Michael McGrath (Cork South Central, Fianna Fail)
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I move:

That Dáil Éireann:notes:

— the worsening crisis in respect of mortgage arrears, with over 94,000 residential mortgages in arrears for greater than 90 days and over 28,000 buy-to-let mortgages in arrears for the same period;

— that almost one in four family home mortgages and more than one in three buy-to-let mortgages are now either in arrears or have been restructured;

— the slow progress made to date by banks in identifying and implementing solutions for distressed borrowers;

— the additional burden being placed on families struggling with their mortgage arising from cuts to child benefit, PRSI increases, local property tax and other measures in budget 2013;

— the adverse impact on mental health, the well-being of society and the domestic economy arising from the failure to adequately address mortgage distress;

— the widespread concern about the threat of a significant increase in family home repossessions arising from the mortgage arrears resolution targets programme, the proposed changes to the code of conduct on mortgage arrears and the Government’s plan to reverse the Dunne judgment; and

— that, in effect, the bank will retain a veto, in the vast majority of cases, over any proposal to restructure the mortgage under the planned new personal insolvency service;

recognises:

— the importance of tackling the mortgage arrears crisis to support economic recovery; and

— the best interests of society are served by ensuring that families can remain in their homes so long as reasonable efforts are made to meet their mortgage commitments;

calls for:

— the establishment of clear, consistently applied guidelines in respect of reasonable living expenses for distressed borrowers;

— the family home to be protected from repossession unless every other possible alternative has been exhausted, including giving the borrower the option of entering a mortgage-to-rent arrangement;

— the Government to refrain from introducing legislation that will remove obstacles to the repossession of family homes until such time as the Central Bank is satisfied that the banks are properly addressing the mortgage arrears crisis by entering into meaningful long-term sustainable solutions to mortgage distress with individual borrowers;

— the setting up of a mortgage resolution office, under the new Insolvency Service of Ireland, to arbitrate between borrowers and lenders and, where necessary, to make a binding mortgage resolution order; and

— greater emphasis on the implementation of long-term sustainable mortgage solutions such as split mortgages, shared equity and permanent interest rate reductions.

I welcome the opportunity to introduce this motion on behalf of the Fianna Fáil Party on what is one of the most serious issues facing the country. At the core of the issue is one simple question: who should make the final decision in identifying a fair solution for a family in mortgage distress? That is what this entire debate will be about.

The Government believes the banks should have the final say. Its announcement two weeks ago greatly strengthens the hand of the banks in their dealings with people who are in mortgage distress. All that the banks are being asked to do now is to propose what they believe is a sustainable solution. In other words, they decide on what is a sustainable solution. This is provided for in the definition of what the Government announced two weeks ago. The banks are not being asked to reach agreement with borrowers; they are merely being asked to propose certain solutions to borrowers, solutions which are to their satisfaction. In return, they are being given extensive new powers that they can use against borrowers. These include measures to allow a bank to contact a distressed mortgage holder as many times as it wishes in the course of one month, whether by e-mail, text message, letter, telephone call or voicemail. Until now the limit was three successful contacts per month, but that limit will be lifted if the Government gets its way. It is proposing that there will be an option for the tracker mortgage rate to be taken from a borrower as part of an overall solution to indebtedness. This tool will be on the table for the first time. The banks will now have the power to deem a borrower to be not co-operating in certain circumstances; therefore, they will have the power to move to repossess a family home within one month or 30 days. This comes on top of the Government's stated intention to reverse the Dunne judgment, a move that will inevitably result in a significant increase in the level of repossession of family homes at a time when the Governor of the Central Bank is saying he is pulling his hair out at the slow pace of progress on the issue of mortgage arrears and the failure of the banks to adequately address the problem. If we can believe media reports, the Department of the Taoiseach is frustrated with the Department of Finance. Apparently, the Department of Finance is frustrated with the Central Bank and the Central Bank is frustrated with the banks at the lack of action on this problem. However, those who are most frustrated are those suffering from mortgage distress because they are not being offered fair, long-term sustainable solutions to their mortgage problems.

On top of all of this is the new Personal Insolvency Act, many of the provisions of which we welcome because we published a similar Bill in July 2011. I have heard the Taoiseach, the Minister for Finance and other Ministers say time and again that there is no veto in the personal insolvency arrangements and that the banks do not have a veto. The Citizens Information Board's website makes it clear that a personal insolvency arrangement will be a voluntary one that must receive the support of creditors, secured and unsecured, representing at least 65% of a person's total debt.

Therefore, in practice, in the majority of cases the banks will have a veto. If we take, for example, a family with a mortgage of €200,000, even if the remainder of that family's debt - credit card loans, car loans, credit union loans - adds up to another €100,000, the bank that holds that mortgage will still have a veto on any personal insolvency arrangement put forward under the new insolvency service. That is the context for this debate.

The Government's view, clearly, is that the final say on determining a fair solution to a person's mortgage problems rests with the bank. In our view, that is a formula which has failed abjectly over the past number of years. It is time for a new approach. We base our view of the need for a new approach on practice to date. We should have learned from experience by now that the banks are not putting long-term forbearance solutions in place. What they are doing is putting sticking plasters on people's mortgage arrears problems and entering into short-term forbearance arrangements, such as interest-only arrangements, which will work for some people. However, for many people these arrangements are not a long-term solution.

If we consider the 80,000 or so mortgages which have been restructured, approximately 99% are subject to short-term arrangements that cannot, in anybody's language, be regarded as a proper restructuring of a mortgage. This is what we seek to change. We propose a different way. Everybody in this House deals with people on a weekly basis who must live with the daily reality of a mortgage hanging over them that they simply cannot afford to repay. This is happening at a huge cost to those families, their communities and the economy. This is the reason it is essential we put new solutions in place, solutions that are deliverable and have oversight.

We propose that a mortgage resolution office be set up within the ambit of the new insolvency service and that this office have the power to examine in detail the financial affairs of a person who is suffering due to mortgage distress. This office will be prepared to engage with the bank to see what it proposes with regard to restructuring the mortgage. We fully recognise that the ideal outcome is that the bank and the borrower enter into a voluntary agreement, but that is not happening in anywhere near the numbers we would like to see, nor is the quality of these agreements sufficient. Therefore, in the absence of agreement between the lender and the borrower, we wish to give the mortgage resolution office, under the new insolvency service, the power to impose binding mortgage resolution orders. These orders would be binding not just on the bank but on the borrower. This is critical.

This proposal greatly improves the Personal Insolvency Act in that it removes the power of veto the Government has built into the legislation, effectively putting the banks in the driving seat. The Minister may come back on this and say we are dealing with issues of property rights and that there are constitutional questions with regard to removing that power of veto and giving an independent office the power to intervene in a commercial contract between a borrower and a lender. The Minister is far more knowledgeable than I am on legal and constitutional questions, but I have investigated this and taken advice. The advice is that property rights are not an absolute, as was decided yesterday in regard to the upward-only rent review issue in the case of Bewley's on Grafton Street, suggesting that measures that are proportionate and controlled-----

Alan Shatter (Dublin South, Fine Gael)
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Directed judgment. That was not decided yesterday.

Michael McGrath (Cork South Central, Fianna Fail)
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The Minister can put his side of the argument in a few moments.

Alan Shatter (Dublin South, Fine Gael)
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It is not an argument. It was just a judgment based on the wording in a rent agreement. It said nothing about the Constitution.

Michael McGrath (Cork South Central, Fianna Fail)
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It contravenes what the Minister has been saying for the past two years.

Alan Shatter (Dublin South, Fine Gael)
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No, it does not. It said nothing about the Constitution. I presume the Deputy has not read the judgment.

Michael McGrath (Cork South Central, Fianna Fail)
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What is the effect of the judgment?

