Dáil debates

Wednesday, 2 October 2013

Mortgage Restructuring Arrangement Bill 2013: Second Stage (Resumed) [Private Members]

 

Question again proposed: "That the Bill be now read a Second Time."

5:50 pm

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I call Deputy Dara Murphy, who is sharing time with his colleagues, Deputies Buttimer, Mulherin, Connaughton, Ann Phelan, McHugh, Áine Collins, Barry and Regina Doherty.

Photo of Dara MurphyDara Murphy (Cork North Central, Fine Gael)
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The Bill relates to a matter that occupies all of our thoughts and the motivation of Deputy Joan Collins must be acknowledged.

Like the previous speaker, I am a member of the Joint Committee on Finance, Public Expenditure and Reform which has had all of the banks, and, most recently, the Governor of the Central Bank, before it. There is growing frustration with the progress that has been made to date. That said, the targets the banks have been set to achieve have only recently been finalised and they are at between the first quarter and the first half of that.

In contradiction of what Deputy Pearse Doherty stated, I would welcome the Minister, Deputy Shatter's, comment that he recognises "that in appropriate cases, the reconstruction of debt in mortgage arrangements will lead where appropriate to the writing off of a portion of outstanding capital. This is an approach and a reality that to date has been avoided by our financial institutions".

Having listened to the banks and the Governor of the Central Bank on a number of occasions, that statement of the Minister is true and I welcome it. The banks seem to be completely ignoring the reality that a significant amount of the capital that has been put into them by the Irish taxpayer must ultimately be used for the write-down of some portion of debt. Both Ministers, Deputies Shatter and Noonan, in conjunction with the Governor, who states he may require further legislation, are open to that. As we move towards the end of this process and tunnel down towards those who would pay if they could, who, if they were forced to leave their homes, would have nowhere else to go, and who would represent a significant burden on the State, that will require further legislation and guidelines. I welcome that the aforementioned Ministers and the Governor are more than aware of that.

We have a massive problem due the lack of potential to cobble together short-term debt with mortgage debt. Many are paying short-term debt because they must and they are not paying their mortgages. For example, a constituent who came in to me owes €18,000 in short-term debt which is costing him €1,035 a month. His €105,000 mortgage is costing him €735 a month. Together, these amount to a payment of €1,770 a month for debt of €123,000. If he could bundle it all together and re-mortgage, he would pay €850 a month, which he can afford. The mortgage lender, because his mortgage is in distress and because the other debts are with other institutions, does not want to take that on. That, of course, could be averaged out among the industry. That is something to which we must give further consideration.

Photo of Jerry ButtimerJerry Buttimer (Cork South Central, Fine Gael)
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I welcome the Minister of State, Deputy Jan O'Sullivan, to the House.

Unlike Deputy Pearse Doherty, I and those on this side of the House are motivated to help those who are in genuine distress. Everything that we are doing is about them restarting their lives as citizens and playing their part. I want to hear the options from the Members opposite because all I hear is empty rhetoric.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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The Bill before the House is substantial.

Photo of Jerry ButtimerJerry Buttimer (Cork South Central, Fine Gael)
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Deputy Joan Collins has put forward no proposition in her time in this House and has only been negative.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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It is based on robust Norwegian legislation.

Photo of Jerry ButtimerJerry Buttimer (Cork South Central, Fine Gael)
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Everybody in Government is working for the people, the families, and those in mortgage distress and in arrears. The issue is of concern to all of us. In our offices, families and communities, every week since this crash has happened we encounter those who are in difficulty.

The economic crash has had a profound impact on the quality of the lives of so many. As I stated at the beginning, we are committed to restructuring and helping those in difficulty get their lives back. The priority of the Government is to restart the economy, create jobs and end the mortgage distress for so many citizens. That is why the Government enacted the Personal Insolvency Bill 2012 and established the Insolvency Service of Ireland to address the legitimate fears and concerns.

What is unacceptable is that banks are not engaging with homeowners. It is unacceptable, for example, that a bank, at ten to five on a Friday evening of a bank holiday weekend, rang a customer telling him he must repay his borrowings when the bank knew the family had no way of paying. Such persons must be allowed to remain living in and retain ownership of the family home. While we hear talk from the banks, and we read their advertisements in newspapers and hear their advertisements on television and radio, are the banks engaging with homeowners? I accept we must differentiate between those who are genuinely trying to pay their multiplicity of bills and keep their lives going and those who are abdicating their responsibility by not paying. As the Minister, Deputy Shatter, stated last night, our objective is to do everything on the development and introduction of various debt resolution processes.

I will conclude with one case that came to me only yesterday afternoon, where customers who engaged with Bank of Scotland Ireland and its agent Certus are waiting since June last for a reply. They have made numerous attempts to engage with the bank since then. They have been fobbed off with replies that the bank has no decision made and does not know, yet they get a letter stating that they owe X amount of money. The couple knew this and were trying to restructure, but the bank will not engage. The responsibility rests with the banks to engage properly and I would call on the banks to engage responsibly rather than irresponsibly with the home owners because this is about the family home. We must not allow a situation where lives are disrupted by the greed of a few.

Photo of Paul ConnaughtonPaul Connaughton (Galway East, Fine Gael)
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I thank the Leas-Cheann Comhairle for the opportunity to speak on this.

I welcome the Bill from the Technical Group. This has been one of the most pressing issues that this Government, or any Government, would probably ever have to face.

