Michael McGrath (Cork South Central, Fianna Fail)
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My party has a duty to hold to account the Government on its handling of the mortgage arrears crisis. A report in this morning's Irish Independent informs us that a new Cabinet sub-committee is being established with additional senior Ministers drafted into it to deal with the mortgage arrears crisis. It paints a picture of distinct unhappiness in Government circles over how the crisis is being handled. The Department of the Taoiseach appears to be frustrated with the Department of Finance. The Department of Finance seems to be frustrated with the Central Bank. The Central Bank seems to be frustrated with the banks and the most frustrated of all are the customers in distress with their mortgages who cannot get a solution identified and put in place. That is the kernel of the problem.

We all need to accept that the only solution to this crisis is for the Central Bank and the Department of Finance to identify a suite of options that can be deployed and then for the banks to put in place a targeted solution for each individual mortgage customer who is in distress. I fully accept there is no silver bullet and the problem will not be solved easily. The only way to solve it is for the banks to get down and dirty, and deal with each file on an individual basis. As is the case with all my colleagues in this House, I am dealing with individual cases of borrowers in mortgage distress and it is utterly frustrating for the people concerned because the banks are not facing up to their responsibilities. Whatever fine words might be uttered in this House, the reality is altogether different.

It is now 18 months since the Keane report was published. That report identified a number of innovative solutions that could be put in place. The record since then of the banks in dealing with mortgage distress is that just 12 split-mortgage arrangements have been put in place in those 18 months. Up to December 2012 only one mortgage-to-rent transaction was completed - we were told a number of others were in the pipeline. The bottom line is that the banks are hoarding their capital and not facing up to the problem, as they should. Customers are not being facilitated in getting a solution to their problems. It is just lingering on with significant damage to the economy and to the lives of the people concerned.

The Minister of State knows the scale of the problem. According to the last official figures, 180,000 residential mortgages were in some form of trouble - either in arrears or had been restructured and had not yet fallen back into arrears. That is almost one in four residential mortgages in distress, which is a national emergency. The Government has undertaken initiatives but they are not working so far. The figures keep on getting worse. Some 44,000 mortgage holders are in arrears of more than a year.

Almost half of them are in arrears of two years or more. In the majority of cases, people will not be able to work their way out of that situation without the bank coming to the table with a solution. That is what I want to see happening. I look forward to the Minister of State's response, which I hope will clarify the role of the new committee and how its work will differ from that of the existing banking and mortgage arrears committee. It is hoped we will soon get some solutions to this problem.

Brian Hayes (Dublin South West, Fine Gael)
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The Government is aware of the significant difficulties facing home owners in meeting their mortgage obligations and is committed to advancing appropriate measures to assist mortgage holders experiencing real and genuine difficulty. A special Cabinet sub-committee was put in place in March last year to address the mortgage arrears problem. This committee, chaired by the Taoiseach and including all relevant Ministers, reflects the need for accelerated progress in this area.

At official level, the Department of Finance is taking a lead role and in that context, a high level steering group, chaired by the Department's Secretary General, was established to drive the implementation of the recommendations contained in the Keane report. The Government's strategy to assist those in mortgage difficulty is built around measures in four distinct areas, namely, personal insolvency, a mortgage advisory service, the mortgage-to-rent scheme and engagement with the banks. Considerable progress has been achieved across this agenda.

The Keane report indicates that given the recourse nature of mortgages, personal insolvency reform and, in particular, the introduction of new more accessible insolvency resolution frameworks are essential for the resolution of the mortgage arrears problem. The Personal Insolvency Act 2012 is now law. This should be a catalyst to incentivise banks to reach an agreed solution with individual borrowers in resolving mortgage arrears cases. It is expected that the majority of agreements between borrowers and lenders can be made outside of the provisions of the Act as bilateral agreements between borrowers and lenders, without recourse to the new insolvency frameworks or the courts, would, in many cases, be in the interest of all parties. However, the new insolvency framework will be necessary for some cases and the insolvency service is now urgently preparing the ground to make them operation as soon as possible.