Olivia Mitchell (Dublin South, Fine Gael)
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Deputy McGrath has the floor.

Alan Shatter (Dublin South, Fine Gael)
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I presumed the Deputy knew that. He obviously has not read the judgment.

Michael McGrath (Cork South Central, Fianna Fail)
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A mortgage resolution order as envisaged under the Mortgage Resolution Bill, which we published yesterday, effectively acts as a binding arrangement between a borrower and a financial institution. A mortgage resolution order can be granted only if a financially restricted borrower - defined in the Bill - is the owner of the mortgaged property, has resided in that property for the two years prior to making the application, has provided written confirmation that he will not sell or lease the property and has not previously been granted such an order.

The Bill proposes that the mortgage resolution office will have a wide range of options open to it which it will be able to employ to restructure the mortgage concerned. Many of these solutions have already been identified, but the problem is they are not being rolled out. One of these solutions is the split mortgage proposal, which has the potential to make a dent in the mortgage arrears problem in this country. A split mortgage provides that a portion of the mortgage, the unsustainable portion, can be parked. The difficulty is that the banks are all treating this issue differently. In the case of AIB, for example, the parked mortgage does not accrue interest, while Permanent TSB charges 1% interest on the parked portion and Bank of Ireland charges the full current market interest rate on the parked portion of the mortgage. This is evidence that there is no consistency currently with regard to how borrowers are being treated. This is the reason we want to give the mortgage resolution office the power to impose solutions such as split mortgages on terms it decides are appropriate, participation in the deferred interest scheme, interest-only payments for a period of up to four years, extension of the mortgage period by up to 20 years, repayment holidays of up to 12 months and permanent reductions in interest rates. For the many people who are locked into unsustainable interest rates, this reduction would play a role in resolving their problems. In the event of voluntary surrender of a property, the financial institution concerned can be required to lease the family home to the borrower at a market rent. This is a solution with potential for many people , but so far only two mortgage-to-rent transactions have been completed.

At the heart of this issue is what I said at the beginning. Will we, as a country, allow the banks, which have been adequately recapitalised - to the tune of approximately €9 billion in the context of mortgages alone - to have the final say on their dealings with individual mortgage customers and families as to what represents a fair solution? That is the Government's position, announced two weeks ago - that the banks will define what is a sustainable solution. The banks will have a veto under the Personal Insolvency Act, but that could, if required, be changed through a constitutional referendum if the Minister is convinced that there are property rights which act as a barrier to bringing in this change. Why not change the Constitution so as to provide him with absolute certainty that this issue can be addressed?

What we propose is a radically different way, a way that provides an opportunity for borrowers who are genuinely engaged and want to restructure their mortgages to have a fresh start. A mortgage is the single biggest liability most people face in their lives. We all know the scale of the crisis. One in four family home mortgages either are in arrears or have been restructured. Our focus is on the family home and its protection where possible. Where it is not possible to protect it, a borrower must be given the option of entering into a mortgage-to-rent transaction.

I look forward to the debate on this and hope it is constructive, because that is the purpose of what we have introduced.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Ba mhaith liom buíochas a ghlacadh leis an Teachta McGrath as ucht deis a thabhairt dom labhairt ar an ábhar fíor-thábhachtach seo. We talk about human suffering, but probably the greatest human suffering is fear. Many people in society are fearful at the moment because they cannot face up to the financial challenges facing them. The only mistake of many of these people was that they paid inflated prices for houses for their families.

It is very hard to get into the mindset of fear that sets in when people feel they face overwhelming financial problems. Having in an earlier life experienced severe financial pressure and having spent many a night counting up cheques to try to meet bank commitments the following day, I can guess at the fear faced by most of these people.

When one meets people who have debts, often the first thing that strikes one is their inability to face the simple task of getting a bit of paper, listing all their debts and telling somebody about them. Even though they know that hundreds of thousands of people have similar debts, they feel that nobody else is in the same mess. It is clear when one meets them they are dealing with an issue of embarrassment and shame. It should not be there, but it is there as these people try to struggle on from day to day.

Deputy Michael McGrath set out the sheer numbers in this regard. Some 94,000 people are in mortgage arrears. Many people are in arrears for all sorts of other debts. I have no doubt that the Minister, Deputy Shatter, is familiar with the scale of this problem, which is a cancer stalking our land. I have a feeling that the Government thinks it is caught in a catch-22 situation. Funnily enough, I think it shares the fears of those who are unable to face up to the realities of this problem. Sooner or later, we will have to recognise, as we did in the case of commercial borrowing, that much of this borrowing is unsustainable in the short to medium term. Many households that were receiving two good incomes are now surviving on the subsidiary income alone. Other households might also have a small second income. In most cases, the level of borrowing is unsustainable. The Government is aware of the reality that the sticking plaster approach, which involves hoping the banks will pretend to write off debts while not actually doing so, will come back to haunt it in the long term.

I have asked myself why there is such inaction in this regard. I do not believe it can be attributed to constitutional problems. The Constitution makes it clear that all property rights are subject to "the exigencies of the common good". Surely it is in the interests of the common good that we deal with this problem. The last time we were in government, the Attorney General made it clear when we were introducing Bills which interfered with people's property rights that approximately 25% of a person's pension or salary, as a rough figure, could be taken away on the basis that the common good outweighed the property right in its absolute form. The Minister might remember the forewords to some of the legislation we introduced. If there is a constitutional problem, it can be dealt with quite simply. This Government is great at proposing constitutional amendments, so it could propose one in this instance.

The Government will have to face up to the much deeper problem in this regard sooner or later. It is afraid that it will have to put further moneys into the banks if they crystallise this loss on their mortgage books and write it down to a real and sustainable level on those books. It is paralysed by this fear. That is why it is unable to face up to the reality of this situation. It would rather that huge numbers of people suffer than to admit that not enough money has been provided to resolve this problem. It has not accepted that more Government money, or some other money, will be needed to provide for an upfront resolution of this issue.

Deputy Michael McGrath has articulated some of the many reasons a system whereby every individual goes in and makes an individual case, with the banks having a veto, will not work. First and most obviously, if the bank is in control, those who are more capable, have better advice, have better life experience or work in this kind of business will come out better. Such people would be at a huge advantage compared to those with no experience of dealing with their own financial affairs. The second reason should also be obvious to the members of the Government. They can imagine how long it will take to process individual cases if the banks have a veto, but individuals do not have to sign up to what is dictated by the banks if they find it unsatisfactory. Each case would go over and back many times before it would finally be resolved. At the moment, it takes a year to process a social welfare appeal, which is a fairly simple operation. One either gets an invalidity pension or one does not. In normal cases, one has to have enough stamps, which is a black-and-white, two-minute issue. The only other thing involved is a medical test. Even so, appeals can take up to a year. In that context, one can only hazard a guess at how long it would take to get through the guts of 100,000 individual cases to find some way of resolving people's problems. Therefore, we need radical policies and radical change. If a binding ruling were issued by an independent office like that proposed by Deputy McGrath, the process would be hastened as there would be no need for endless negotiations. There would be no eyeballing between the banks, which would use their veto to ask people for things they cannot commit to, and applicants who know their borrowings are unsustainable.

Another weakness in all of this is that most people who are in financial trouble will make promises way beyond what is possible if they think that is a way of getting out of the problem in the short term. Therefore, if the banks seek unsustainable payments as part of an attempt to protect their own interests, most ordinary people will believe the best thing to do is to commit to making such payments even though they know in their hearts and souls that the figures do not stack up. If that happens, we will have to take another trip on the merry-go-round a year or 18 months from now. It is time for us to face up to this problem in an upfront manner by recognising the reluctance of the banks to crystallise their losses. They are pressurising the Government not to force them to crystallise their losses. The kind of shadow-boxing that is taking place, as the Government asks the banks to set out the numbers of cases they have dealt with, will allow the banks to deal with all the easy and marginal cases while pushing the greater problem down the road.

