Dáil debates

Tuesday, 19 February 2013

Mortgage Restructuring: Motion [Private Members]

 

8:45 pm

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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I move:

That Dáil Éireann:

recognises that:— the two biggest issues in housing are mortgage distress and the lack of social housing; and

— the current Government has pursued a policy to pass responsibility for providing social housing onto the private sector and has continued to deplete the public housing stock;notes that:— one in four mortgage holders in the State is in distress, while tens of thousands more are at risk of distress;

— 115 mortgage holders are falling into distress every day;

— Fine Gael and the Labour Party have failed to fully implement the recommendations of the report by the Inter-Departmental Mortgage Arrears Working Group (the Keane Report) into the mortgage crisis;

— the Central Bank and the financial institutions are failing to be pro-active;

— the Personal Insolvency Act 2012 will do little for the vast majority of mortgage holders currently in distress;

— despite the fact that Sinn Féin and others have, since 2011, called for an independent statutory mortgage distress body to adjudicate and enforce agreements on mortgages between banks and mortgage holders, the Personal Insolvency Act 2012 establishes a Personal Insolvency Service but does not adequately deal specifically with the area of mortgage distress;

— this Government, since 2011, has cut spending on housing by 19 per cent to €585 million, leaving local authority housing desperately under-funded, resulting in 98,318 households on waiting lists for local authority housing in this State;

— there are 23,649 people housed as part of the rental accommodation scheme and 94,000 people in receipt of rent supplement, with recent cuts to rent supplement rates making securing affordable housing even more difficult and in some cases leading to families being made homeless; and

— the National Asset Management Agency, NAMA is mandated to provide a social dividend, yet only 179 units have so far been provided for housing; and calls on the Government to:— remove the veto given to lenders over proposed insolvency agreements in the Personal Insolvency Act 2012 and prioritise the maintenance of the family home in any agreements dealing with residential mortgages;

— provide in the legislation for the independent adjudication and enforcement on mortgage distress cases, through a new category of agreement to be known as "independent agreement on mortgage distress" which will be adjudicated by a "mortgage restructuring panel" appointed by the Minister, who would have the statutory power to agree and impose agreements on lending institutions where the panel believes that such agreements would enable the mortgage holders to remain in the family home;

— include the possibility of write-downs on portions of the mortgage debt as well as other options such as debt for equity swaps, mortgage-to-rent and short selling in the options available when reaching "mortgage restructuring agreements";

— take more direct action with the Central Bank to force lending institutions to adopt a more pro-active and lender-friendly approach to the mortgage crisis;

— ensure that NAMA contributes to "the social and economic development of the State" in providing any housing units in its portfolio suitable for social housing;

— develop a plan to commence the building of at least 5,000 housing units by the end of 2013, with a further 4,000 houses by the second half of 2014 for the public housing system, including the use of social housing bonds to fund these projects; and

— restore funding for Traveller accommodation to its 2010 level.
In recommending this motion to the House, I am conscious that mortgage distress and lack of social housing are two of the most important issues with regard to housing. I am very glad to have the opportunity to speak on the issue of social housing in the House tonight. There has certainly been much talk of housing, particularly relating to the issues faced by people at risk of losing their homes. However, there has been very little debate on the solutions to these problems and even less dedicated to the continuing shortage of social housing.


If one spent much time in this House listening to those on the Government benches or examining the topics for discussion, one could be led to believe there is no issue with social housing. In fact, the only thing one would learn about social housing is that apparently too much money is being spent on it and it needs a good cut at least once a year. One would be led to believe that those in social housing are well looked after, that they live very comfortable lives, in good conditions and that those who are not happy with their accommodation are most likely a bit too picky. However, like most pictures this House paints of those hardest hit by this recession or those who were already on the margins, it is a picture much distorted by many things. Some Deputies are out of touch, some are in denial and some still look on those who avail of social housing as targets for contempt rather than as citizens deserving of their rights, but that is what housing is.


Despite what Government policy might indicate, housing is a right. Article 25 of the Universal Declaration of Human Rights, Article 11 of the International Covenant on Economic, Social and Cultural Rights and the European Social Charter all recognise the right to housing as part of the right to an adequate standard of living. The UN Committee on Economic, Social and Cultural Rights, CESCR General Comment No.4: The Right to Adequate Housing, states: "The human right to adequate housing, which is thus derived from the right to an adequate standard of living, is of central importance for the enjoyment of all economic, social and cultural rights." Can we really say that in 2013 this State provides that right to its people? Shamefully, we cannot.


As the motion states, there are currently almost 100,000 people on the housing waiting lists of this State. In 1948, the first coalition Government commissioned a report which found that 59,000 homes were needed across the State to make up for the gap between housing provision and demand. That was just over 26 years after the foundation of the State and now, 65 years later, we have nearly double that demand but are nowhere near providing for those numbers. In fact, we are providing less new social housing now than we were in the 1970s. The State has a shocking shortage of suitable homes to provide for people, while there are tens of thousands of homes lying idle which, in many cases, belong to developers who have been bailed out by the public purse.


Who are these people whose needs the State is so badly failing to meet? Of course, the degree of need among this very large group varies but I certainly have met and worked with many people whose need could be described as severe. I met a mother who shared her parents' couch with her two sons in a house of 11. She has no option but to wait and see, with the hope of getting onto the insecure and increasingly difficult rent supplement scheme. She cannot get work even if there was work to be found because she cannot sleep a wink, giving up the couch so her sons will not go to school too tired to pay attention. She sits in her mother's kitchen and hopes for some way out. Rent supplement, by its nature, perpetuates her poverty trap. It is her only hope but is only open to her if she is unemployed. This is a poverty trap which now takes in 94,000 households and includes hundreds of thousands of men, women and children.


A short-term stop gap to deal with the shortage of social housing when introduced, rent supplement has now become the Government's best weapon in pretending it is providing housing. We have a system where the State is taking public money and subsidising private landlords who are, in too many cases, not living up to the standards set for them but all too rarely checked upon. In order to get rent supplement, a person must be on the housing waiting list and be unemployed. Once a person becomes part of the scheme, he or she must find accommodation, which can be a difficult task, given rising rents, poor standards, cramped conditions and the fact that some landlords, as a means of pre-emptive social cleansing, reject any prospective tenants in receipt of rent allowance. This scheme costs the State over €500 million per year and provides not one extra social housing unit at the end of each year. If rent is dead money then rent supplement is much worse, given the potential this money could have to rebuild communities and the social housing stock in a long-term drive to provide for the needs of the people on the housing waiting lists.


The Government's other solution is to pretend that NAMA is delivering a social dividend. While it is supposed to be doing this and a special purpose vehicle was created last year, it would seem to be a little bit of a charade. Having spent billions of euro bailing out developers through NAMA, we are left with 179 homes delivered in three years, out of a promised total of nearly 4,000, up from an original figure of 2,000 homes which never materialised. This scheme will also not deliver one extra social housing unit in the long term. Instead, developers in NAMA will be given an easy tenant for about 11 years. Estimates are that 2,000 homes will cost the State €14 million per year. NAMA developers line their pockets while nothing is done to solve the continuing lack of housing.