The crux of this problem is we now know that the targets have been set for the banks and, as anyone listening to the Joint Committee on Finance, Public Expenditure and Reform in the past couple of weeks will have heard, they are hitting their targets without difficulty. The real problem with all of this is in determining what is a sustainable solution. It is easy to offer a deal and say that one has done that part, and that achieves one's percentage target, but what will be the sustainable solution for these individuals to restart their lives? We must remember that such individuals who cannot pay their mortgages are not really living. They are not spending. Towns in mainly rural constituencies such as Galway East, for instance, Loughrey, Tuam and Athenry, are starving because such individuals in these areas are not spending.

Another problem we must face up to is it is easy to give the banks a kicking. We, on both sides of the House, have done it for the past number of years. It goes down well with the public. We all understand we need a banking sector of some sort but the point about it is the banks must remember they are only there because taxpayers' money bailed them out.

The other problem we have is this issue of writing off significant amounts of debt. I suppose the elephant in the room is that if we start writing down significant amounts of debt on all of these issues, while it may solve the problem for the person involved, will we eventually have to come back and bail out these banks again with more public money due to the debt that they are in? The other side of that is these banks are kept there by the mortgage holders and there is an obligation on the banks to get them out of these problems. It always goes back to the importance of sustainable solutions.

As other speakers said, people raise local issues with me. The biggest issue is the manner in which the banks deal with individual customers. A constituent of mine was repaying her mortgage by putting money into the bank at the end of every week. After three months she received a letter and a call from the bank to say she was in mortgage arrears and that the bank had not received mortgage repayments for the past three months. The bank said the payments may have been lost or mislaid by the bank. The very unnecessary strain on this person is unacceptable. Thankfully, she had receipts to prove that she had indeed lodged the money into those bank accounts.

There is an onus on the banks to solve these problems but the solutions must be sustainable and must allow for people to stay in their homes. We bailed out the banks and we do not want to do it again. They must provide mortgage-holders with a sustainable solution so that they can kick-start their lives again.

6:00 pm

Photo of Ann PhelanAnn Phelan (Carlow-Kilkenny, Labour)
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I accept Deputy Joan Collins' bona fides in introducing this Bill. I accept it is a response to the very tragic circumstances in which people have found themselves and I am aware of the human tragedies that have accompanied this mess. Most of us have no sympathy for the banks.

Deputy Collins seeks to introduce an Act that will, among other things, provide for the restructuring and disposal of certain mortgage arrears and, where practical, the retention of the principal private residence - the family home - for the debtor. This Bill suggests the introduction of a new approach in a personal insolvency arrangement, namely, a mortgage restructuring arrangement. This would provide that a personal insolvency practitioner could propose a once-off mortgage restructuring arrangement on behalf of a debtor for a secured debt on a principal private residence or where the debtor owns only one property.

What I regard as somewhat unusual is that it would add a fourth option in debt resolution to the three already set up by the Government in the Personal Insolvency Act 2012. The Bill borrows from that Act certain criteria for eligibility for assistance. The main proposal would allow the forced restructuring of a secure mortgage debt on a creditor by effectively forcing the individual to write off part of the debt. For example, the proposed process allows a debtor to appoint a PIP who would then prepare a proposal for a mortgage restructuring arrangement to submit to the creditors. Mandatory provisions require that repayment be made on the terms laid out by the PIP alone and these would be binding on the creditor. The creditor would not be permitted to take any enforcement or other actions against the debtor. The creditor would, however, be allowed to appeal the decision of the PIP to the court, but only so long as he or she is deemed to have fully co-operated with the PIP. There is a possibility that the rights of secured creditors under the Constitution would be infringed. I can understand the Deputy's wish to help those in trouble but this Bill is not workable in its present state, nor does it take into the account the difference between those who cannot pay and those who will not pay. There is a risk that people would decide to default if they think the law is on their side. This also runs contrary to the arrangement set out in the Personal Insolvency Act 2012. There could be many creditors such as local authorities which employ many staff and create much employment. I ask whether they are to write off such debts. The Personal Insolvency Act has put in place a code of conduct for those unfortunate enough to find themselves in mortgage arrears. The resolution targets set out by the Central Bank for financial institutions and the protection by the courts of those seeking the adjournment of a repossession action constitute a significant set of responses by the Government to the mortgage arrears problem. The newly established personal insolvency arrangement needs time to settle in, but I accept the Deputy's bona fides.

Photo of Michelle MulherinMichelle Mulherin (Mayo, Fine Gael)
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I welcome the opportunity to speak on this Bill. The effect of mortgage debt, the massive burden described by previous speakers, is terrible and tragic. I welcome the aspect of the Bill that seeks to deal with this issue. However, there is a need to put forward real solutions and this Bill, sadly, is questionable from a constitutional and from a drafting point of view. I agree we must offer hope to people. There is hope in this country; there is always another choice and a way out. We can fine-tune solutions but we should not create false dawns for people, as this draft legislation does. It is a piece of legislation that might encourage some people to engage in strategic default-----

Photo of Séamus HealySéamus Healy (Tipperary South, Workers and Unemployed Action Group)
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The Deputy should stop this talk.

Photo of Michelle MulherinMichelle Mulherin (Mayo, Fine Gael)
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I have the floor. Such a policy is not helpful in the overall scheme of things. Every time a debt is written off it is ultimately paid by the taxpayer and citizens of this country. We have to be sympathetic and mindful of the distressing and life-changing situations for families. We have to be responsible in our response. We must hold the banks to account. They need to wake up and smell the coffee. They must diligently engage with those in mortgage debt - particularly on family homes - in order to set up humane restructuring arrangements. Unless people can have sustainable debt, the economy will not recover and the banks will not enjoy full recovery. It is in the banks' interest to do it and they need to do it sooner rather than later in order to help the people affected and, in the bigger scheme of things, to get the economy fit for purpose once again.