Our proposal would make a big difference. Having worked on this issue for a long time, I know the current approach is not going to work. I am not engaging in political point-scoring as this matter is way too serious for that. As I said at the outset, relationships and marriages are breaking up and people's physical, emotional and mental health is failing because of the threat of repossession. If the Government says there will be no repossessions, it will create a new moral hazard. If people think there will be no repossessions regardless of their circumstances, they will stop paying. The unwillingness to face this problem means that both sides are losing out. Ultimately, the ordinary people of this country are left with a burden on each shoulder. I will conclude by reminding the House that inaction in this regard will ultimately hurt the young children who are growing up in this country. They will remember that the formative growing years of their youth were blighted by the fact that their parents were living in fear.

Michael Moynihan (Cork North West, Fianna Fail)
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I welcome the opportunity to contribute to this debate. I thank Deputy Michael McGrath for tabling this motion and for his ongoing work on this issue, which is one of the most serious we are facing in this country at present. I compliment him on the mortgage resolution office Bill, which he wrote along with our colleague, Senator Thomas Byrne, and details of which were announced yesterday. The biggest difficulty we face as we go forward is the mortgage issue, specifically the debt arrears of families and individuals.

To take the main issues that come across the desk of public representatives, one will find that the people who are facing the most difficulty and stress, both in economic, mental and physical terms, are those with mortgage arrears. We get this line that the banks are dealing with individual cases under the new regulations but they are not. I can cite cases going back two or three years where we have been trying to come to an accommodation with the banks, for example, where mortgages were given out to people whose only income at the time was an invalidity pension. Such people are being communicated with by the banks once, twice and, in one case, three times a week in regard to their difficulties. They have gone through the Money Advice and Budgeting Service to try to find a resolution but no matter what agency of the State might add, subtract, multiply or divide the figures, the stark reality is that the debt they have on their shoulders is unsustainable.

There has to be a meaningful engagement with the banks to find a resolution to this issue. There are families with up to five school-going children who started out with two incomes but now only have one income. In one instance, parents with three children started out with only one income but were given a huge mortgage. That debt is still on them despite the house being in huge negative equity, but it is their home. There are also people with historical debt.

As Deputy Michael McGrath outlined earlier, only two or three mortgage-to-rent arrangements have been achieved to date. People are in treatment for mental suffering because of this issue and, in one instance, a person is currently hospitalised due to a difficulty of which I have personal knowledge. In my clinic on one particular day in the past fortnight, six individuals - grown men and women - cried in front of me in regard to the amount of debt they had on their shoulders. For any public representative, on either side of the House, to be flippant on this issue is to do a gross disservice to the Irish people because a huge number of people need help and advice.

It was wrong to introduce legislation that puts the banks in a veto position. The banks in this country and across the world had all the answers up to five years ago, they had all the experts and knew every kind of statistic available, but it was all based on a heap of sand. We in this House must be serious about our business of representing ordinary individuals who, through no fault of their own, have this huge difficulty. In many instances, it is causing illnesses and I know of one case where a person was recently diagnosed with a serious illness. The first thing that person's spouse did was to try to get the couple's bank to hold off on the mortgage payments because they were put to the pin of their collar. They were left with just €10 or €15 a week after taking care of all of their commitments and they wanted to know when they could get back to some form of normal living.

It was mentioned over last weekend that the banks will take into account certain spending, such as spending on Sky Sports and so on, but many people in this country do not currently have those services because they simply cannot afford them, given they are putting all their money together to try to ensure their financial commitments are met. It ill behoves us to have banks coming out to say they are dealing with this issue. The regulators and the Central Bank claim they are tearing out their hair in trying to get the banks to deal with these issues. In my experience of dealing with constituents, the banks are dealing with these issues by sending out letter after letter, followed by telephone call after telephone call, and by harassing people.

The simple fact is there is no blood in a stone. The sooner the banks realise this and start dealing with the issue accordingly, the better. No matter how much pressure is put on from the bank head offices and bank managers, they will not be able to get blood from a stone. There are people who cannot sustain their debt and arrangements will have to be put in place for them. This is why this Fianna Fáil motion is so important. All over the country, whether in the suburban commuter belt where house prices escalated or in rural communities, house prices have dropped. More importantly, the ability of people to earn money to pay off their debts has disappeared. If the people in charge of the banks or those regulating the banks think that sending out letters or having three communications a month to a borrower, whether by text, e-mail or otherwise, is going to make any difference, they are very mistaken. It will not make a difference.

We have to stand up on this issue. Deputy Ó Cuív mentioned the issue of fear and there are people in great fear because they want their family homes protected. Until last September or October, there was a line being given out by the banks and financial institutions that the last thing they would do is repossess the family home, but I am sorry to say that language has changed dramatically since then. While we welcome aspects of the Personal Insolvency Act, there are aspects of it with which we have serious concerns. A first point concerns the veto given to the banks but a fundamental point is that the language coming out of the financial institutions has changed the mindset of homeowners. Until September or October of last year, the suggestion was they would try to meet interest-only payments but they are now fearful their homes may be taken. The line in the Sunday newspapers was that they would be reduced to penury in order to pay back their mortgages.

We have to face up to this issue. I congratulate my colleague, Deputy Michael McGrath, on putting down the motion and on the Mortgage Resolution Bill which was launched yesterday in co-operation with our colleague, Senator Thomas Byrne. We need to have an informed and passionate discussion on this issue in the debate today and tomorrow, and not play politics with it. Whether one is on this side of the House or the other side, the issue is far too serious for the people coming into our clinics who are not sleeping at night and who are reducing what they are eating to try to keep the banks or financial institutions from taking their houses. I acknowledge that some institutions such as credit unions are meeting hard-pressed borrowers but a lot more work needs to be done on this issue.

John Browne (Wexford, Fianna Fail)
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I compliment Deputy Michael McGrath on putting forward the motion, which gives us an opportunity to address this serious problem. I hope the Minister will take on board some of the suggestions put forward by Deputy McGrath. As Deputy Moynihan said, no political party has a monopoly on how to solve this problem, which is not an easy one to solve. We must put our heads together to ensure we come up with a solution for the people who are suffering greatly due to mortgage arrears.

The mortgage resolution Bill, which was published this week by our party and which proposes the setting up of an independent mortgage resolution office under the Insolvency Service of Ireland with the authority to provide for actual settlements, is the way forward. An independent body is the only solution to this problem. Banks have been talking the talk over recent years but they are certainly not walking the walk. As many Deputies noted, significant numbers of people are coming to our clinics asking us for a solution to the problem. In many cases, we have gone to the banks with the people involved to try to hammer out a deal or solution, but this has not happened. The personnel in local banks do not have the experience to deal with families' mortgage problems. I have gone with people to the banks. They will give one a hearing but nine times out of ten, they will say they have to refer the package to Dublin to see what they think of it there. Nobody knows more about families' problems than the local bank personnel but they not allowed to make any decisions. All decisions are made in Dublin and more often than not, the solutions put forward are not acceptable there.

Every day, families are very concerned about arrears. I compliment the money advice and budgeting service, MABS, which has done a tremendous job in every county trying to help families come to terms with their financial difficulties. MABS personnel will tell one that once the families involved go through the income they have, more often than not, there is no money left to pay the mortgage and certainly no money left to pay the full mortgage the banks are looking for. The fact that too many people have lost their jobs or have reduced wages and the extra charges being placed upon them makes it very difficult for people to meet any part of their mortgages.

Deputy Moynihan alluded to the fact that many people received mortgages they would never be able to pay back. It baffles me how bank managers approved such loans. People have contacted me who have monthly mortgage repayments of €1,200 to €1,300 and I find that they are on invalidity or disability pension or a low income. How the banks ever gave them loans is beyond reason. It is an area at which the Minister should look because the banks should be held to account for granting these loans.