Sinn Féin has offered a solution, clearly laid out in our job creation package released at the end of last year. A novel approach, it suggests that we provide housing as part of a public housing system. The current Minister and the last Minister with responsibility for housing have stated that no big house building programmes would be possible, but we have clearly shown how it can be done. In our job creation document, we highlighted how, through the National Pensions Reserve Fund, the European Investment Bank and incentivised investment from the private pensions sector, we could raise funds which would include €1 billion for improving and increasing our social housing stock. This could fund the commencement of building 9,000 homes in the next two years, coupled with a renewed focus on the delivery of the 3,949 properties identified for social housing by NAMA, of which only 179 have so far been delivered. This would take a considerable number of people off the waiting lists and save a considerable amount of taxpayers' money. This €1 billion could also be used to improve the maintenance of social housing and to refurbish dilapidated units to make them available for housing families.


Management companies are a big problem and the taking in charge by local authorities of many private housing estates and apartment blocks is going to happen sooner or later. The Traveller accommodation maintenance programme in Dublin alone had its budget cut from €1 million to €50,000, which is an absolute shame.


We need a vision for housing and a new approach. We need an approach that recognises that housing is a right and that people who need housing should be housed and should not have to beg for it.

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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There is no more obvious sign that working families are bearing the brunt of austerity than the crisis that many are facing every single month in trying to pay their mortgages. Since 2011, my party has warned that the Government did not appreciate the urgency of the situation. At that time we called for a new, time-limited, distressed mortgage resolution body. Such a body would be an independent arbiter, tasked with reaching resolution agreements for those in mortgage distress. While such an agreement between lenders and borrowers should be on the basis of joint agreement, we said that the resolution body should have the powers to impose agreements.

We showed how the primary aim of that body should be to assist mortgage holders maintain their family home. Options to achieve that would include reducing the size of the mortgage. That is what we have been calling for since this Dáil was formed nearly two years ago.

The figures are shocking, and I am sure the Minister of State, Deputy Costello, is aware of them. During the Government's time in office the figures have got worse. One in four mortgage holders is in distress and 115 mortgage holders fall into distress every single day. That is a figure I need to repeat time and time again. This time tomorrow, another 115 people will be in mortgage distress, and that has been the daily figure for the last two years since the Government took office. Shocking as those figures are, they do not paint the full picture. They cannot measure the number of mortgage holders who are going without necessities because they prioritise their mortgage repayments above all else. They do not show how much the real domestic economy is missing out as mortgage holders refrain from spending to make sure they have sufficient money each month to pay their mortgage.

We are living through a State-wide social crisis. How many fathers and mothers are suffering bad health from the stress of being in arrears or because the prospect of losing their family home is hanging over them? This situation cannot be allowed to fester. The Government must step up to the mark and start dealing with issues and proposing solutions that will work.

Sinn Féin was critical of the Personal Insolvency Bill because it failed on one core issue. It failed to remove the veto on lenders over any agreed plans. No independent voice was empowered to say, "Enough is enough" when it needed to be said. That is the critical flaw which means the Personal Insolvency Act will not bring about a major change in the mortgage crisis. It will be an irrelevance for the majority of mortgage holders who are in distress or who may fall into distress in the future. It is not a solution. The Government needs to get real and recognise that.

The Keane report remains unimplemented. It was a conservative and uninspiring attempt to bring about some solutions but even that report remains, for the large part, on the shelf gathering dust. On top of this inaction, we see a Government determined to heap more difficulties on struggling lower and middle income earners. It would be almost comical, if it were not serious, that at the height of the mortgage crisis the Government is moving to tax the family home. Later this year, we will see water meters installed in these same homes. We are living through a mortgage crisis and the Government has set its face to taxing the roofs over these families' heads and the water they live on.

The Government tries to wash its hands of the crisis, and that is simply not good enough. That inaction has resulted in this crisis getting worse on a daily basis. Today, the media reported that the chief executive of AIB has announced that the bank will write to 33,000 of its customers who are in arrears. I am sure many AIB customers who are in arrears will welcome this initiative and hope it will bring some finality and solace to the reality of not being able to repay their mortgages. The statements in the media, however, give us some insight into what the bank is planning. The initiative only deals with those who are in mortgage arrears. It does not deal with those who have already been restructured. Many people who are in mortgage distress have been restructured into interest only payments. That is not a solution and is definitely not a long-term solution. It may provide a short-term solution until a more comprehensive one is looked at. The fact that AIB has excluded that category of borrowers from this initiative shows it will be taking a minimalist approach.

That is why Sinn Féin believes the Government has a duty to intervene and tackle this crisis. In this motion, we call on the Government to take action, not to sit on its hands but to force the banks to deal with this crisis. Our motion offers our alternative, which is a direct taking on of the issue. The one in four who are in mortgage distress do not want, and cannot afford, to wait around for the Government to face the reality of the extent of the crisis.

The first concrete action the Government must take is to revisit the Personal Insolvency Act and remove the final say from lenders. The veto must be removed. As long as lenders have a veto there is little reason for them to seek fair compromises. Sinn Féin is calling, as we have done for the past two years, for independent agreements on mortgage distress to be decided by a mortgage restructuring panel appointed by the Minister. This panel would be empowered to act as an arbitrator with authorisation to impose on both parties agreements aimed at prioritising the protection of the family home. It is regrettable that such a move is necessary but as this crisis deepens, the banks must be made show some willingness to face reality. Only such a panel appointed by the Minister can fulfil that necessary role. It would be more desirable that the banks do this themselves, but we need a carrot and stick approach. The mandate of the new panel should, explicitly, allow for write-downs on portions of mortgages where necessary. That is only accepting reality for many mortgage holders throughout the State. Other options, including debt for equity swaps, mortgage to rent and short selling, should be available in settlements when independent agreements on mortgage distress are being reached.

The crisis is out of hand, in no small part because of the inaction and unreasonable approach of lenders. These same lenders lent recklessly and some had to come crawling to the State to be rescued. The State appointed, and still appoints, so called public interest directors to the boards of these same lenders. These, supposedly, act in the interest of the citizens. Some of these public interest directors have come before the Joint Committee on Finance, Public Expenditure and Reform in recent months. These so called directors, including former Members of the Dáil and former Ministers, including former Fianna Fáil Ministers, have not shown a smidgin of interest in the public. They are part of the old failed system and they need to be told their role is to protect the public interest and not the interests of the banks. If they are unprepared to do that they should move aside and let someone else take their place. These same people receive hundreds of thousands of euro to represent the people. They are failing to protect the public interest and they should resign.

We must also see the Central Bank step up to the mark. Time and again, Governor Honohan has made the right noises when he comes before an Oireachtas committee but he needs to show the same steel when talking to lenders. It is also the duty of the Central Bank to ensure that the code of conduct for mortgage arrears is adhered to by all. The code lays out best practice for resolutions and, critically, lays out the rights of borrowers to be free from harassment.

To date, the Government has taken a minimalist approach to the crisis. The Keane report was the bare minimum and even its recommendations have not been implemented. It is time to take the final say from the lenders and give it to a panel representing the public interest. It is time to look at write-downs and other options when they are needed. It is time to give those who did not cause this crisis a break.

Throughout our recent economic crisis, the Government has chosen to have working people carry the heaviest burden. That burden has become unsustainable in many cases and family homes are at stake. This is unfair. Irish people are proud to be home owners and we must act to ensure that their rights and dignity are protected. We must move beyond fine words, and act. It is time to get real. I commend the motion to the House.