Photo of Joe McHughJoe McHugh (Donegal North East, Fine Gael)
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This issue outweighs every other issue currently before us and is the most important issue in the country. I commend Deputy Collins on her introduction of this Bill.

I have less than three minutes' speaking time, which is not enough. This is an example of the ridiculous nature of debate, when such an important issue is constrained by time limits. I will use my time to make that point and to speak about the current situation for my constituents. I can say that my constituents are living in the present tense. There are parallel universes. The commentary is about the deficit in America, the closing down of the American Government this week and the UK's agreement to austerity but not until 2016. We get on with the business of the hard work and the hard measures in this country, where people are still living in the present tense. For example, five or six years ago my constituents were able to talk about how long they had left on their mortgages, but nobody is having that conversation now. People are no longer discussing how many years are left on their mortgages because they are like the rabbit in the headlights; they are living in the fearful present tense. They are worried about the end of the week and whether they have enough money in the bank account to pay the mortgage at the end of the month. They do not dare to think about six months or a year down the line.

The banks have a responsibility to engage in a constructive way with their customers rather than just phoning and e-mailing them. As a public representative acting as a third party I am treated with disdain by some of the banks. They will say that such information is sensitive. I commend the Technical Group on its introduction of this Bill, even though I disagree with some aspects. There should be a better mechanism to allow us, as public representatives and legislators - the messengers of the people - to represent people who are in a hole, and there are a lot of people in that dark, black hole at the minute. It would be a good thing if we could arrange such a mechanism collectively in this House. The perception of the productivity of this House is on the floor.

My last point refers to bankers. Poor bank staff have taken abuse for five years from the public. Politicians are well used to the ire of the public and I will not even mention it but the faceless bankers behind the scenes have got off scot free, and people are angry because of that. We can consider the grandstanding that will come with a proper bank inquiry but people are demanding justice, although they do not want heads on a platter. There must be consequences for the sinister job done to this economy from the early 2000s to 2007 and 2008.

6:10 pm

Photo of Áine CollinsÁine Collins (Cork North West, Fine Gael)
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I welcome the fact the Technical Group has brought this very important issue into the House and there is no doubt that solving this major mortgage crisis in the banks is now the most important financial issue facing the Government. The matter is difficult and extremely complex, and any practical solution could have unforeseen consequences for the liquidity and solvency of our banks, and as a result, for the taxpayer.

Everybody in this House is correctly concerned about the issue and it is right for every Member to become involved in the debate and propose what is considered to be a fair solution to the problem. We are all concerned by the worry and hardship brought on by the inability to repay mortgages for decent, hard-working families throughout the country. In all our constituencies we continue to come across on a weekly basis families who are in fear of losing their home. I have known about this only too well in my constituency in the past week or two.

We would all like a simple and straightforward way of dealing with this tough societal issue but, unfortunately, despite the best efforts of all experts, this has not been possible because of the consequences any action would have on society as a whole. The resolution of the mortgage crisis would be beneficial to society in general but it must be remembered that debt forgiveness or restructuring must be paid for by somebody else, or the taxpayer in this case. Despite the significant number of families in mortgage arrears, we must also remember that there is a large number of mortgage holders in our society who are barely coping with repayments. Their efforts to keep on top of mortgages have become more difficult over the last number of years because of the imposition of necessary new taxes to solve our national deficit problem. If measures to resolve our mortgage problems necessitated an extra burden on the citizen who is barely coping at the moment, the so-called solution could make matters worse, so we must be careful about any measures taken involving debt forgiveness, as the cost of debt restructuring must be paid for by somebody else. This would come about either through increased taxation or higher bank charges and interest, which could put many people into difficulty, so we must accept there will be no quick solution.

Having said this, the Government is not happy with the way many banks are responding to Government policy and Central Bank directions. The recent intervention of the troika, setting new targets for banks for next March, is to be welcomed. One of the key problems with the Bill currently being debated is that it has no regard for the potential for moral hazard or strategic defaulting on the part of a debtor. There is also the real possibility that permitting an infringement of property rights of secured creditors, as proposed in the Bill, would be in breach of the Constitution. Any changes which could set a precedent for future alterations would undermine our credibility and have a knock-on effect on foreign direct investment.

We in the House must continue to focus on these very serious issues in a careful and considered way. We must continuously monitor the banks' compliance with the Government and Central Bank policy to ensure implementation.

Photo of Tom BarryTom Barry (Cork East, Fine Gael)
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I also welcome the opportunity to speak to the issue and I welcome the fact that it has been raised again. Achieving a realistic and workable debt resolution between debtors and creditors has been a priority for this Government and the banks have not responded sufficiently. Then again, it is easy to criticise and we can be very good at doing that at times. It took much time and skill to put together a potential solution. Everybody must come together to engage with banks and try to achieve a solution; it is incumbent on everybody involved in this to engage because without such engagement, the process will go nowhere.

For the vast majority of taxpayers who finance the banks, those institutions must provide viable solutions to maintain family homes. Well before the last election I proposed that a percentage of mortgages be parked and, feeding into the Keane report, this would essentially be a split mortgage product. With this, a person who can only afford to pay interest on the principal would have the amount calculated relative to what he or she can afford. The balance would be parked and dealt with down the road but debt would not be crystallised and nobody would be evicted from a home. This would be based on the principle of the there Fs of fixture of tenure, fair rent and freedom to sell. Sometimes solutions come in many guises.