I know some families in my own area in Wexford have handed back their houses to their banks. In many cases, they feel it is the solution. However, it is not the solution because when the bank sells the house, the balance left over is then targeted back at the family involved. People should realise that even when they hand back the home, if the bank sells it at a reduced rate, the arrears left will accumulate and they will find themselves in a very difficult position in trying to meet them.

I ask the Minister to look at the suggestions in the Bill announced this week and the suggestions put forward by Deputy Michael McGrath about split mortgages, interest-only payments up to four years, extending the period of the mortgage by 20 years and a repayment holiday for 12 months. These are some of the suggestions that have been put forward. It is hoped the Minister can take on board some of the suggestions from this and all sides of the House because, as I said at the beginning, we are all in this together to try to come up with a solution. No one has a monopoly on wisdom regarding how to solve it but we must make an effort to deal with it quickly.

Olivia Mitchell (Dublin South, Fine Gael)
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I understand the Minister for Justice and Equality is sharing time with Deputies Áine Collins, Ciarán Lynch, Anthony Lawlor and Heather Humphreys. The Minister has 15 minutes. I ask him to move the amendment.

Alan Shatter (Dublin South, Fine Gael)
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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 from the previous Government; and notes the responsibility of the previous Government for the creation of that crisis and its abject failure to properly address it;

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;

acknowledges, in particular, that shortly after taking office the present Government established the Inter-Departmental Mortgage Arrears Working Group and that it is now implementing the key recommendations of that Group’s Report;

notes the speedy publication by the Government of comprehensive legislation to reform our insolvency laws and the enactment of the Personal Insolvency Act 2012 which provides for non-judicial debt resolution mechanisms, which include a Personal Insolvency Arrangement which will facilitate the retention of their family home by individuals who are insolvent and enable them to resolve debt issues by agreement with creditors with the assistance of a Personal Insolvency Practitioner;

recognises that Central Bank interaction with mortgage lenders is key to addressing mortgage arrears and that the Central Bank is now further intensifying its engagement with the main mortgage lenders to ensure that lenders offer sustainable solutions to their customers in arrears;

supports the Central Bank in this work, in particular, in setting specific targets for action and in monitoring and auditing the achievement of those targets;

further notes the Central Bank’s review of the Code of Conduct on Mortgage Arrears to strengthen protections for customers and also allow to provide for effective, timely and sustainable resolution of individual arrears situations;

accepts that, for a functioning mortgage market, it is necessary to protect and vindicate, in a fair manner, the legitimate rights of both debtors and creditors;

while accepting that the option of repossession has to be one of the options to deal with mortgage default and distress, also notes the view of Government that this should only be an option of last resort and that there are a range of other resolution options available that can be deployed to deal with mortgage distress in the best interests of both the borrower and lender;

encourages the Government and other authorities to continue with the work to bring the Insolvency Service of Ireland, and the debt resolution processes provided for in the Personal Insolvency Act 2012, into operation as soon as possible;

notes that the Insolvency Service of Ireland will shortly publish guidelines on reasonable living expenses for debtors who propose to enter into debt resolution mechanisms; and

condemns the failure of the previous Government to publish or enact any legislation to reform bankruptcy and insolvency law, and its failure to create any statutory debt resolution mechanisms or structures to facilitate individuals in financial difficulty to resolve such difficulties by agreement with creditors and to facilitate the restructuring of mortgage debt."

This Government, in stark contrast to its predecessor, has made considerable progress across a number of sectors in addressing the very significant and severe mortgage arrears crisis which it inherited. This crisis is directly linked to the economic situation presided over by members of the previous Government, some of whom are signatories to tonight's motion. Let us be quite clear about the utter and total failure of the previous Government as this country slid towards the abyss of national bankruptcy to propose or introduce insolvency or bankruptcy reform legislation. Let us also reflect this evening upon the many consequences of this failure, not least the loss to emigration of so many thousands of our young people.

Unfortunately, the Fianna Fáil motion before the House shows the same mindset which it displayed down through the years while causing the economic collapse of this country. It pretended the good times would always roll, that the property bubble would never burst and that a bailout would never be necessary. It seeks to pretend to those whose financial lives it was responsible for ruining that there is some painless or simple way of resolving their problems. I have learnt from long experience not to be surprised by the calculating cynicism and hypocritical posturing in which Fianna Fáil specialises but it must be truly galling for those who find themselves in difficult financial circumstances to see the very party which caused them now trying to hijack their plight for its own political ends and engaging in this type of political opportunism.

Each motion on financial and economic matters which Fianna Fáil brings before this House is informed by the same wilful amnesia as if it has no recollection that what it did and failed to do over the years resulted in an economic, fiscal and banking collapse. Thousands of people lost their jobs, living standards were substantially reduced for families, and despite frenzied denials that it would ever happen, we lost our economic sovereignty. As the people of the country know to their cost, we are still living with the consequences of the failures of the previous Administration and its predecessors.

I can assure the party opposite, however, that any failure it has in recalling what it did to address the problem of mortgage arrears is quite easy to explain because it did absolutely nothing. In particular, it failed to reform the law on bankruptcy and insolvency. It did not provide any statutory debt resolution mechanisms or structures to facilitate individuals in financial difficulty. Having caused so many people to get into financial difficulty, it simply ignored the problem and its responsibility to deal with it. Against that background, if the motion is to serve any useful purpose, it provides an opportunity for the party opposite to apologise for all it did to contribute to the mortgage difficulties in which so many people regrettably find themselves. Of course, there is little prospect of Fianna Fáil apologising for its appalling failures.

As the counter motion in amendment No. 1 makes clear, since coming into office, this Government has taken a number of significant steps to address the personal insolvency situation, including the mortgage arrears problem, and to stabilise the banking and wider economic situation. Such steps can be contrasted with the inactivity of the previous Government with regard to updating our ancient and ineffective personal insolvency law. Shortly after assuming office in 2011, we established the interdepartmental mortgage arrears working group, the report of which is also known as the Keane report, and we are implementing the key recommendations of the report published in October 2011. Based on its recommendations, the Government established the mortgage arrears steering group to co-ordinate the responses of the Departments and agencies centrally involved. Since March 2012, the steering group has reported to the Cabinet committee on mortgage arrears.

In contrast to the inactivity of our predecessors, let us consider some of the important initiatives taken by this Government. For example, the mortgage-to-rent scheme, available since last June, is a mainstream social housing solution for the most acute cases of mortgage arrears. Lenders are now engaging with the process and substantial progress has been made. More than 800 cases have been put forward for the scheme. Development of a mortgage-to-lease scheme is also progressing. Under this scheme, the lender would become the long-term owner of the property after voluntary repossession had taken place. The household would become a social housing tenant of the relevant local authority and the local authority would, in turn, lease the property from the financial institution for the period of the lease.

An information and advice service has been established to help people in mortgage arrears through the website, www.keepingyourhome.ie, an information helpline and the availability of independent financial advice for people being offered long-term restructuring proposals by the banks.

The most significant development in addressing the issue of personal over-indebtedness, including mortgage arrears, has been the development and enactment of the new personal insolvency legislation. The Personal Insolvency Bill was published in June 2012, passed by both Houses in December 2012 and signed into law. The Act introduces new concepts to Irish law. The new personal insolvency arrangement, PIA, introduces a concept which I understand is unique in international insolvency law, providing for the negotiated resolution of secured debt in a court sanctioned process that provides certainty for creditors and - if I may say so - hope and relief for debtors. If I can describe it as such, the personal examinership approach in the PIA is sufficiently flexible and robust to be able to address complex personal insolvency cases which may include combinations of trade, consumer and mortgage debt. It offers a second-chance mechanism for talented and capable individuals and entrepreneurs to return not only to solvency but also to contribute to the economic development of our society.