8:55 pm

Photo of Michael ColreavyMichael Colreavy (Sligo-North Leitrim, Sinn Fein)
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At present, nearly 100,000 people are on public housing waiting lists across the State. This is a crisis and it is on our doorsteps. There is a lack of adequate public housing across the State and there has been a dramatic rise in this number since 2009.

Many Deputies first became involved in politics through the housing action committees that sprang up during the 1960s. At that time, as we celebrated the 50th anniversary of the 1916 Rising, many people, especially young people, realised there was a significant lack of proper accommodation for Irish people.

At that time, as we celebrated the 50th anniversary of the 1916 Rising, many people, especially young people, realised there was a significant lack of proper accommodation for Irish people. After the Rising, which promised radical change and the development of a new Irish state, those who took power failed to deliver on the aspirations of the instigators of the rebellion.

If we look at where we are today, can we say we are in a better position? The greed and corruption that surrounded the Fianna Fáil property bubble left this country in dire straits. The needs of the people were cast to one side and the interests of property developers were put to the fore. Social housing was significantly damaged by the weakening of Part 5 of the Planning Act by Fianna Fáil, which allowed developers to buy their way out of their social responsibility to provide 20% social and affordable housing as part of any project.

Since Fine Gael and the Labour Party took office, there have been further attacks on social housing. Since coming into power they have cut funding to social housing by 19%, and overall spending has fallen 66.23% from the 2008 figure of €1.7 billion. The Dublin Traveller accommodation fund has been cut from €1.5 million to €50,000, an example of what has happened.

The Government also plans to take out leases on NAMA properties to plug the hole in the social housing gap. These leases will be on a long-term basis and will cost the State €40 million per year for 2,000 units, with the properties reverting back to the NAMA developers at the end of the lease. This is nothing more than a scandalous double bail-out for developers. It is not a scheme, it is a scam.

A special purpose vehicle was set up in NAMA to identify homes but in the year since the plan was announced, only 179 have been delivered. At present, 94,000 people are in receipt of rent supplement, costing the State almost €500,000 a year and subsidising private landlords at public expense. Sinn Féin has highlighted a solution to the social housing crisis. In our jobs strategy, we outlined that a €1 billion fund could be put in place for the construction of social housing. This could fund the commencement of 9,000 homes in the next two years. It would also be coupled with the proper utilisation of NAMA properties, providing an effective solution to our social housing problems.

The only mistake that Irish people made was to believe senior politicians and bankers who encouraged them to do the right thing and provide a roof over the heads of their families. How can those who cannot currently afford to pay their mortgages, whose incomes are being cut as we speak and who face new and higher Government charges, continue to live? What will happen to their mortgages as we take more from their pockets? What will happen to the housing market when these people can no longer find the money to pay their mortgages?

9:05 pm

Photo of Jonathan O'BrienJonathan O'Brien (Cork North Central, Sinn Fein)
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Some of the figures we have heard are unacceptable. I do not know the Minister of State's political history but I am sure he served on a local authority like I did, and he would know better than me the pressures faced by local authorities in trying to provide adequate social housing to meet demand. My local authority area of Cork City Council has 9,000 applications for social housing and many of those have been on the waiting list for six, seven or eight years. Those people have little prospect of being offered social housing because we do not have the stock within the city boundaries to provide for those on the list.

We must ask why people go on the social housing lists. There might be medical issues or overcrowded accommodation but primarily they are on the list because they cannot afford to purchase their own home and are therefore relying on the State to provide housing at local level to secure a home for themselves and their families. This is a vicious circle because these people cannot afford to pay a mortgage so many of them apply for social housing. If they are lucky enough to have a job, even in low-paid employment, they do not qualify for rent allowance. As there is no social housing available and because they are working, even for minimum wage, they do not qualify for rent allowance and are therefore forced into the private market. They end up paying what it would cost them if they were able to get a mortgage. That is consigning people to poverty. It is unacceptable and must be addressed. Much of the private accommodation I visit when meeting constituents is substandard. The Minister of State will have seen the same when visiting constituents who are looking for social housing in his own constituency.

Approximately half of those on the Cork City Council housing list are single, and many of them are separated fathers who will never have their needs met because they are classed as single applicants. Many of these separated fathers have children and they have access to those children. Given that the marriage has broken down and as a result of their inability to secure social housing, they must rent in the private market. They cannot afford to rent a two or three bedroom house which would allow them to have their children to stay. They are forced to rent one bedroom apartments where they cannot put their children up overnight. That creates real hardship for the separated parents but most of all for the children. This is not just about providing social housing, we must provide the sort of social housing that will meet the demand that exists. No longer do typical three bedroom homes need to be built in areas like Cork City Council, we must tailor the social housing building to meet the demands of those on the social housing lists and those demands will vary from local authority to local authority. To get hold of this we must have comprehensive review of the type of housing needed and then put in place the finances to deal with it.

The cuts in the housing budgets for local authorities are having a significant impact. There are houses in Cork City Council that are lying idle under the works department but the works department does not have the necessary funding to bring them up to a standard for re-letting. People come to clinics asking why they must sit on a housing list for seven years when there are houses in the area that have been boarded up for three years. We are not investing in housing at local or national level and that must change.

I commend the motion put forward by my colleague Deputy Ellis and the section dealing with mortgage distress as put forward by Deputy Pearse Doherty. I ask the Minister of State to take on board our proposals for solutions to rectify this issue.

Photo of Brian StanleyBrian Stanley (Laois-Offaly, Sinn Fein)
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There has been a constant crisis in housing for decades. We in Sinn Féin believe there is a fundamental right to housing. Other parties might not agree but we are marked out tonight in our belief that people have absolute rights that are non-negotiable: the right from the cradle to the grave to a home, education and health. In any civilised society those rights should be fundamental and should be paid for out of a progressive taxation system.

These rights are not dependent on building booms, bank bailouts or so-called public private partnerships.


One of the first pieces of legislation Sinn Féin introduced to the Dáil in 2002 was a Bill seeking to amend the Constitution to guarantee everyone a right to a home. The Bill was defeated by the votes of a government which, in hindsight, we all know had a deeply unhealthy close relationship with the same developers who were laughing all the way to the banks.


Unfortunately, during the age of the so-called Celtic tiger, we were lectured by the great and the good that developers would provide enough homes for everyone. Those of us who promoted social housing were branded as being old fashioned or backward. Now, of course, we realise that it was those same property developers and their allies who were in government fanning the flames of a building boom who brought the economy into recession and brought the State to the edge of bankruptcy.


It is now time to revisit how we provide housing to those who need it. As I stated earlier, there are currently 98,318 households on the waiting lists of local authorities in the State. The building boom failed utterly to provide homes for these.


Now is the time to plan and build local authority housing to meet the needs of these families. It is far more cost effective to build now when building material, labour and land is so much cheaper. Local authority housing is a good investment, with the rent providing an investment return to local authorities.


I merely flag up this practical point with the Minister of State, Deputy Costello, because we will always get the answer that the funding is not there. I have looked at the maintenance budget of a couple of the local authorities and what they collect in rent. From what I can see, the maintenance budget is between 17% and 22% of rent collected annually. Assuming the maintenance is 20%, that allows 80% to be paid off the capital sum of providing the homes. I refer to local authorities that have a fairly good record of house maintenance.