I do not like the manner in which the proposed legislation would leave the debtor's representative with the choice of what should be paid, as the creditor must have a say in the process. When we speak of debt, we must remember the core and non-core debt of businesses. We cannot just exclusively speak of people with mortgages, as people in business have an iron in the fire, employing many people while being burdened with much debt. We must examine the non-core aspects, which are like an anchor sinking viable businesses.

Many people here are looking to a short-term solution but the solution has to be long term and viable. Looking at a debtor book in business, each separate person is dealt with differently, with different rates of interest charged based on past performance. This process must work in much the same way. When people talk about a future bailout, people must engage and if money is required in future, it should go to those who engaged in the first place. I disagree with the idea of handing money straight to the banks; it has to go to provide solutions. Nobody wants to see a family home go. Many second homes need to be repossessed as they are holding down the market. Nevertheless, many people have taken to the notion that they will not pay anything. People must pay a mortgage or rent as there is a duty to pay something.

Photo of Regina DohertyRegina Doherty (Meath East, Fine Gael)
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We would be hard pushed to find somebody in the country who does not know some or many of the hundreds of thousands of families in serious mortgage crisis. The Minister for Justice and Equality, Deputy Shatter, last night indicated that one of the main priorities of the Government has been to put in place some of the best possible solutions for people living under the burden of unsustainable debt. With the establishment of the Insolvency Service of Ireland, ISI, we now finally have an insolvency regime to address the needs of our Irish population. The range of measures available through the ISI have been designed to provide quality insolvency solutions to debtors in a very important, transparent and customer-focused manner that is fair to all. It is in everybody's interest, including borrowers, lenders and society as a whole, to ensure that the appropriate mechanisms are put in place to facilitate this development, with timely provision of appropriate and sustainable resolutions for borrowers facing or experiencing mortgage arrears.

I agree that restructuring arrangements agreed to date have primarily been of a short-term nature, with interest-only or even less than interest-only arrangements accounting for 46% of restructuring processes. As of end of December 2012, there were over 106,000 mortgage accounts in arrears for which no restructured arrangement had been put in place. With this Government there is a clear priority to deliver an effective regulatory and consumer protection framework that would be in the best interests of borrowers, lenders and the wider economy. We all recognise that the process has started, although it is slow.

It is interesting that the Bill before us makes no acknowledgement of the Personal Insolvency Act or any of the other strategic steps taken to address the mortgage arrears problem. Along with that Act we have the Insolvency Service of Ireland, the Central Bank revised code of conduct on mortgages and the Land and Conveyancing Act. This Government's strategy is to assist people and families in mortgage distress, with four distinct measures in the form of the personal insolvency process, the mortgage advisory service, the mortgage to rent scheme and proactive engagement with banks.

I will refer to the code of conduct on mortgage arrears, which stipulates that mortgage lenders should allow for a flexible approach in the handling of arrears and pre-arrears cases, aiming to assist the borrower in genuine difficulty rather than procrastinating or avoiding the problem. They should genuinely assist, in as much as possible, having regard to the special circumstances in families. In particular, the code provides that the lenders' arrears support units must base assessments of the borrowers' cases on the full circumstances, including personal circumstances, overall indebtedness, information in the standard financial statement, current repayment capacity and previous history. Form should be taken into account.

This revised code provides robust protection to consumers in mortgage difficulty and is vital in solving mortgage difficulties faced by too many families. The Personal Insolvency Act provides for the introduction of three new debt resolution processes, which although requiring court approval are essential non-judicial procedures.

Based on my constituency experience in working with people for the past year who are in major financial distress, we are beginning to see long-term sustainable solutions being put forward for them. I agree that it has taken too long to get here, but people are seeing the light at the end of the tunnel. Lorcan O'Connor fills me with hope that there will be a resolution in the short to medium term for the 106,000 families in arrears. In the United Kingdom 65% write-downs are the norm for its insolvency service given the number of people in debt. This is to be welcomed and I am confident that the ISI will be able to do the same for people here to enable them to rebuild their lives which have been shattered in the past few years.

6:20 pm

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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Shattered by Shatter.

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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I wish to share time with Deputies Finian McGrath, Catherine Murphy, Luke 'Ming' Flanagan, Seamus Healy and Mattie McGrath.

Tá fhios agam go raibh an ábhar seo a phlé an seactain seo caite ach tá sé tabhacthacht go bhfuil sé á phlé againn anocht agus ba mhaith liom aitheantas a thabharirt faoi Deputy Collins de réir an obair a dhéan sí i gcómhair an Bille.

I read over material I had gathered on mortgages and was struck by the important principles put together by the various researchers and groups campaigning on mortgage issues. The people concerned have a strong track record on anti-poverty issues, including debt, credit and housing. The first principle to accept is that there is an inability to pay rather than an unwillingness to do so, which means that there is a need for a multidimensional response. We are all flawed human beings and human nature being what it is, some people will choose not to pay, not because they cannot but because they will not. That leads me to the second principle - the need for data. All policy initiatives must be undertaken consistent with reliable and accurate data, some of which have been missing. The solutions must take all debt liabilities into account, otherwise they will not be workable. Debt write-off does not sit easily with some people, but if mortgage holders have been paying honestly and trying to do their best, the point can be reached where the practical and common-sense approach is to write off the debt.

