at one's clinic by a young man and a young woman and to be informed about the horrendous difficulties they are experiencing. People such as those to whom I refer are trying to raise their children in the best way possible but they are in dire circumstances as a result of a lack of cash.

I welcome the advent of the mortgage to rent schemes. These will provide a solution whereby people will at least retain the dignity of remaining in their homes. It does not make economic sense for banks to put people out of their houses - and sell them on at much reduced prices - because those individuals then have to be rehoused by their local authorities. No one should be obliged to leave his or her home because he or she is not in a position to make mortgage repayments. As previous speakers indicated, the banks should, in conjunction with the relevant Departments, make arrangements on a case by case basis. That is the correct way to proceed, particularly as there is no one-size-fits-all approach in respect of this matter.

I accept that there may be an extremely small minority of what might be termed "rogue" borrowers. However, the majority of individuals are sincere and want to repay their loans at a rate they can afford. That is why the banks will be obliged to work with people. I accept that there may be circumstances in which banks may have to take houses back but they should allow people to remain in them. I say this because, regardless of whether they live in rural or urban areas, people are connected to their neighbours and their communities, their children attend local schools and they do not want to move elsewhere. As already stated, I welcome the mortgage to rent schemes but issues relating to them should be teased out further.

I welcome the debate on the report of the interdepartmental working group on mortgage arrears. However, as is the case with every report that is ever published, I am sure those on the Government benches would like it to be tweaked in a number of ways. No one on the opposite side of the Chamber is going to state that the report represents the answer to all our problems. Of course it is not the answer to all our problems but it represents a step in the right direction. I am of the opinion that further deliberation will be required in respect of the mortgage interest supplement scheme.

The banks are going to be obliged to play their part because, after all, we own them. The branch managers who are dealing with the type of young couples to whom I refer are, as far as I am concerned, in charge of nothing. We should be issuing directions to the banks and informing them that we all live in this country, that we want to help those who are in trouble and that we must work together to identify solutions that will suit individual cases. I reiterate that I do not want people - regardless of whether they are young, in middle age or old - to live under the threat of being obliged to leave their homes. We had enough of that in the past when a great many individuals were put out of their houses. I do not want to live in a country in which people can be evicted from their homes. We should identify a solution whereby citizens can retain their dignity. Irish people are extremely proud and they do not want to be left at the side of the road and obliged to seek alternative accommodation.

We must work together in a positive fashion. For my part, I will make a constructive contribution at every possible opportunity. I will continue to work not only in my constituency but also elsewhere. We will all be obliged to put our shoulders to the wheel in respect of this very important issue. We can only hope that sensible approaches will be adopted and that people will pull together to find a solution that will help everyone. I commend those who have contributed to this debate so far. I am aware that every Member of the House is genuine in his or her commitment to wanting to assist those who are in trouble at present. I again thank the Technical Group and the Ceann Comhairle for making it possible for me to contribute to the debate.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context

I welcome the opportunity to speak on the issue of mortgage arrears and the commonly referred to Keane report. Before dealing with the substance of the issue, it is important to pay tribute, as previous speakers have done, to organisations such as the Society of St. Vincent de Paul and MABS and citizens information offices on the excellent work they are doing in all our constituencies, including that which I represent, Wicklow. These entities have been swamped with queries from all of our constituents as the mortgage arrears crisis has heightened. Those who work for them are often the unsung heroes when it comes to dealing with this matter.

I welcome the publication of the Keane report, which has been produced in an efficient and timely manner. It is important to state categorically it does not, as Deputy Healy-Rae indicated, provide any sort of magical solution to what is a complex and difficult problem. The report states "it is not contemplated that the Working Group will provide an exhaustive set of recommendations and/or solutions". This debate represents an important opportunity for Government and Opposition Deputies to come forward with constructive proposals. Members should indicate what is good about the Keane report and highlight what is missing from it. They should also outline what we need to do. Deputy Healy-Rae's contribution was extremely constructive in that regard and was in stark contrast from those of Sinn Féin Members, who rejected the Government's approach despite the fact that said approach has yet to be delineated. Sinn Féin is actually trying to pre-empt Government action on this issue. Those who represent that party cannot wait to criticise the Government before it has even reached a decision in respect of this matter.

The Keane report is merely that - a report. It provides a useful set of guidelines, recommendations, opinion and thought, which is extremely helpful. However, it does not constitute a Government decision. It is now the responsibility of the Fine Gael and Labour parties, on a collective basis in Cabinet, to implement the programme for Government and to do everything possible to assist those whose mortgages are in arrears.

There has been some criticism in recent days with regard to the involvement of bankers in the formulation of the Keane report. I am of the view that it was wholly appropriate to bring bankers to the table. As Deputy Healy-Rae stated, it is time bankers stepped up to the plate. Those in the banks must accept responsibility for the mess in which many people with mortgages find themselves and they must also be part of the solution.

I wish to focus on a number of issues, namely, advocacy, the mortgage to rent schemes, recapitalisation of the banks and the reform of personal insolvency legislation. In the context of advocacy, we must respond to the reality that many people find it extremely difficult or even intimidating to approach their banks and renegotiate the repayments on their mortgages. The lingo used by those within and the culture of the financial services sector can be off-putting and inaccessible to many. MABS does a wonderful job with regard to advising and supporting people in respect of financial matters. However, as the report before the House outlines, this organisation is not resourced or structured to assist people in dealing with banks and other financial institutions. There is a need for an organisation to act as a consumer advocate for mortgage holders. An "honest broker", for want of a better term, that could speak on behalf of, advise and assist mortgage holders and provide them with a voice in the renegotiation process. I welcome the Keane report's recommendation in this regard and it must be acted upon. Each mortgage is different and in such circumstances there is a need for an advocate who can consider matters on a case by case basis.

I have a range of concerns, questions and queries in respect of the mortgage to rent scheme. It is understandably incomprehensible that people would want to rent back their homes from any organisation or authority having pumped every cent they possess into meeting their repayments.