The mistakes of the past should be learnt from and never repeated. We do not want to see sprawling suburbs where residents are denied transport, schools and access to essential services. What we want is well planned housing estates built with purpose. Services and infrastructure must be at the core of any social housing plan, not fast-buck politics or so-called public private partnerships that have dominated the scene since 2004.


It is ironic that there were two major house building programmes during significant recessionary periods in the State. In the 1930s, the Fianna Fáil Government, to its credit, carried out a considerable house-building programme. In the 1950s, the Minister of State, Deputy Costello's party, in power with Fine Gael and Clann na Poblachta, carried out a considerable house-building programme. All the Marian avenues were built in 1954 - one can see them all throughout the State.


Unfortunately, now the major parties tie themselves up in knots in their attempts not to provide social housing. Every trick in the book, such as rent subsidies, rental assistance scheme and social leasing, has been tried but all of them lead back to the same point in the circle. They all lead to a dependency on private landlords and private developers, with the taxpayer carrying the buck. Let us invest in social capital. Let us invest in good local authority housing.


None of those approaches will ever provide enough homes to meet the needs of the 250,000 people who make up those 98,000 households that are on the waiting lists, and now we have the sight of unfinished estates lying dormant, some of them in the hands in NAMA. There are empty houses but there are people who do not have houses.


In my county, there are 1,700 households languishing on the waiting list, yet houses lie unfinished in Portlaoise, Portarlington, Mountrath, Boris-in-Ossory and Graiguecullen. I would propose where the estates remain unfinished and there is no bond, that the local authority complete the infrastructure, as it is doing at present in my neighbouring estate, Woodgrove in Portlaoise. Local authority staff are in there today finishing off that estate. They are completing the works that should have been done by the developer, who is gone.


Where there are empty houses, the ownership of some of these properties could be transferred to the local authority in lieuof payment of the bond that should have been in place to carry out the works in those estates. This is practical. It is just, realistic and fair. This is part of our social dividend. It is part of the burden sharing. This should be part of the solution to the housing crisis.

9:15 pm

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I call Deputy Martin Ferris who is sharing time with Deputy Healy-Rae.

Photo of Martin FerrisMartin Ferris (Kerry North-West Limerick, Sinn Fein)
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I would say that on a weekly basis every Deputy meets persons coming into their constituency offices who are seeking social housing, be they low-income families who are renting private accommodation and are being helped out by community welfare officers to put food on the table, single parents living on the lone parent allowance and receiving rent allowance in order to have accommodation, or others who would be on the rent allowance scheme, RAS. There are 98,316 on the local authority housing list, 23,649 on the RAS and 94,000 in receipt of rent supplement. If one adds up those figures, it comes to 216,000 persons who are awaiting social housing. In contrast, according to figures we were given here a number of years ago, there were 314,000 units empty in the country, the majority of them accommodation for housing.


Over the past number of years the taxpayers, against their will, bailed out the banks. These are the very same banks which are currently trying to repossess family homes across this island. There are others also involved, the sub-prime lenders. Previously, I have read names into the record. One of those is a person by the name of Mr. Ronald Weisz of Wise Mortgages and other companies, who has been declared bankrupt in the United States but who also has a conviction here for illegally soliciting deposits. Mr. Weisz's company operates in a legal limbo. Prior to 2008, there was no authorisation or supervision of retail credit companies and, consequently, Wise Finance is neither licensed nor supervised by the Central Bank. Clearly, there is a need to bring all such persons under legislation.


Anyone who read the Irish Examiner on Saturday last would have seen where it named Wise Mortgages and a person by the name of Mr. Ian Andrews, who was convicted for corporate tax fraud of £76 million and served 12 years in prison. These persons are operating in this country and nothing can be done about them. They are repossessing homes and property from Irish persons whom they sucked into their web and there is still nothing that can be done about them. I have written to the Central Bank about it and I received letters back from it. I have repeatedly raised the matter in the House. Nothing is done about these legalised gangsters who are effectively evicting ordinary decent Irish persons from their homes on a daily basis. Something needs to be done about it. Something needs to be done, in particular, to provide a social housing programme that will provide accommodation to those who are seeking this for so long.

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry South, Independent)
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I thank Deputy Martin Ferris for sharing time and Sinn Féin for bringing this important Private Members' motion before the House. According to my own records, today alone I had 11 housing queries, between social housing and mortgage difficulties. It is a crisis. Sinn Féin is to be highly commended and thanked for bringing in this Private Members' motion to give the issue an airing because it is bringing severe hardship on families.

There are families who are locked into a position of owing a massive burden of debt to the banks. There has been a write-down for all of the big players but the young couples with families occupying very modest houses which cost a fortune are paying huge mortgages. These couples are failing to put proper heat into those houses. They are going without proper food and proper clothing because they are married to paying the banks. The sooner the banks realise that there must be a write-down for these couples and they must be taken care of, the better. No ordinary person can afford to pay €200,000, €300,000 or €400,000 of a mortgage on a house that today might not be worth €80,000 or €90,000. These couples have young families. They will only live once. The Government will have to act and try to assist and be of help to those couples.

When it comes to social housing we all will be aware that the social housing building programme is gone.

Thousands of people are on housing waiting lists. These are young people with their lives on hold in rented accommodation where they do not want to be. They want the opportunity to be placed in local authority housing and in a number of years' time when they get their legs under them they might be able to purchase that house. I do not mind anybody having to rent a house for a few years when starting out - that is perfectly normal and par for the course. However, I hate to think of a young couple having to stay in rented accommodation all the days of their lives. That is not right or proper.

I again thank Sinn Féin and in particular Deputy Martin Ferris for sharing time.

9:25 pm

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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I move amendment No. 1:

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

“acknowledges that this Government inherited a severe mortgage arrears crisis;

recognises that the Government has already taken a number of significant steps to address the mortgage arrears problem and also to stabilise the banking and wider economic situation; in particular, acknowledges that the present Government established the Inter-Departmental Mortgage Arrears Working Group and subsequently published the Group’s Report in October 2011;

notes that the Report indicated that the mortgage arrears problem is complex and that a range of measures, such as personal insolvency reform, the development of mortgage to rent, the provision of mortgage advice, direct engagement by banks and the development of sustainable options by banks for their customers who are experiencing mortgage difficulties, will need to be advanced to address the problem;

recognises that the Government has moved to implement the main recommendations of the Report and that a special Government committee, chaired by an Taoiseach, is overseeing the implementation of the measures across Government;

acknowledges that significant progress has now been made on this implementation agenda, including the fact that:
— the Personal Insolvency Bill 2012, which introduces new insolvency frameworks to allow for the resolution of unsustainable debt situations in a manner that is as fair as possible to debtors and creditors, has been enacted;

— the Central Bank has obtained mortgage arrears resolution strategies and implementation plans from regulated mortgage lenders;