Another principle is that debtors need adequate representation in negotiations and that the cost should not be prohibitive. People also need to have a minimum income. They must be able to meet their basic needs while repaying their debt. The aim should be to keep them in their homes, whether as an ongoing mortgage holder or as a tenant. When we discussed this issue two weeks ago, the Fianna Fáil motion referred to keeping people in their homes and stated that where repossession occurred, appropriate social housing and social welfare rights should be provided. It further stated the mortgage arrears crisis represented the greatest social challenge facing the State. I disagree because we must examine housing generally. In the area I represent there is a dire shortage of housing, whether it is social housing, private rented accommodation or local authority housing. This issue must be also included, with mortgage distress, when the housing crisis is considered. Everything must be done to ensure people remain in their homes and that they are not added to lengthy housing waiting lists.

The other principle is that the personal insolvency process should be adequately transparent. The Bill is trying to address provisions not adequately covered in a PIA. There is a specific proposal for a mortgage debt arrangement which would be added to the provisions in the Personal Insolvency Act 2012. It tries to regulate the relationship between the debtor, the bank and the PIP. The legislation addresses the issue of a reasonable standard of living and acknowledges that families need discretionary spending. They spend the most and if we can get them spending again, that will be a boost to the economy. If the measures brought forward to date were working, we would see the results in the statistics, but we are seeing the opposite. More than 97,000 mortgages, with a total value of €18.6 billion, are in arrears for more than 90 days.

This legislation tries to ensure owner-occupiers are protected. People have genuine fears that the Personal Insolvency Act 2012 was designed for business people and those with multiple properties, but the rationale behind this Bill is that it will force the banks to deal with homeowner debt. It is terrible that it is assumed that all those in mortgage distress are strategic defaulters. That is a serious mistake, but it is determining the policies being introduced. The Government has bailed out the banks at enormous expense and they have to play their part through genuine realistic engagement with those in distress. This legislation might force them to do that and deal with homeowners. As we debate parliamentary democracy with the Seanad referendum approaching on Friday, it would be useful if it was accepted that there was wisdom and an insight on all sides of the House and that it was not confined to the Government benches. The Government might just acknowledge that there was such wisdom and an insight in the case of this Bill.

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
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I am grateful for the opportunity to contribute to the debate. I welcome the Bill and strongly commend Deputy Joan Collins for bringing it forward to help people in genuine crisis. This demonstrates that members of the Technical Group have ideas, solutions, common sense and, above all, that we have a great sense of justice on behalf of the people.

The Government must realise there is a major problem with families under huge financial stress who need our help. They need reasonable solutions and action now. The Taoiseach stated in the House earlier and again yesterday that 12.7% of mortgage holders were in arrears, but those who live and work in the real world believe the accurate figure is approximately 25%. A total of 86% of families in distress have nothing left at the end of the month, while the remaining families who pay their mortgages on time each month and are good citizens are left with practically nothing. That issue has to be addressed in this debate. The vast majority want to make an effort to pay down their debt. That is the reality every week in my constituency clinic in Donnycarney.

Before addressing the legislation, I would like to speak out again on behalf of another group of mortgage holders who were shafted in the past - the residents of Priory Hall. I commend them for the work they have done. They were let down by the developer, the State, bureaucracy and the banks. Many of them are in a dire situation, but I commend people such as Stephanie Meehan who lost her partner, Fiachra Daly, because of this issue which has come alive again because of his sad death and her bravery and integrity. However, it is important that the Government move on this issue and support the residents of Priory Hall because these families are suffering badly. They are crying out for justice. It is a disgrace that they had to wait for someone's death to end their nightmare. It is time for legislators, the State and everyone else involved to bail them out as a matter or urgency. We bailed out the banks. Why are we not bailing out the residents of Priory Hall? Next Friday the Government will spend €14 million on a referendum, while between €8 million and €10 million would address this issue. I commend Stephanie Meehan for her recent statement and again offer my deepest sympathy to her on the death of her partner, Fiachra. These families have suffered enough. This is related to the debate.

The legislation is based on the Norwegian model and I thank Deputy Joan Collins for the magnificent work she has done on it. She has come up with ideas, solutions and reasonable, practical outcomes to help families. The Government parties regularly say the Opposition has no ideas, but this is one of many, which is why people are looking to members of the Technical Group to show leadership on this issue.

On 21 June this year the Central Bank stated 95,554 or 12.3% of private residential mortgage accounts for principal dwelling houses were in arrears for more than 90 days at the end of March 2013, up from 92,349 accounts or 11.9% at the end of December 2012.

The number of principal dwelling house, PDH, accounts in long-term arrears of more than 180 days increased by 4.8%, showing quarter-on-quarter growth. The number of accounts in arrears more than 720 days was 12%. The number of PDH accounts in early arrears fell marginally during the first quarter of the year. The figures show that 46,564 PDH accounts were in arrears of less than 90 days at the end of March, reflecting a quarter-on-quarter decline of 0.7%.

I urge all Members to support this excellent legislation introduced by my colleague, Deputy Joan Collins. The Bill presents solutions and an option to help families. We need to do it now.

6:30 pm

Photo of Catherine MurphyCatherine Murphy (Kildare North, Independent)
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I congratulate Deputy Joan Collins on the work involved in this Bill and on introducing it to the House. It is a serious attempt to deal with a very serious issue but what is really good about it is that it has worked elsewhere. One could ask why we should not consider solutions that have worked elsewhere.

This week’s figures from the Central Bank show the depth of the problem. Since 2009, when it began to collect quarterly statistics, the percentage of mortgages in arrears of more than 90 days has grown by 17% or 17,000 loans. That amounts to €18.6 billion. In total, 100,000 mortgages have entered arrears. Some of the arrangements for dealing with them are temporary solutions such as, for example, interest-only arrangements or reduced payments where the mortgages are clearly not sustainable.