The development of modern insolvency law is a key commitment in the programme for Government. The Personal Insolvency Act provides for three new debt resolution processes which, though requiring approval by the court, are essentially non-judicial in nature. The debt relief notice will allow for the write-off of qualifying debt up to €20,000, subject to a three year supervision period; the debt settlement arrangement provides for the agreed settlement of unsecured debt, with no limit involved, normally over five years; the personal insolvency arrangement will enable the agreed settlement of secured debt up to €3 million, although this cap may be increased with the consent of all secured creditors and unsecured debt without limit normally over a six year period. The Act also provides for the automatic discharge from bankruptcy after three years subject to certain conditions.

The Insolvency Service of Ireland was formally established by ministerial order on 1 March. Its director, Mr. Lorcan O'Connor, is working with all speed to complete the administrative and technical preparations to ensure the full operation of the provisions of the Personal Insolvency Act can begin as soon as possible. I expect full operation to commence in the second quarter of 2013. The service will launch an information campaign early next month which will include launching its website, the issuing of publications, the opening of a public information line and the announcement of the regulatory framework for personal insolvency practitioners.

The Personal Insolvency Act makes provision for the Insolvency Service of Ireland to draw up guidelines in regard to reasonable living expenses that would be applicable to a debtor in one of the new insolvency processes. In developing these guidelines the Act requires the insolvency service to have regard to a number of specified criteria and this has been done. The service has engaged in extensive consultation with relevant Departments, agencies and organisations and I am informed that the guidelines should be ready for publication in the very near future. When completed, they will be published on the insolvency service's website. While the guidelines are primarily a matter for the service, I wish to counter some ill-informed recent media comment. A reasonable standard of living does not mean a person should live at a luxury level, but neither does it mean a person should only live at subsistence level. A debtor should be able to participate in the life of the community like other citizens.

The numbers likely to avail of the new or reformed insolvency processes will be significant. For broad planning purposes for the first full year of operation, our tentative estimate remains at 15,000 applications for the debt settlement arrangement and personal insolvency arrangement; 3,000 to 4,000 applications for debt relief notices; while 3,000 bankruptcy petitions may be made. The critical message to all those experiencing debt problems is that it is essential for customers to engage with their lenders so as to negotiate an appropriate settlement. It is also a requirement that lenders engage properly with customers.

Now that the architecture of the new insolvency legislation is settled, I have made it clear that I expect financial institutions to better engage with debtors. If financial institutions refuse to engage constructively and realistically, I have made it very clear on a number of occasions in this House and in the Seanad that the Government will in the future take any necessary measure to refine its approach to ensure the debt resolution processes work. I realise that banks must have regard to commercial considerations, but they must also behave with greater flexibility and insight and apply a broader range of common-sense options based on financial reality. The new debt settlement arrangement and personal insolvency arrangement are designed to facilitate a workable, sustainable voluntary resolution between a debtor and his or her creditors. A common-sense rather than a coercive approach is taken, as expressed in the creditor voting process provided for in the Act. It is also an approach designed to avoid, in so far as is possible within constitutional constraints, the necessity for contentious court hearings and adjudications, together with the substantial delay and inevitable legal costs inherent in such process.

I will now deal with the emotive issue of repossession of the principal private residence of a borrower. The House will be familiar with the well known 2011 case, Start Mortgagesv. Gunn, in which the High Court found that the repeal of section 62(7) of the Registration of Title Act 1964 in the Land and Conveyancing Law Reform Act 2009 had the unintended consequence in certain cases of restricting lenders from exercising their repossession rights. The judgment in this case is under appeal to the Supreme Court. High Court judgments in later similar cases appear to have limited the potential impact of that judgment. As a result, there is now uncertainty in the law relating to the exercise by lending institutions of their repossession rights in certain cases of default. Arising from this case law, the Government, in the context of the revised index of conditions and actions following the third quarter 2012 review of the EU-IMF programme of financial support for Ireland, made a commitment to introduce legislation to remedy the issues identified by case law in the 2009 Act. That legislation is being drafted and I hope to be in a position to publish the Bill shortly. Essentially, it will seek to eliminate any doubt as a result of the case law regarding the continued application of repealed provisions of the Conveyancing Acts 1881 to 1911 and the Registration of Title Act 1964 to all mortgages created prior to 1 December 2009. It will also contain a provision that will allow a court in proceedings for the repossession of a principal private residence to consider whether a personal insolvency arrangement under the Personal Insolvency Act 2012 would be a more appropriate course of action. Where the court is of such an opinion, it may adjourn the hearing for no more than two months. What I am seeking to provide by way of this provision is a transparent, final and time-limited safety net for a homeowner where repossession is being pursued without the PIA possibility having been fully explored by the parties. However, it may also be the case that as a last resort, it may be in the best interests of the borrower for repossession to take place. This could arise, for example, in cases in which there are substantial arrears and there is no prospect that the borrower will be in aposition to address these arrears or restore some stability to the mortgage situation or make any reasonable or realistic level of mortgage repayments. This is recognised in some cases and currently the majority of repossessions arise on a voluntary basis or by means of some other voluntary arrangement to address the unsustainable mortgage.

In circumstances in which individuals borrow money to acquire a home and that home is the security for borrowing, it has been the law of the State for many centuries that ultimately the financial institution that provides the loan can apply to the courts for possession of the property where the borrower fails to discharge the mortgage repayment. In the absence of such a law, no financial institution would lend money for house purchases as its security would be meaningless. Modern insolvency legislation is a required feature of a properly functioning market economy. It will assist not only debtors and financial institutions but also businesses of all types and sizes, tradespersons, local co-operatives, etc. All debtors and creditors are concerned about this reform and all must be treated fairly. Many persons or companies may be both debtors and creditors. While I can understand and share some of the very negative and jaundiced feelings towards financial institutions and their contribution to our current economic difficulties, we must not lose sight of our objective, which is to introduce reformed, workable and balanced insolvency legislation. This approach which seeks balance and fairness has been criticised as suggesting creditors, particularly mortgage creditors, will exercise a veto. That criticism is reflected in the ill thought-out Opposition motion. Such a contention is based on an incorrect view of how normal commercial contractual issues may be resolved. Where one borrows, one must repay where one can. If one receives a good or service, say, for example, essential plumbing repairs, the provider is entitled to be paid. If the debtor is genuinely unable to pay, negotiation with creditors may resolve the difficulty. The Act provides the new framework for sensible negotiation.

The approach in the proposed debt settlement arrangement and personal insolvency arrangement is that the insolvent debtor will, with the assistance of a personal insolvency practitioner, put forward what the debtor considers to be a realistic offer to his or her creditors, one that will restore the debtor to solvency within a reasonable period, while at the same time giving creditors a better financial outcome than the alternatives of debt enforcement or bankruptcy.

The creditors will need to consider carefully the debtor's offer conscious that if they refuse, the debtor has another option - the standard debt discharge procedure - under the reformed bankruptcy laws.

The motion from Opposition Deputies tonight makes reference to developing some form of non-judicial independent agency or process to arbitrate and impose solutions on creditors and debtors. The new processes, which the Government has introduced, are designed to operate on a voluntary basis with common sense and enlightened self-interest in mind rather than coercion. I know of no example of the type of body that appears to be demanded by Fianna Fáil Members existing in any jurisdiction and none could be provided by them during the debate on the Personal Insolvency Act. The State cannot impose a settlement on parties to a private contract involving the provision of goods or capital. I very much oppose this cynical, badly-informed and misguided motion. It does not seek to inform, educate or improve matters by offering constructive and objective proposals. It has no particular purpose, but serves to highlight again the inaction of the previous Government and to propose a suggested solution that cannot work and which is designed to establish some sort of alternative court to our current court structure.