— the Mortgage to Rent Scheme is now available across the country; and

— a mortgage advisory function is now in place;
encourages the Government and other authorities to continue this work; in particular to bring the new insolvency frameworks, as provided in the Personal Insolvency Act 2012, into operation as soon as possible and to enhance action by mortgage lenders to appropriately address unsustainable mortgage loans;

notes the statement by the Governor of the Central Bank of Ireland at a recent conference on distressed property markets that, having ensured that the banks are much better staffed and organised for dealing with arrears, the Central Bank will be setting out its quantitative expectations for their effectiveness in achieving lasting solutions;

notes the Government commitment to responding more quickly, and on a larger scale, to social housing support needs through a variety of mechanisms, including through increased provision of social housing and a restructuring of investment in social housing, to allow for the delivery of new social housing through more flexible funding models;

supports the Government in developing new funding mechanisms that will increase the supply of permanent new social housing, including options to purchase on lease agreements, build-to-lease and the sourcing of loan finance by approved housing bodies for construction and acquisition;

acknowledges that the National Asset Management Agency (NAMA) has identified in excess of 2,000 units that are suitable for social housing and are working with housing authorities to bring these into beneficial use for those in need;

supports the Government’s overall housing policy statement; in particular, that a priority for Government action will be to meet the acute needs of households applying for social housing support, and in that context, notes and supports the Government’s continued commitment to meet the accommodation needs of Travellers; and

notes that the Government’s overall social housing programme is framed in a manner which both optimises the delivery of social housing and maximises the return from the scarce resources available for that purpose.”
I thank the Sinn Féin Deputies for their contributions, and for the ideas they have put forward and the issues they have raised, all of which will be listened to and considered. I welcome the opportunity to set out the Government's achievements in this area and our strategy for the future.


The context for the mortgage arrears and high level of indebtedness is the economic downturn, as the Deputies have acknowledged. The Government is deeply committed to addressing the challenge of economic recovery, growth and jobs in the first instance in order to produce the environment where mortgage holders can pay for and stay in their homes. The Government is very aware of the difficulties some homeowners are facing in meeting their mortgage obligations and we are committed to advancing appropriate measures to assist those mortgage holders who are experiencing genuine difficulty. I will outline to the Deputies the steps we have taken, as well as our continued efforts in assisting our citizens who face difficulties with mortgage arrears.


One of the important steps to protect mortgage holders who are experiencing such difficulty is the code of conduct on mortgage arrears. This code remains a key framework to govern the relationship between mortgage holders in 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.


Forbearance is a very worthwhile and an appropriate response to most people experiencing mortgage difficulty. The approaches set out in the code of conduct on mortgage arrears can provide a household experiencing temporary mortgage difficulty with the necessary and important breathing space to enable that the household can get back on their feet and resume meeting their full mortgage commitments at a future time. 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 also recognised that, in certain circumstances, other approaches may be required. In view of this, the Government's Economic Management Council established an interdepartmental group, which was chaired by Mr. Declan Keane, to consider what additional measures could be introduced to assist people who are dealing with more significant mortgage difficulties. Two main objectives were set for the group. First, there was a desire, where appropriate and possible, to assist people who are experiencing real difficulties with their mortgage commitments to remain in their home. Second, incentives should not be created that would encourage people who can pay their mortgage to stop doing so. The Government has accepted these Keane report recommendations and has put in place an implementation framework to advance this work agenda. The Government attaches a very high importance to this work as evidenced by the fact that a special Government sub-committee has been in place since March 2012 to address the mortgage arrears problem. This committee is chaired by the Taoiseach and includes all other relevant Ministers, and reflects the need for accelerated progress in this area. More recently the remit of the committee has been expanded to include a greater focus on meeting the challenges facing small business.


The Government's strategy to assist those in mortgage difficulty is built around measures in four distinct areas: personal insolvency; a mortgage advisory service; the mortgage-to-rent scheme; and engagement with the banks. Considerable progress has now been achieved across this agenda. This cross-departmental strategy reflects that there is no single solution to the mortgage arrears problem and it is being tackled on many fronts.


The Keane report indicated that, given the recourse nature of mortgages, personal insolvency reform and in particular the introduction of new more accessible insolvency-resolution frameworks were essential for the resolution of the mortgage arrears problem. The Personal Insolvency Act is now law and the introduction of this new and very important Act should be a catalyst to incentivise banks to reach an agreed solution with individual borrowers in resolving mortgage arrears cases. We expect 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 framework 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 of Ireland is now urgently preparing the ground to make them operational as soon as possible. The director-designate of the Insolvency Service of Ireland, who took up his position last October, has been tasked with setting up an insolvency service to administer the new personal insolvency framework. He has established an implementation team to address all operational matters necessary for the office and he is working towards a launch date at the end of next month with a website, an information campaign, and the issuing of publications and relevant guidelines.


The vast majority of mortgage holders in distress also have unsecured debt, for example, credit card, personal loans and credit union loans. Therefore the Personal Insolvency Act will allow mortgage holders in distress to address both their secured and unsecured debt effectively and in a holistic way. As this is a formal process lenders are bound by the final agreement and thus this will provide the mortgage holder with greater certainty.


There is a three-phased approach to provide a comprehensive mortgage arrears information and advice service to assist people in mortgage distress. The approach differentiates between mortgage information and mortgage advice. The first two elements involve the enhancement of the website www.keepingyourhome.ie and the establishment of a mortgage arrears information helpline within the Citizens Information Board, both of which focus on the provision of comprehensive mortgage-arrears information in particular to people in arrears or pre-arrears. The third element of the service is the provision of independent financial advice to mortgage holders who are being presented with long-term mortgage-resolution proposals by their lenders. This advice is provided by a panel of accountants drawn from members of the main accountancy institutes in Ireland who have agreed to participate and support this independent service.


When a lender is proposing longer-term mortgage resolutions, the lender will advise the borrower to obtain independent financial advice on the proposed arrangement and if the borrower wishes to avail of this option, the lender will pay €250 to an accountant of the borrower's choosing for the provision of this advice. The independent financial advice is available to all holders of a mortgage secured on a primary residence, who have been offered long-term forbearance options by their lenders. An operating protocol for the provision of this advice has been agreed between the main accountancy bodies and the Irish Banking Federation. To date, some 2,700 accountants have confirmed to their accounting body that they wish to be part of the panel and their details are listed on a county-by-county basis on the website www.keepingyourhome.ie.


A key housing support for those with distressed mortgages is the mortgage-to-rent scheme. The Minister of State with responsibility for housing and planning has now put this scheme on a nationwide basis. The objective is protecting the home of the most distressed mortgage holders through a mortgage-to-rent scheme where the ownership of the house passes to an approved housing body. 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 that family remain in their home. While the numbers are still relatively small, mortgage-to-rent is an option that is being rolled out and many lenders are actively engaged in this roll-out.


Of course the Central Bank also has a key role to engage with banks and mortgage lenders and to require banks to engage in a meaningful way with their customers who have distressed mortgages.

The Central Bank, under its MARS project, has been for some time intensively working with lenders to ensure that they have a range of long term options, including trade-down and split mortgages, sale by agreement or other appropriate options as may be developed by lenders, available 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 that context, I welcome the recent statement by the Governor of the Central Bank of Ireland at a conference on distressed property markets that, having ensured that the banks are much better staffed and organised.for dealing with arrears, it will be setting out its quantitative expectations for their effectiveness in achieving lasting solutions.