Reference has been made on numerous occasions in the House to a power imbalance. The scale of the figures is frightening. The Personal Insolvency Act introduced some onerous pathways for people to deal with debt problems and a power imbalance was sewn into the legislation. This Bill seeks to rebalance the relationship in favour of borrowers in difficulty. Nobody is suggesting that we embark on wholesale debt forgiveness. The Bill is strict in terms of the qualifying criteria but that seems to have escaped many speakers on the Government side. It would be available only one time per mortgage. The Bill is sensible. It is designed to tackle this unique crash which does not happen much more than once in a generation. The situation threatens the national interest. Not to engage in the exercise is itself a moral hazard. I am pleased the Bill breaks the power imbalance because that is the key to tackling mortgage arrears in an equitable manner.

The Bill makes it a requirement that a person should have tried and failed to reach an agreement with the lender in advance of turning to this option. It means one is setting minimum standards and giving a statutory guarantee to borrowers. That is a decent principle. If we take a silo-based approach to mortgage arrears, it would be as if the only cost is to the individual families who are put on the side of the road when in fact there is a cost to the State. I wish that was factored into the debate. Deputy Maureen O’Sullivan outlined that the significant housing waiting list will become even bigger because people will not be able to borrow again. They will go on the waiting list and will require rent assistance. That is not a temporary solution because there is no other solution in most major urban centres. Because of the poverty trap that is built into the system people will not be able to work and they will then be on social welfare and will be entitled to medical cards, student grants and many other supports. Such people will find it impossible to get back into the workforce. Those who are in distressed mortgages had jobs because if they did not they would not have got a mortgage. The solutions we are offering will make such people permanently unemployed and unemployable because of the lack of real choice.

We were told recently in the House that for every 10,000 people who come off the live register there is a saving to the State of €90 million. We must examine the issue in its totality. Up to now the Government is considering the issue as though it is a problem for individual families and banks. It is a problem for all of us. We must begin to consider the issue in a much more rounded way if we are to find solutions that will benefit not just the individuals concerned but society as well. I urge the Government to give the Bill a serious hearing and the opportunity to go to Committee Stage because it is serious legislation.

Photo of Luke FlanaganLuke Flanagan (Roscommon-South Leitrim, Independent)
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I commend Deputy Joan Collins for introducing the Bill. Having read and considered the Bill, it is the essence of the person who has introduced it, as it comes from the point of view of fairness. Fairness is supreme to Deputy Collins. That is the reason she introduced the Bill.

She has put a considerable amount of work into the Bill. When one does that one would like people to hear what is involved. What Fianna Fáil, Sinn Féin or other parties do in such cases is to hold a press conference. Sadly, when people from this group put forward good ideas they get ignored. One person turned up. I am disappointed for two reasons. The first is that the media attends press conferences of organisations that have destroyed this country and will not attend press conferences of people who are trying to make a change. More importantly, I am surprised they did not turn up because many media organisations have already benefitted from similar write-downs to what Deputy Collins has suggested and that achieve the same result. I was surprised when two particular media organisations, which I do not know if I am allowed to mention because it is against the rules-----

Photo of Seán BarrettSeán Barrett (Dún Laoghaire, Ceann Comhairle)
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It would be better not to mention them.

Photo of Luke FlanaganLuke Flanagan (Roscommon-South Leitrim, Independent)
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I will not bother then. I would say people can work it out. I would have thought they would have come to applaud Deputy Collins and to say that the approach worked for them. It worked to the extent that the head of one of the companies said the restructuring was a very positive development for the company and put it in a good place to deal with many challenges for the business. If we went along with what Deputy Collins suggests, average persons having benefited from it could say the restructuring was a very positive development for their house and put them in a good place to deal with many challenges for their families.

Let us look at the write-down for one of the companies. I will quote from NAMA Wine Lake because it says it a lot better than me. It states:

But on the face of it, it looks as if the banks may forgive or write-down or write-off up to €196m plus interest or 44c-plus in the euro and are getting 11% of a company which had a market value of €20m.
In other words, the bank did a deal with a company whereby it wrote off €196 million in debt and it got €2.2 million of a company in return. Let us, for example, apply those rules to a €200,000 mortgage on a house now worth €100,000, as would be the case in my town. If the banks decided, as they already have for those big organisations, to give a 44% write-down on such a mortgage, that would bring it down to €112,000. I did hear a Member suggest that perhaps this Bill would be better if the bank would take equity. Let us say we would stomach that, which would be hard to do given that the banks caused the problem in the first place. On the basis of the logic for the media companies, even though it would stick in my craw, it would be better than what some have suggested, because all the bank would get is 11% of one's house for an €80,000 write-down.

It sounds like a good idea but if it is such a good one, why did the employees not turn up to listen to why it could benefit ordinary people too?

I had people in my office approximately six or seven months after I was elected and I obtained figures for them on stress tests. I was told that in the region of €9 billion was available to help us with write-downs. Who has that money? Has it been used to write down the debts of multi-billionaires? How much of the money is left? Anyone who would suggest that Deputy Collins's Bill is unrealistic should examine the fact that there is meant to be approximately €9 billion available. Sadly, all people are not treated the same.

If an ordinary person wants to have his debt written down, the personal insolvency service will publish his name. It is a bit like “Cheers": the personal insolvency service where everybody knows your name. I asked the Minister for Finance, Deputy Noonan, the details on the sort of debt write-down the banks that we own gave the media organisation and was told the information was commercially sensitive. This is a wonderful country, is it not?