Áine Collins (Cork North West, Fine Gael)
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The mortgage arrears crisis must be dealt with urgently both for the sake of mortgage holders and their families and for the good of the economy. Banks should realise that the quicker the crisis is resolved, the sooner we can return to a normal economy where the population as a whole feels secure. People must return to feeling confident that they can meet their obligations under new arrangements agreed with the banks. A benchmark or 35% of one's income should be used to pay a mortgage. People should then have the choice as to how they spend the balance. The constant talk about mortgage arrears along with recent speculation about guidelines on lifestyle choices that may be imposed on those seeking an insolvency arrangements is terrifying for the people who are facing this reality.

It must be stressed that very few people will eventually opt for insolvency. Banks and borrowers will quickly realise that a reasonable resolution between parties is more effective for everybody. Prominent solicitors and accountants have said that the insolvency legislation is designed in a way that it will not be used to any great extent. Its very existence, however, will force banks to reach agreements with mortgage holders. The banks themselves caused this crisis in the first instance. Through their total incompetence and greed for quick profits, they bankrupted themselves and the nation and placed ordinary taxpayers in a terrible situation. Citizens were entitled up to now to believe that banks were professional institutions. They believed banks would advise them correctly and would only lend money at appropriate levels to those who were in a position to repay. The banks failed in their professional duty to advise customers of the risks involved and encouraged the ordinary citizen to borrow huge sums of money that could not and will not ever be paid back.

The banks ruined the future of a generation, wiped out their shareholders and destroyed the economy. I accept that in these circumstances many people are sceptical and in fear about their ability to solve this problem in a reasonable way. We can be sure of one thing, namely, that bankers will be bankers and they will behave in a way that restores their profitability. For this to happen, the economy must recover. It cannot and will not recover without resolving the mortgage crisis. Not only is it affecting those people in mortgage arrears, it is also affecting the willingness to spend in the real economy of those who have savings and income. Constant talk of unaffordable lifestyle choices creates a fear of spending across the whole population. If we continue along this road, there will be no recovery in the real economy, no increase in retail sales and no opportunities for employment. We can now depend on the banks to act in a way that will benefit themselves. They must realise that unless the economy recovers, they themselves will never recover. For the sake of us all and for the sake of the future of banking itself, these problems must be resolved quickly.

It is in the interest of banks to work hard to reasonably and sustainably resolve the mortgage crisis. The Minister for Finance and the Governor of the Central Bank will insist that the banks make this resolution process work or take immediate action to impose a stricter process. A stricter process would not benefit the banks or return them to long-term profitability. I can well understand the great anger of ordinary people about the banks' behaviour up to now. They have been telling people to give up Sky Sports, health insurance and child care when it was the banks that caused all the trouble through their lack of professionalism and addiction to greed. This is very hard for people to listen to. The banks cost citizens billions of euro and they are now lecturing the hard-working people who bailed them out about where they should shop. No one wants to be told how they should spend their money, particularly by the very entities that cost them so much.

It is also disingenuous of the people sitting across from me to now think that they can advise on how to solve this problem. They are the ones who were entwined in the causes of the situation we find ourselves in today. Fianna Fáil was co-conspirator in the get-rich-quick actions of the Celtic tiger, which seemed the norm at the time, and its members must recognise the damage they have caused to the people of this country. The banks were definitely culpable, we now need them to be capable.

Olivia Mitchell (Dublin South, Fine Gael)
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The Deputy is eating into the time of other Members.

Áine Collins (Cork North West, Fine Gael)
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The Government is capable and we will ensure that the banks engage and make this process work for all of us.

Olivia Mitchell (Dublin South, Fine Gael)
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As the Minister, Deputy Shatter, overran his time, I propose that the remaining three speakers be limited to three minutes to avoid the last speaker being given no time.

Ciarán Lynch (Cork South Central, Labour)
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That is an issue for Fine Gael, in fairness. I will be looking for my four minutes.

Olivia Mitchell (Dublin South, Fine Gael)
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Deputy Lynch is next and may take his four minutes.

Ciarán Lynch (Cork South Central, Labour)
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I thank Deputy Michael McGrath for moving the motion and providing the opportunity to debate the issue. Despite the current mortgage crisis, the Irish will continue to be a home-purchasing nation. That will not change. It is in that context that we must examine the mortgage crisis we are trying to resolve. While dealing with the crisis we must create a sustainable home-purchasing model that allows people to buy homes at an affordable level into the future. It is not just the crisis that must be fixed; we must do something for the future also. We must move the residential property market for home buyers towards normalisation. In doing so, we must stabilise our banking sector and create conditions in which banks provide loans for mortgages at appropriate income ratios and loan-to-value measures. The days of 100% mortgages must come to an end.

Over the course of this evening and tomorrow, many Members will express their frustration at how progress on the crisis has been dealt with to date. I would share that. I wish the insolvency legislation had been passed 12 months ago. I would have liked to have seen the Personal Insolvency Act up and running six months ago, but the technicalities and architecture of such legislation comes with difficulties. I am very frustrated that during the previous Administration, a wait-and-see approach was adopted at the genesis of the crisis. I remember that Mr. Hugh Cooney's preliminary report on mortgage arrears, which preceded the Keane report, was published on the day the Dáil went into its summer recess. The full report was published in November of the same year but was not debated in the House at all by Fianna Fáil. The two most significant debates which took place during the course of the last Administration were pursuant to Labour Party motions in Private Members' time. During those debates, the problem was talked down by the then Government.

The mortgage crisis can be broken into three categories. There are those who are in short-term or medium-term difficulty to whom mortgage assistance can be provided. There are those at the worst end of the spectrum for whom insolvency legislation is perhaps the only option. In some cases, those people are screaming for structured repossessions. There are people in mortgage difficulties for whom a blanket ban on repossessions would not be helpful. They include the woman who bought a one-bedroom apartment for €250,000 in Cork City which is now worth less than €100,000. She lives with her child in a one-bedroom dwelling and needs to structurally surrender it. They include the family who moved 16 miles from Cork. The parents are no longer working. They moved because the property was cheap but need now to get back into Cork city.

The Government has taken action despite its frustration. We have published the Keane report and brought forward personal insolvency legislation. Just last week, targets were set for the banks to resolve the crisis. It is not just an issue for the Minister and the Department of Finance, it is an issue for the Joint Committee on Finance, Public Expenditure and Reform, other members of which are present. The joint committee will bring in the director of the Insolvency Service at the end of the second quarter. It will also be bringing in the banks regulated by the Central Bank as well as the Governor of the Central Bank and the Financial Regulator to ensure that the targets are being met. The scheduled hearings are just part of a continued programme to ensure the crisis is ultimately resolved.

Anthony Lawlor (Kildare North, Fine Gael)
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I propose to share time with Deputy Heather Humphreys. I am grateful for the opportunity to speak on the mortgage crisis. It is unbelievable that the motion is tabled by the party that caused the mortgage crisis, Fianna Fáil. Between 2000 and 2007, where was Fianna Fáil? It was partying. Between 2008 and 2012, where was Fianna Fáil? Its head was buried in the sand. Since 2013, it has pulled its head out of the sand and come forward with what it believes to be brilliant ideas, but where were these ideas prior to that long period of time?

In 2006, Fianna Fáil allowed 93,000 houses to be built and in 2007 it allowed 78,000 houses to be built. Where was Fianna Fáil? Partying. It allowed packages to be proposed by banks, such as 100% mortgages and life loans for the elderly to get money from their properties. The economy was based on construction because Fianna Fáil was partying with the builders, developers and bankers. The signs started to appear in 2006 and 2007. Fianna Fáil allowed arrears to increase from 2007 to when it left office in 2011. Where was Fianna Fáil? Its head was buried in the sand. It allowed unemployment to increase through that period. There is correlation between unemployment and arrears. Fianna Fáil never spotted this because it started to happen in 2006. It is shown in a 2011 report that between 2006 and 2007, arrears and unemployment started to increase. There was no conception that the correlation might lead to what we have now, but where was Fianna Fáil? Its head was buried in the sand.