The Central Bank is focusing in 2013 on the implementation of MARS by lenders and is specifically looking at their operational capability in this regard. Deputies will be aware that the Central Bank compiles and publishes data on mortgage arrears, repossessions and mortgage restructures on a quarterly basis. The Central Bank commenced the publication of such data for the quarter ending September 2009 in respect of principal dwelling mortgages and from September 2012 also in respect of buy-to-let mortgages. In addition, it now publishes pre-arrears data. This data is available on the Central Bank website.

The Government is committed to building on the progress made and to 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. Indeed, 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. Following the progress achieved so far in other areas, this will be the key focus of our attention.

Many Deputies raised the issue of social housing. The Government's housing policy statement published in June 2011 identifies that the priority for Government will be to meet the most acute needs of households applying for social housing support. The Government is determined to ensure that the social housing programme is framed in a manner which optimises the delivery of social housing and the return for the resources invested. To achieve this it is essential that we tailor the use of available Exchequer supports to prevailing conditions and explore the full range of solutions to address housing needs. This means meeting the needs of the greatest amount of people in the most cost-efficient manner, which has necessitated a shift away, for the time being, from large-scale local authority capital-funded construction programmes.

The mistakes of the previous Government are well documented. One of the consequences of those mistakes has been a reduction in the social housing capital budget from €1.54 billion in 2008 to just over €333 million in 2012. This year's anticipated outturn figure will be in the order of €299 million. Nevertheless, the Government is committed to responding quicker and on a larger scale to social housing support needs through a variety of mechanisms and utilising a range of actors. While the private sector is one of those actors, the Government's housing policy statement also recognises non-profit approved housing bodies as a key delivery agent in the coming years.

In spite of the challenging circumstances within which local authorities are now operating, a tentative outturn of approximately 4,000 housing units was achieved in 2012, which compares well with the figures provided in the Sinn Féin motion. Given the current volatility of the market and different challenges to the channels of supply, it is difficult to estimate the likely output of new units for social housing this year. However, it is provisionally estimated that in region of 5,000 units will be provided for social housing in 2013, which is an increase of 25%. The limited funds available to the Government for social housing must be stretched to meet a wide variety of needs, including those of the elderly, the homeless and people with special needs.

While I would like to speak in detail about a number of issues, time does not permit me to do so. The 5,000 plus units of social housing to be provided in 2013 are broken down as follows: 350 units for people with special housing needs; 150 units specifically for people leaving institutional care; an additional 400 permanent homes delivered through capital expenditure under the social housing investment programme; 300 transfers under the mortgage-to-rent scheme and approximately 4,000 units which will be delivered under social leasing, including property transfers from NAMA, the rental accommodation scheme and mortgage-to-lease scheme.

The Government has also been in discussions with NAMA in regard to 2,000 units of accommodation which it is anxious to acquire for the social housing market as soon as possible.

9:35 pm

Photo of Paul ConnaughtonPaul Connaughton (Galway East, Fine Gael)
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I welcome the opportunity to speak on this motion. I also welcome the Government amendment to it.


This Government inherited a severe mortgage crisis. Too often, discussions on the mortgage crisis are dominated by facts and figures when in reality they should focus on the social problems it is causing, the untold sleepless nights and the children who will grow up listening to an ongoing battles in their homes because of the unsustainable mortgage debt and insurmountable financial difficulties placed on their families.


There has been some good news on the economic front in recent weeks, including the deal on the promissory note and the recent announcement of the sale of Irish Life. Buoyed by this good news, it is now necessary that our full focus is brought to bear on the problem of unsustainable mortgage debt. A failure to tackle this problem will allow this tsunami of misery to continue in homes all across Ireland.


We have all dealt with cases involving families faced with impossible debt who are paying a huge emotional price in terms of their daily living. I have come across a case of a man on disability benefit who lives in a house built on his parents farm, which is unsaleable as it is of little use to anyone else, in respect of which he continues to be pursued by the banks for an astronomical sum. Despite repeated attempts, the bank has failed abysmally to open any line of communication, in terms of a write-down, with this man, causing huge upset and worry for him and his elderly parents.


There is much talk of moral hazard. Many people who never took out large mortgages will find the prospect of a write-down difficult to comprehend. However, what must be communicated is the extremely high social price that is being paid daily for the alternative. No solution will be a one-size fits all panacea but some solution has to be arrived at. Many aspects of the October 2011 report of the interdepartmental mortgage arrears working group have been implemented, including the personal insolvency legislation and the mortgage-to-rent scheme. I look forward to the Central Bank's report on its expectations in terms of the banks achieving lasting solutions with mortgage customers in arrears.


Currently, our small towns and villages are being strangled by the lack of spending power of ordinary families. These ordinary families do not have any money to spend because all of their income is being taken by the banks as they try desperately to keep a roof over their heads. Until ordinary families begin to spend modest amounts of their hard-earned money in their local economy, the downward spiral will continue. Alternatively, if these people had their unsustainable mortgage debt dealt with, they could begin to live again, to make simple everyday purchases within their reach and to provide the economic lifeblood that our local towns, such as Tuam and Loughrea in my own constituency, require so urgently. Achieving this will require a sea-change in the banks. As legislators, we have the power to institute such change. It has to happen because the alternative will consign generations to the economic scrap heap.


The Irish people bailed out the banks yet there appears to be little or no recognition of this in the prevailing culture in the banks as they attempt to squeeze every cent out of hard pressed families. It is crucial that proper monitoring be put in place to ensure that the banksdonot, as they have done in the past, employ sleight-of-hand to sidestep measures designed to force them to engage with householders whose debt is unsustainable.


Another issue of great importance in relation to the motion before us tonight is social housing. Every week, in towns such as Portumna, Headford and Tuam, I encounter people who are experiencing huge difficulty in securing social housing. These people have been on the housing list for many years. It is not unusual to encounter people who have been on the waiting list in County Galway for five to seven years while all around them there are half-finished housing estates, the houses in which would make lovely family homes but are lying abandoned and unfinished. NAMA needs to work more closely with councils such as Galway County Council with a view to providing a much-needed boost, in terms of numbers and quality, to the county's housing stock.


The work of NAMA needs to be more focused on providing a social dividend as well as an economic dividend. I believe that if NAMA works more closely with local authorities in future, the authorities will be able to house people quicker, thus reducing the prevalence of people living for many years in temporary accommodation instead of permanent homes.

9:45 pm

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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I thank Sinn Féin for tabling the motion. This is serious politics and it is about time we had a proper discussion about the matter. More importantly, it is time we had some ideas and solutions as to how to rectify the problem. It is the biggest problem facing my generation. We have been knee-deep in the mortgage crisis for almost five years and the toll of the crisis has reverberated throughout all sections of Irish society. One in four mortgage holders has been identified as incapable of repaying mortgage debt and 86,146 private residential mortgage accounts for principal dwelling houses were identified as being in arrears for more than 90 days. I often think of the other three in four who are making payments on their mortgages and the physical, mental and emotional problems they must encounter monthly, weekly and daily and how their family lives must suffer under this financial stress.

We are now all aware of the long reaching implications the mortgage crisis has had through our work as politicians, through our friends and family members, through the media and for many of us personally. Coming from that generation, I meet it at my clinic and throughout the country because as a former banker people come to me looking for solutions. It is not easy but it must be resolved. Otherwise we will become known as generation jinxed.