6:40 pm

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry South, Independent)
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I confirm my support for the legislation and commend Deputy Collins for introducing it. It is very important, timely and necessary. Above all, the idea contained in it has worked elsewhere. This is crucial to note. It has been tried and tested and has been successful elsewhere.

I commend Deputy Joe McHugh of Fine Gael, who made a very reasonable and reasoned speech earlier this evening.

This legislation is necessary because the current insolvency legislation, passed in this House recently and now in operation, is seriously flawed and deficient. It is seriously flawed because it gave a veto to the banks and seriously deficient because it is now quite clear that a significant number of distressed mortgage holders will not fulfil the criteria in the legislation. We must simply listen to what Mr. Patrick Honohan said last week. He said 62% of the sustainable solutions offered by the banks to meet the Central Bank guidelines involved voluntary sale, voluntary surrender or repossession. Over the weekend, personal insolvency practitioners have confirmed that, in their experience to date, as many as 43% of people coming to them will not be able to avail of the personal insolvency services because they have no disposable income.

This Bill deals specifically with those two issues. It will remove the veto from the banks in regard to owner-occupied properties. We are talking about people who made mortgage repayments when they were in a position to do so. There are trying to pay now and would love to be able to do so. We are talking about family homes.

The second key point of this legislation is that it deals with negative equity pertaining to owner-occupied properties by revaluing the security of the asset at 110% of today's value. The negative equity will become unsecured debt and this will reduce the mortgage repayments to a more affordable level. These measures cover the two areas that are causing difficulty for ordinary, decent families who want to pay their mortgages.

We should remember what Patrick Honohan and others have said. Mr. Honohan said 62% of the offers by the banks involved voluntary surrender and repossession. Both of these solutions effectively mean eviction from the family home. I have seen letters from banks suggesting to distressed mortgage holders that they engage in the voluntary sale of their property. Did one ever hear the like of it? There are no mortgages being made available for ordinary people; therefore, there are no sales of properties. Down the country, certainly in my constituency, it is not possible to sell homes such as the ones in question. There are no mortgages and people do not have the cash that some investors may have to buy homes in south County Dublin in such places. We are talking about anything from 40,000 to 60,000 families effectively being evicted. If this occurs, they will be put on a local authority housing list. Local authority housing lists already have 98,000 families. I commend the legislation to the House.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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I, too, am delighted to be able to speak on this well-researched and timely Bill, introduced by Deputy Joan Collins, whom I compliment on her work and examination of the circumstances that led to this savage problem in other countries. I am saddened, but not surprised, by the response of the Government. It is a sad indictment of the Government. I compliment Deputy McHugh and others who have agreed a path with us and who understand the circumstances. We all know – we have a small bit of savvy – what is going on. We know the banks are controlling everything and about how the bankers, regulator, or the lack of regulators, and politicians and senior public servants allowed the mess to occur. None of them has been challenged and the ordinary people are left to carry the load. Every day, especially during the last term, legislation is introduced by the Government to get over the Dunne case, which stopped repossessions. The Government introduced a Bill with a lovely title, the Land and Conveyancing Law Reform Bill. It should have called it what it was, the eviction Bill. I have an eviction notice in my hand that a family in Cork received . It was delivered by the sheriff on 9 September 2013 and pertains to Start Mortgages. The letter tells the family in question to vacate the property in ten days or else face eviction. Are we going back to the Peep o' Day Boys and the landlords? Irish people fought against what they represent. What more noble idea or dream could working people have than to get married or become involved in a relationship, take out a mortgage, house themselves and live a normal life? The problems were allowed to continue in a frenzy and regulators laughed. Those who were challenged, including prime ministers and taoisigh, said the people giving warnings should go away and commit suicide. What more arrogant and insulting behaviour could the Government engage in than the behaviour that resulted in its having passed the legislation in question?

The Government also introduced legislation establishing the personal insolvency agency. It is all window-dressing for the bankers who created the mess, the people whom we bailed out. I voted for the bailout. I was warned of the abyss, but how much worse could the abyss have been had we not had a bailout? We were fooled, tricked and lied to by the banks. We heard the tapes of the bankers who were laughing and scoffing about how they fooled everyone.

The referendum on the court of appeal is on Friday, again to allow bankers to put people out of their homes. Many people in desperation have exhausted all the available court remedies. They do not get much satisfaction or solace in court. Many are appealing to the Supreme Court in a last-ditch effort, which is causing a problem for the bankers. Therefore, the Government has to do something about it, on the instruction of Ms Merkel and co. and the troika. Here we are, bowed down again, and we hope to get rid of our second Chamber, which might have a bit of sanity. The legislation is not even being debated and people are sleepwalking into a court of appeal. There is no detail on how many judges will be appointed, the kind of court it will be and how much money the barristers will charge. It is all regarded as fine. It is a question of putting the clock ticking in the belief free legal aid will deal with the fees, or in the belief that the clients, who cannot pay, will pay. The meters will be ticking for the fat cats to get richer while ordinary people and families are in desperation over the great extent of the crisis.

We can ignore it all we like and we can have the Taoiseach denying it every morning on the Order of Business and during Leader's Questions, but the reality is that it is a time bomb waiting to go off. We cannot house the families on the housing waiting lists, as Deputy Seamus Healy said. In my constituency, the waiting list is very long as it is. Are we going to force all of these people onto those lists? Are we going to allow young families to be terrorised by sheriffs? It is shocking that any family would have threatening letters passed on to them and have all of the forces of the State coming down on them. Thankfully, the good people of Kanturk have rallied around that particular family and have gone to the High Court in an effort to assist them. They are looking for some mercy, and here we are trying to interfere with the courts by introducing a new court of appeal.