An extensive independent mortgage advice framework has also been put in place by the Minister for Social Protection, comprising an enhanced website, a mortgage arrears information helpline and the provision of free independent one-to-one professional advice to borrowers when considering a long-term forbearance-resolution offer from their lender. The Minister of State with responsibility for housing and planning has now put the mortgage-to-rent scheme on a nationwide basis. Protecting the home of the most distressed mortgage holders through a mortgage-to-rent scheme whereby the ownership of the house passes to an approved housing body is a key social back stop housing support for those with distressed mortgages. The existing owner then becomes a social housing tenant. This option is now available in appropriate cases and will be of benefit to low income families whose mortgage situation is unsustainable to allow them remain in their homes.

The Central Bank, under its MARS project, has been intensively working with lenders for some time to ensure that they have a range of longer term options, such as trade-down mortgages, split mortgages and sale by agreement or other appropriate options as may be developed by lenders for their distressed mortgage customers and that they have the capacity to implement these in an effective manner. While progress in this area has not been as rapid as desired, greater effort and resources are now being deployed across the banks to this issue and real engagement on resolution options should now be further enhanced.

In addition, the Central Bank's code of conduct on mortgage arrears remains a key framework to govern the relationship between mortgage holders experiencing difficulty and their bank and it offers very worthwhile protections for distressed households. The code provides that each bank must put in place a formal mortgage arrears resolution process to deal with its mortgage customers who are in arrears or pre-arrears and for the establishment of dedicated arrears support units and appeals processes to handle such cases. The Central Bank has commenced a review of the code of conduct on mortgage arrears which will involve a public consultation process. The review of the code will have to take account as appropriate of recent developments such as the new insolvency legislation.

The Government is committed to building on the progress made and further intensifying its efforts to address the mortgage arrears problem and in that context is proceeding on the basis of the recommendations of the Keane report. However, banks and other lenders also have a very significant obligation and responsibility to address mortgage holders experiencing genuine mortgage arrears. Given that lenders extended the credit in the first instance, they can be regarded as having the primary responsibility for addressing the debt problems now facing their customers and for resolving the position in a sustainable way for those customers experiencing genuine difficulty.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister of State for his response. The problem is that while there is engagement between the banks and their customers, it is not real engagement. I have assisted many borrowers with the completion of the standard financial statement form. While some get a response weeks or even months later, others do not get a response, leaving them not knowing where they stand. Meanwhile, the overhang of debt is causing major problems for them, including stress, lack of certainty and fear of losing their homes. All of this is also acting as a drag on the overall economy. The evidence in this regard is in the official published figures. More than 99% of mortgage restructures to date comprise the standard instruments of interest only repayments, reduced payments for a period of time, extension of the term, capitalisation of arrears or a payment moratorium for a short time. The innovative solutions identified are not being rolled out.

The Minister of State is duty bound to say in this House today that the Government is not satisfied with the manner in which this issue is being dealt with. High level officials in Government and the Central Bank briefed the Irish Independent about their concerns. This issue is not being dealt with. The banks are not facing up to their responsibilities. It is about time we called a spade a spade. The banks have been recapitalised by the people. They are hoarding that capital and are not facing up to the bad debts on their books. I acknowledge that the solution will have to be on a case-by-case basis. However, it must be within the context of the suite of measures which have been identified, rolled out and supported by Government and the Central Bank. This is not what is happening on the ground, which is my reason for raising this issue again.

Brian Hayes (Dublin South West, Fine Gael)
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The patience of all of us in respect of this matter is being stretched. The Government has put in place the building blocks. The banks must now engage with people who have distressed mortgages. The legislation in terms of insolvency is in place. The code of conduct is also in place. The banks, as the Deputy knows, have been well capitalised. As I have repeatedly said, they are better capitalised than Swiss banks in terms of their capital reserve ratios. The banks have been given the money to either write down, write off or restructure debts in accordance with the original capital assessments completed more than 18 months ago.

The Central Bank has agreed and accepted the suite of measures put in place to allow each of the institutions deal with this issue. The Government wants this year to be the year when deliberate and extensive actions is taken by all of the financial institutions to bring this over the line and to get on with the task of restructuring people's mortgages, where appropriate. Deputy McGrath is correct that this will have to be done on a case-by-case basis. The banks have been given the tools and capital to address the issue. It is now the task of Government to drive this process forward and to ensure the banks are accountable to the people who have well capitalised them over a period of years. The Government expects extensive delivery on this programme in 2013. The matter is being monitored at Government and departmental level. The Department of Finance is involved on a daily basis with bringing this issue to some conclusion. We expect to see results this year.