Many people who set out on their course in life went travelling, learned a trade, went straight to work to earn money or went to college to gain skills and knowledge. People did what they could to find the right type of employment for themselves, which would later help them afford a home and a family. They followed along the natural path of life of finding a partner, buying a home, having children or some version of these events in some order. For many people in a certain generation the carpet was pulled from under them overnight, and they have been struggling ever since. I belong to this group as do many of my colleagues. Normally when I look down to the Front Bench I am very happy to see people with grey hair who are slightly older than me. I am on the record as welcoming their political experience and their ability to stay calm in the eye of the storm during a time of crisis. However, those of us in the younger generation need to identify what is critical to us and need to put pressure on the Front Bench to ensure it is dealt with so we do not lose sight of what we are trying to gain as a society.

The Government's announcement on the Personal Insolvency Act and AIB's announcement today that it is willing to offer debt deals for the 33,000 homeowners who are in arrears are encouraging. While announcements such as these are a bit late in the grand scheme of things I see them as a pro-active approach to the mounting and growing crisis of which we have all been aware since 2008. Those of us clued into economics realised this would happen a long time before then. It is time for the other banks to stop playing catch-up on the mortgage crisis and tackle the issue. We need to have certainty for the family home. We are trying to protect people, families and young children. Ireland has always put a great value on the idea of owning one's own home, and whether through social housing or personal ownership one does not want to have a stressful situation. This is a fundamental Irish principle which all political parties share.

An examination of the banking crisis is essential to regain the confidence of those we have lost through the actions of a previous Government and the failings of institutions which cannot function on their own. The people of the country need to hear the truth. President Michael D. Higgins, my former colleague and a good friend of the Minister of State, Deputy Joe Costello, stated at the Sorbonne during the week we should not be considered as consumers of commodities but rather as social beings, and that we should use economics to this effect. We must achieve this through legislation, pressure and the banks coming up with a solution.

I propose a framework for people to approach banks. If one in four mortgage holders is in arrears how many people are pushed to the pin of their collar just to make payments? I believe many people pay 70% or 80% of their net income towards keeping a roof over their head and preventing bankruptcy. We need a meaningful and structured write-down of debt much along the lines of what we achieved on the promissory note. This is where I differ with Sinn Féin, but if we were to be objective we would come to the same solution. The debts should be separated and those which are affordable should be dealt with by the debtor and the other debts should be put onto the State. We should catch this can and kick it so far down the road that it becomes irrelevant to us as a nation. This would mean asking the European Central Bank to take some responsibility for its culpability and telling every citizen in the country we are in this together. Older generations complain their children are hamstrung financially and they are helping them out. The ultimate way to sort this out is not through wealthy parents helping out less fortunate children or any other social scenario one can think of. It is important to act as a society. We should bring the debts together and look at packaging them and using the ESM, if this is the mechanism to be used. Earlier Deputy Doherty referred to the Personal Insolvency Act not giving people the capacity to go back to the banks. I do not believe this is necessary. To complete the circle, it is up to AIB, Bank of Ireland and other State-guaranteed banks to get back up on their own two feet. I would like to see them remain nationalised through the ESM and held onto by the State until they become extremely profitable and then used as an asset to pay down some of our debt or provide services to people.

Anybody seriously considering buying a State-owned asset such as a stakeholding in a bank will do due diligence. If mortgage holders are in arrears or impaired nobody will be interested in purchasing the banks. The banks know they must clean up their act and carry out securitisation of loans whereby the best are picked and sold and one gets money from it. This would be to the benefit of the State and would decrease our debts and provide us with funding.

I have raised this issue for a long time. I propose there should be a moratorium on banks taking profits on a generation which was mis-sold loans on property prices which had no connection with reality. My parent's generation received mortgages of two and a half times one's income for 15 or 20 years. My generation received mortgages of up to ten times one's income for up to 40 years. In many cases two incomes were going into a house. The hyperextension of credit is largely responsible for this. Bad governance, stewardship and regulation also played a part but it is not really about blame any more; it is about trying to resolve it. Those who are culpable need to take some of the pain.

Integration is key. The irony is that the Irish banks are less capable of dealing with this than the non-Irish banks. The Irish banks are owned by us as a State, so every time we write off debt for somebody we will place it on that person's neighbour and the rest of us. I am okay with this but I would also like to see the bondholders and the European Central Bank play a role. It will not be simple. It will be complex but people should stick with us and we hope to resolve this matter.

Photo of Barry CowenBarry Cowen (Laois-Offaly, Fianna Fail)
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There is no doubt mortgage distress and the lack of social housing are some of the most pressing issues facing the State today. One could argue the debate on renegotiating the Croke Park agreement also revolves around these issues. Many front-line workers were afforded mortgages on the basis of their pay and allowances. We hope their pay will not be disproportionately affected by any proposals emanating from the Government. Many of these people are no longer able to afford the mortgages they have, but they do not hear any real solutions from the Government.

They do hear about the continuation of the property tax, further cuts to the children's allowance, prolonged delays in allocating medical cards and education grants, and they face water charges that have still not been made fit for practice. Prior to the election, the public had been assured of a softer, easier way with the immediate overhauling of the promissory note deal and retrospective capitalisation of our banks.

It was said that the Government's choices and decisions would be more progressive, yet they have been regressive. While the promissory note deal, as Eamon Dunphy might say, could be described as a good deal but not a great deal, it affords an opportunity and a new start, as well as the potential for some social dividend. Even at this late stage, it could start by addressing concrete issues which in turn address the mortgage crisis, rather than having more rhetoric, Cabinet sub-committees or talk of special focus. To date, we have seen no definitive action in the area of split mortgage schemes but we have seen the decimation of mortgage interest relief.

The Personal Insovlency Act provides that financial institutions may exercise a veto in terms of resolutions. Whether devised in conjunction with and negotiated by an independent assessment, the veto still remains and is retained by the bank.

Last week, I tabled a question to the Minister concerning the failure to adequately promote or implement the mortgage-to-let scheme. Taking both residential and buy-to-let mortgages as of September last year, 167,000 mortgage accounts were in arrears out of a total of 911,000. A further 51,000 have been restructured, so 23% of all mortgages are not being paid in accordance with their original terms. This is both a social and economic crisis.

The data show how little progress has been made in dealing with the mortgage crisis. The Personal Insolvency Bill is untested and it is difficult to predict whether or not it will be of benefit to homeowners, given the veto the banks have over any proposed settlement.

The fact that 20,000 residential mortgages are in arrears of over two years is a shocking indictment of the Government's response to date. There appears to be little or no prospect of these mortgages ever being repaid in line with their original terms.

Despite last week's news on the promissory note, the banks are still reliant on the State for funding and will not get outside investors to invest unless the mortgage crisis begins to resolve itself. At that point, the recapitalised banks may be able to lend with relatively clean balance sheets, and the issues around credit for businesses and households may resolve themselves.

The buy-to-let sector represents a time-bomb for the economy. Some 17.9% of buy-to-let accounts were in arrears of more than 90 days at the end of September 2012.