In our first budget, we introduced an extension of mortgage interest relief and took on board many of the suggestions in the Keane report. We also introduced the Personal Insolvency Act. I thank Fianna Fáil for introducing this motion so that Members on this side can let people know who is responsible for the crisis. I welcome back Fianna Fáil Members. It is nice to see some colour in their faces because they have eventually pulled their heads out of the sand.

Michael McGrath (Cork South Central, Fianna Fail)
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People are looking for solutions.

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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I welcome the opportunity to contribute to this debate on mortgage arrears, which is one of the most serious issues facing Ireland at present. Failure to address this problem will have severe consequences on our prospects of economic recovery.

I welcome the fact that, since taking office, the Government has put in place a series of measures to assist distressed home owners, which is in stark contrast to the approach of the previous Government, which did absolutely nothing to assist those in arrears. Indeed, it was the total inaction of Fianna Fáil while in government and its failure to regulate the banks that got us into the almighty mess we must deal with now. It is particularly galling that Fianna Fáil now has the audacity to criticise this Government, which is taking steps to address the problem.

As part of the 2012 budget, the Minister for Finance introduced a special rate of 30% mortgage interest relief to assist first-time buyers who bought their homes in the years 2004 to 2008. Over 270,000 home owners have benefited from its introduction. The mortgage to rent scheme and the provision of mortgage interest supplement by the Department of Social Protection are further measures to assist families in financial difficulty.

Ultimately, if the mortgage arrears problem is to be adequately addressed, the banks must engage with home owners experiencing difficulties with their repayments. In this respect, the recent publication by the Central Bank of specific targets for the six main banks, AIB, Bank of Ireland, Permanent TSB, ACC, KBC and Ulster Bank, to put in place sustainable mortgage solutions for borrowers is to be welcomed. By the end of June 2013, banks should have a sustainable solution for 20% of distressed borrowers that are more than 90 days in arrears and this will rise to 30% by September and 50% by the end of the year. These are ambitious targets with clear timeframes and the banks have been left in no doubt as to what they must do. However, it is a two way process and I encourage anybody in difficulties to engage with the bank and not to ignore a problem that will not go away. If people are in doubt or unsure what to do, they should contact the local MABS office, which will help them and give them good advice. I pay tribute to the great work MABS does in helping people in financial difficulties.

The Central Bank will be monitoring the banks closely and I am satisfied that we will have a much clearer and better picture by the end of this year. The mortgage arrears problem will not be solved overnight as there is no quick fix but the measures outlined are proof that this Government is taking serious action to address the issue and the recent scaremongering by the Opposition of mass repossessions is an example of the worst type of cynical politics I have seen during my time here. The objective here is not to put people out of their homes, but rather to put in place sustainable, achievable solutions for people that will allow those struggling with unmanageable debts to remain in their homes.

Pearse Doherty (Donegal South West, Sinn Fein)
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Cuirim fáilte roimh an deis labhairt ar an ábhar seo anocht, ábhar iontach tábhachtach, sóisialta agus eacnamaíochta ag baint leis an Stát seo.

I welcome the opportunity to discuss the issue. It is similar to the Private Members' motion tabled by Sinn Féin some weeks ago. It is an opportunity to look again at what is happening and the Government's approach to the mortgage crisis two years into its term. It is also important to offer the context to the debate. In fairness, this Government inherited a spiralling crisis that was not of its making. We must examine the last 18 months of Fianna Fáil in power. At the time, the number in arrears of over 90 days and more had increased dramatically. The numbers almost doubled in that 18 month period, but there were no plans and no initiatives from the party. There was pure panic and its head was in the sand. It sat on its hands bailing out bankers and banks and letting those who bought houses at the height of the crisis suffer the wrath of bankers.

We must look forward and examine the approach of the Government two years since taking office and ask whether it has done anything. The answer is that it has not. We have heard of the initiatives the Government has brought forward. Has this dealt with the severity of the crisis? No, it has not. It is not just me saying this - the statistics show the number of those in arrears of 90 days or more has doubled under the term of this Government. There are now more than 180,000 families in mortgage distress. Looking back at the programme for Government, both parties stated that more protection was needed for home owners with distressed mortgages and that a more radical approach was needed to protect families in fear of losing their homes. That is exactly where people are at and more families have fallen into that fear over the past 24 months despite the bluster from Fine Gael and Labour that the Government is tackling the crisis. The crisis is out of control and the measures brought forward by the Government have not been fit for purpose to deal with the scale and quantity of the crisis facing families the length and breadth of the State.

Every community, parish or town land has been affected by the mortgage crisis. Today, the CSO published figures showing that house prices have dropped 2.6% over the past year. Bad as it is for people struggling to pay their mortgages, they also see the value of the property diminishing while it is mortgaged to the hilt. Unbelievably, the people who cannot pay their mortgage, or those who go without essentials in order to make the mortgage payments, are faced with the response of the Government, which is more austerity, more taxes, more levies and more hardship.

What sticks in the craw more than most is the family home tax, a tax on the roof they cannot afford to keep over their heads anymore. On top of the misery of facing bankers and explaining they cannot afford the €400,000 mortgage, they must find the means in the family circle to pay the additional bill that has come through the door in the form of the family home tax. The family home tax is a complete breach of the Government's promise. I agree with the Taoiseach, Deputy Enda Kenny, that it is unfair to charge a repetitive tax on someone's home. That is why Sinn Féin published legislation to repeal the family home tax. If in government, Sinn Féin will bring that about.

Earlier this month, the Minister for Finance, Deputy Noonan, announced a new initiative to push the banks to deal seriously with the issue of mortgage distress.

Everybody in this House hopes it is successful but I have my doubts, which are well-founded. We only have to look at what the banks have done not over the past five years but over the past two years. They have basically made the crisis worse because they put the squeeze on homeowners and failed to face the reality that people will not be able to pay back the magnitude of debts they have on their homes. They failed to allow for write-downs of those debts, despite being recapitalised by the taxpayers to provide for such write-downs. What they have done instead is they have ramped up variable interest rates, which has put further pressure on these same families.

What is needed is not the veto contained in the Personal Insolvency Act. What is needed is not simply targets and a watchful eye from the Central Bank of Ireland. What is needed is a proper solution to this crisis once and for all. We cannot wait two years, which the Government's plan indicates, when solutions will be offered to all of those in mortgage distress. What we need is action now.

The only way to do that is to establish an independent arbitration agency which can force settlements above the heads of the banks. That group of people, or panel, needs to have the power to look at different options. Some of the options are contained within the Keane report, although many of the options in that report are flawed. For example, split mortgages could be welcomed as an option but not welcomed in the form Keane reported where the part which is parked will continue to accrue interest. We must also ensure banks have the ability, which they must use in a more robust way, to write down debt where it is very clear families will not be able to pay back this debt during the lifetime of the mortgage.

What the Minister has done is set targets and has said the Central Bank of Ireland will force the banks to make provisions if they do not live up to the targets. That is the stick the Minister is using to force the banks to deal with this issue but that stick is broken. It is simply not big enough and bold enough, it will not have the desired effect and it will not create the immediacy required to deal with this issue.