As regards the mortgage-to-rent scheme and in response to the question I put to the Minister of State, Deputy Jan O'Sullivan last week, eight months on from the launch of the scheme, just eight homes have gone through the mortgage-to-rent scheme service. Only two of those transactions have been completed so far and this is from an initial 708 applications. The ongoing failure of the scheme exposes the Government's complete inadequacy in tackling the mortgage crisis. The scheme has even been the subject of judicial criticism for giving false hope to struggling homeowners.

The Minister of State, Deputy Jan O'Sullivan, said the scheme would help more than 100 families in 2012 and could eventually be geared up to help several thousand. She and her officials emphasised the humane aspect of the scheme in that families do not have to leave their homes. However, the prediction of 100 families being helped in 2012 is in tatters, as is the claim that the scheme could be geared up to help several thousand. The Government needs to answer questions on the failure of the scheme, as well as providing reasons for what has happened.

Of the 708 applications, some 300 were ruled out immediately. I understand that a three-month period must elapse before any such deal can emanate. In addition, it has succeeded in only two cases since last June. As I said earlier, there are no specifics regarding split mortgages, the veto remains with banks, and mortgage interest relief has been decimated. That does not bode well for dealing with this crisis.

By virtue of the social dividend that is supposed to emanate from last week's deal, can we expect progress in this matter in future? The Government has cut spending on social housing by 19% to €585 million, thus leaving local authorities' housing sectors desperately underfunded. This has resulted in close to 100,000 households on waiting lists for local authority housing across the State.

Meanwhile, NAMA has advised that it has identified roughly 3,900 residential properties controlled by its debtors and receivers as being available for social housing provision. To date, demand has been confirmed by local authorities for over 1,500 of the properties that NAMA has made available. Another 800 properties are being evaluated, bringing the overall total that may be deemed suitable to slightly over 2,300.

NAMA is mandated to provide a social dividend, yet only 203 units have so far been provided for housing. This is despite the fact that the Minister, Deputy Hogan, spoke about 2,000 homes being provided in 2012 for people on social housing waiting lists. Let us be generous and say that 50% or 100 units have been provided, allied with the two cases mentioned in the mortgage-to-rent scheme. That is the sort of success that has been achieved in this area.

Where are the 1,800 plus houses that have been promised by the Government from NAMA's property portfolio but which have yet to be delivered? NAMA has made the properties available, local authorities have identified them but the Government has not acted.

The Government has failed to confront the immense scale of the mortgage crisis facing the country. Promissory note deals will mean nothing to ordinary home owners if the financially devastating impact of the mortgage arrears crisis is allowed to rage on. The disaster of the mortgage-to-let scheme exposes the ineffectual response of the Government to date.

While social housing waiting lists have ossified with the failure to utilise NAMA properties, it is now time for the Government - even at this late stage - to get to grips with what is a spiralling crisis.

10:05 pm

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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The experience of losing one's home must be added to those most stressful experiences in a person's life. I acknowledge the Government inherited a severe mortgage arrears crisis and that its amendment outlines the steps taken to address it, including the mortgage-to-rent scheme, the Personal Insolvency Act and the engagement by banks in mortgage advice. However, the point is that if all these measures were working, people and society would be seeing the benefits and one would be able to discern a decrease both in the number of mortgage holders in distress and in those at risk of distress. Instead however, we are seeing the severe impact of the mortgage debt crisis. At the end of 2010, statistics indicated that one in ten residential mortgages were in trouble. A few months later the figure was one in nine mortgages, then one in eight and this evening's Sinn Féin motion states the figure is one in four. Consequently, it is obvious that the measures are not sufficient. Moreover, one week ago Professor Honohan stated, "I fully agree that not enough has been achieved on the mortgage arrears". He was expressing his frustration, and that of the Central Bank, that the performance of the banks is not good enough. He spoke of the dilemma that were the Central Bank to issue a directive to the banks, it would give the latter an out and they could then absolve themselves of all responsibility. However, responsibility does lie with the individual banks which gave the mortgages.

I accept the responsibility on the individuals who took out such big mortgages for their dream homes or for the purpose of starting a property portfolio. However, the banks and lenders also have a responsibility for facilitating and encouraging such borrowing by giving 100% mortgages, not insisting on deposits and sometimes giving top-ups for furniture and extensions. As for the responsibility of those in marketing, advertising and auctioneering, they all played a part in creating that property bubble with the extortionate prices being paid between 2001 and 2007. At the time, prices such as €250,000 and more were paid for houses and apartments that people knew were worth, at most, one quarter or one half of those amounts. The really unlucky ones are those who bought in the period between 2001 and 2007. They are suffering and this suffering is compounded by the additional taxes.

Repossession is not the answer because that will lead to further speculation in property, another property bubble and more rogue landlords and speculators and my constituency of Dublin Central certainly has enough of those. Repossession also puts additional pressure on the local authorities and Dublin City Council, for one, does not have sufficient housing stock. In addition, there would be further fuelling of the private rented sector. I was struck by one newspaper headline today, which stated that AIB was to engage with customers in mortgage arrears. I thought this would be something that would happen quickly but when I read the article more closely, I did not get any sense of immediacy. While I acknowledge this debate is on mortgage arrears, I wish to make one further point before concluding. In listening to and reading the comments from, for example, the 24/7 Frontline Alliance, one factor to emerge regarding the cuts to people's salaries pertained to their inability to get a mortgage with consequential effects on their wish to start families.

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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I welcome the opportunity to contribute to this debate on the mortgage and social housing crises. The Technical Group raised the mortgage crisis in the Dáil in 2011 during Private Members' time, at which time there was a crisis in respect of mortgages. However, almost two years later, we remain in crisis and that crisis is only deepening to the point where at present, one mortgage in four is in arrears of 90 days or more. This is the biggest crisis facing the country. It is a crisis that is holding back the domestic economy and has taken spending out of it. Moreover, it ensures that no growth can be achieved and that people have no confidence and are completely unable to spend because they are lumbered with such massive mortgage debt and mortgage arrears and their sole purpose is to try to keep a roof over their heads. It has gone beyond time that the banks are obliged to deal with this issue. They must do so by providing write-downs and this is essential. It is the only way we will emerge from this crisis. It is clear the steps the Government has taken thus far are not working and will not work because there is a lack of engagement with the banks in dealing with people in a way that will allow them to manage their debts and to continue living, working and spending in the economy. Unless the Government does this, the country will be faced with another recapitalisation of the banks this year in order that they can deal with the losses they will be obliged to take into account on their balance sheets. Is this what will be done?

Everyone claims there is a moral hazard involved in the question of how one deals with people in mortgage arrears but the bigger moral hazard is to allow the situation to continue. The banks have been let off scot-free by bailing them out. There is no moral hazard for bankers or bondholders in this society but yet there is a moral hazard for those who simply wanted to provide a home for themselves and their families. It has gone beyond the time at which this matter must be dealt with. Write-downs must be provided to make sure that people can manage their debts and to encourage spending back into the economy again. Allied to this crisis is another in social housing, whereby the Government has completely privatised the provision of social housing across the State. A social housing capital fund must be put back on track to enable local authorities to provide housing for those who need it, that is, for those who, through circumstances beyond their control, will never be able to gain access to mortgages and provide for their own needs. The Government must address these two issues and must so do as a matter of urgency. It must force the banks to deal with this in the only way it can be dealt with, namely, by providing write-downs.

Debate adjourned.