The other issue I wish to touch on is the mortgage arrears information and advice service, which has been very much trumpeted by the Minister for Social Protection, Deputy Burton, in the past week. She presented it as a force of 2,000 accountants who are ready to help those struggling with mortgage distress. Let us deal with the facts and what is being applied. Some €250 is being made available by the banks to those in this situation to avail of an accountant. However, the accountant is completely precluded from offering his or her opinion as to whether the solution being ordered by the banks is a good or a bad one. Basically, one can get an accountant who will explain the bank's proposal but who cannot tell one that he or she was dealing with Mary or John last week who is in the same circumstances but who got a far better deal. They are expressly blocked from doing any of that.

The reality is that this Government has had a very light touch in regard to bankers and banks but has had a very stern hand in regard to the ordinary people. We have seen that in the myriad austerity measures which have been brought in from the abolition of the motorised transport grant to cuts in child care to cuts in child benefit to the family home tax to the taxation of PRSI to the introduction of water meters to a vast number of new pressures this Government has forced on citizens. However, when it comes to the pressures it puts on banks, it is basically setting targets to offer proposals and that it will come up with the targets where the proposals have to be accepted at a later date. When it comes to the vast pay people such as Richie Boucher get - €843,000 - the Government says the banks need to reduce their cost base but that they can do that on their own terms. It is very different from those serving in our Garda force, serving as nurses or serving as teachers who are losing payments, increments and allowances and are taking real cuts in real time.

I am glad the Minister of State with responsibility with the Gaeltacht, Deputy McGinley, is in the House because it is time he started to defend the values and interests of the Gaeltacht. The decision to cut the Gaeltacht grant for teachers and the island grant is nothing short of appalling and shameful and I appeal to the Minister of State, to show a bit of backbone.

I have said before that the mortgage crisis needs a number of solutions. It needs the banks to be able to look at different options on a case-by-case basis but it needs an independent agency to force those options on the banks where they are not willing to do so. It also needs to allow for write-downs.

The reason many people have fallen into mortgage distress is that they have lost their jobs. That is the reality. Some 430,000 people are unemployed and many of them are struggling to pay their mortgages. If this Government dealt with the jobs crisis, it would, in part, be dealing with the mortgage crisis. A constituent of mine with a mortgage contacted my office. He is a 60 year old man, is a bus driver by profession and is unemployed. He has availed of the FÁS services for retraining and re-skilling and for seeking employment. Happily, he got a letter from that the FÁS employment service which stated that a vacancy notified to it may be of interest to him. The employer was Arriva Malta Limited, the location was Malta and the salary was €250 per week. The duties were driving transport vehicles on routes around Malta and left-hand side driving. It went on to state that while Maltese salary rates are lower than those in Ireland, Maltese workers pay among the lowest taxes in the EU. It further stated that the climate is typically Mediterranean and it asked the person to forward his CV to the FÁS employment service. The Acting Chairman, Deputy Olivia Mitchell, is laughing but this is what the Government is doing. A 60 year old person, who is trying to pay his mortgage and is unemployed, gets a letter from the FÁS employment service asking him to travel to Malta for a job for €250 per week and saying that he will get a tan when he is there. That is where this country is at. It is laughable in a way but it is very sad. The Government needs to deal with the mortgage crisis but the best way to do that is to deal with the unemployment crisis.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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The question of mortgage distress and, more important, how to adequately address the issue is probably the most pressing one, along with the jobs crisis, which this Government faces and which needs to be resolved. As Deputy Doherty said, they go hand in hand. We cannot resolve one without resolving the other. We have had much discussion, press announcements, reports and even legislation in the guise of the Personal Insolvency Act but, unfortunately, all the proposals coming forward have not even stemmed the problem, not to mention begin to reverse the issue of mortgage distress.

Earlier Deputy Lawlor referred to some of the figures, which are pretty shocking. From 2009 to 2012, the number of mortgages in severe distress, that is, more than 90 days in arrears, increased by more than 300%. I am not for one moment saying that this Government is responsible for the mortgage crisis. We know who is responsible for it. It is the Fianna Fáil policies of old and the banking system which fuelled it. However, this Government is responsible for what has not taken place in the past two years.

We were told the Personal Insolvency Act would go a long way to resolve the issue for many families in mortgage distress. During the debate on that legislation we, along with others in this House, NGOs and those working in the industry, said that as long as the veto remains in it, we will not adequately address the mortgage crisis. That will be the case. We need solutions, and we have put forward solutions. We have put forward solutions in our job creation document. As was pointed out, unless we deal with this issue, we will not adequately deal with the other one.

The issue of debt write-down needs to be looked at. The banks have been recapitalised to take those losses but they are trying to work the legislation to maintain a veto over those in mortgage distress but we will not resolve the issue that way.

The Government is sincere about what it wants to achieve and I do not believe for one moment that there is anybody on the Government benches who does not want to resolve the mortgage crisis, but the actions and proposed solutions of the Government to date do not match that sincerity.

Joan Collins (Dublin South Central, People Before Profit Alliance)
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Why has the Government increased the power of the banks? Why has it increased the power of the banks to harass people and why is it proposing legislation to allow for repossessions? Why is this being prioritised before the personal insolvency agency is up and running? Not a single personal insolvency practitioner position has been advertised. Why are only six of the 15 lenders active in the mortgage market covered by the targets set by the Central Bank? The lenders omitted by the Cental Bank are the most aggressive in pursuing people for arrears. These include Ulster Bank, Bank of Scotland, various sub-prime lenders, Start Mortgages, GE Money and Springboard, whose only interest now is to get out of the Irish market and recover as much as they can. Not a single one of these companies is now engaged in mortgage lending. What they are engaged in is an aggressive operation to limit their losses. A green light has been given to these companies to write to distressed debtors telling them that whatever forbearance they have enjoyed is now ended. They are demanding full payment of arrears; otherwise they must face the threat of court action, repossession and eviction.

The weasel words of Ministers to the effect that repossessions are a last resort are in light of the Government's action in overturning the 2011 ruling of Mr. Justice Dunne. They are just that - weasel words. It sickens me to hear Fianna Fáil Members in the Dáil but it must be remembered that the Labour Party and Fine Gael members in the local authorities were part and parcel of the problem in driving planning legislation through over the past 20 years.

While supporting the motion in general, it should be said I have introduced a Bill for a Friday hearing. It is a very good Bill and I have drawn attention to it before. It deals with the write-down of debt to 110%, which must be done. Even Deputy Joan Burton said this before she was Minister for Social Protection. The radical approach proposed by the Government seems to have been reversed because of the role of the banks.

Thomas Pringle (Donegal South West, Independent)
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The Technical Group raised the mortgage crisis during Private Members' time in April 2011. In the past two years, the problem has just got worse. Some 94,000 mortgages are in arrears of over 90 days, yet the Government has still to deal with the problem comprehensively. The problem will not get any better while the Government continues to allow the banks to maintain a veto on any solution to the problems or the personal insolvency of citizens. If the banks' veto is maintained, the problem will never be solved.

People suffering from mortgage distress should have 35% of their disposable income put towards their mortgages to pay off whatever capital that will pay off, and the rest should be written off. Writing down the debt is the only solution that will solve the crisis comprehensively. This is the only approach that will allow people to get out of the stranglehold of mortgages that are crippling them. The mortgages are not only crippling them but also the domestic economy. Consumers have no spending power and confidence, thereby leading to another vicious cycle whereby an increasing number of people are getting into distress and losing their jobs. The cycle just continues and the Government is not dealing with it or making any serious effort to do so. The Government needs to act and ensure the banks write off the capital. We will probably have to recapitalise the banks yet again because they were not capitalised sufficiently on foot of the stress testing in the past year or two to ensure that they managed and wrote off enough of the mortgage debt that needed to be written off.

There is no moral hazard associated with dealing with mortgage debt in they way I propose or with dealing with the debt of citizens and allowing them to be active again in the economy and society. The moral hazard is associated with doing nothing and continuing to allow the banks to call the shots and maintain their veto. The Government needs to act and ensure debt is written down for everybody in distress.