I can see that my time is up. I could continue speaking for hours-----

6:50 pm

Photo of Seán BarrettSeán Barrett (Dún Laoghaire, Ceann Comhairle)
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That is what worries me.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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-----but it would make no difference to the Government. I will not do so and will respect the time. It makes no difference with this Government, in spite of its promise to burn the bondholders. I refer particularly to the Labour Party and the Minister of State, Deputy O'Sullivan's party leader.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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Some of the bondholders were burned.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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We have only burned the ordinary people. I watched "Tonight with Vincent Browne" last night and heard him writing off the Labour Party. I feel sorry for those who were members of the old Labour Party, a decent party. I know many decent people who were once members of the Labour Party.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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The party was founded in the Deputy's constituency.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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I hate to see a decent party which was plundered by-----

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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Has the Deputy forgotten about the party of which he was once a member?

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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Deputy O'Sullivan is the Minister of State with responsibility for housing, but she is making a damn bad job of it.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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I acknowledge the fact that everyone who has spoken in this debate feels very passionately about the crucial importance of addressing this very serious problem for many of our fellow citizens. The Government has taken action across a number of areas, including engagement with the banks, requiring them to develop and apply sustainable measures to assist customers in mortgage arrears, personal insolvency law reform and implementation, and the introduction of mortgage-to-rent schemes and a mortgage advisory function. Personal insolvency reform and Central Bank involvement are fundamental to resolving the mortgage crisis. These processes are under way and should be supported. I wish to stress, in response to several Deputies, that these processes are for all classes of debtor, not for a select few.

I thank Deputy Joan Collins for the work she has put into her Bill. However, I must reiterate what the Minister stated in the House yesterday - that the mortgage restructuring arrangement proposed by the Deputy, to be additional to the three new debt resolution arrangements introduced in the Personal Insolvency Act of 2012, would turn what is a negotiated approach to debt resolution into an adjudicative approach, with the details of such arrangements determined solely by a personal insolvency practitioner, with acceptance by the creditor to be mandatory. Such an approach would be unconstitutional and would have serious economic and financial implications for the sustainability and solvency of financial institutions, with the risk of a resulting additional burden being placed on taxpayers.

The Central Bank has the power, from both the prudential and consumer protection perspectives, to require banks to address mortgage arrears cases on their books. It will no longer be acceptable for banks to apply short-term solutions where the position of the borrower has fundamentally changed for the long term. Durable restructures such as split mortgages or other solutions will have to be applied, having regard to the circumstances of each case. The Central Bank has put in place the mortgage arrears resolution targets, known as MART, and set out a rolling plan requiring the main banks to propose sustainable solutions to their mortgage arrears customers, with a target of 20% by the end of last June, 50% by the end of the year and 70% by the end of March next year. There are also first targets for concluded solutions of 15% by the end of this year and 25% by the end of March next year. The banks have indicated that they exceeded the end of June 20% target for proposed solutions, with a heavy emphasis on potential legal proceedings. However, as Deputy Shatter has already stated, so-called legal letters cannot be regarded as a sustainable solution to a mortgage problem.

The code of conduct on mortgage arrears, with which banks must comply, clarifies that repossession of a primary home is a last resort and that legal proceedings may be commenced only where lenders have made every reasonable effort to agree an alternative repayment arrangement. Crucially, the Central Bank has commenced an audit of the end of June returns, with a report expected in November. The audit will entail an examination and evaluation of the policies, procedures, systems and controls that the banks have implemented to ensure that reported performance is complete, accurate and valid. It will also include file reviews on a sample of loans reported by the banks as modified sustainable loans. For this process to work and for banks to be able to provide sustainable solutions to mortgage arrears cases, the borrower will have to co-operate and provide the information necessary to enable the lender to provide such solutions. Where the borrower does not constructively engage with a lender, and despite full compliance by the lender with the code of conduct on mortgage arrears, then there may be no other option for the lender but to commence legal proceedings. Indeed, the lender may otherwise incur even more losses, with further costs for wider society. Where efforts to find a mortgage solution have failed or are not viable, unfortunately, in some instances - and I hope very few instances - the ultimate resolution will involve the sale of the property.

I wish to stress that the mortgage-to-rent solution is available to people who qualify for social housing and who fulfil a number of other criteria. It is becoming a realistic solution for a certain percentage of people.

Photo of Séamus HealySéamus Healy (Tipperary South, Workers and Unemployed Action Group)
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What percentage?

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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It is a solution that allows people to stay in their own homes.

What Deputy Collins and others appear to be proposing is the provision to certain debtors of a capital asset at a low cost or, in some cases, no cost at all. There is the risk in the Deputy's Bill that a means of evading payment might be provided to debtors who may actually be able to meet their financial obligations. Our overall focus is on assisting people in genuine difficulty in remaining in their homes where possible. If reasonable offers are made, I expect they will be broadly accepted by customers. Should the borrower not be satisfied with a bank's proposal, or if no such proposal is forthcoming, the legal insolvency frameworks are now available to mortgage and other debtors. In addition, the reformed, more debtor-friendly bankruptcy process is available as the ultimate resolution to an unsustainable debt position.

Two basis principles underpin the Government's approach to the mortgage problem. First, co-operating mortgage holders experiencing real difficulty should, where possible, be assisted in remaining in their homes. Second, any framework for mortgage holders must distinguish between those who cannot afford to pay the mortgage on their primary homes and those who will not pay.

Providing a fresh start for people facing genuine difficulty in dealing with their mortgage commitments is necessary. The Government has provided a suite of measures. We all agree that the banks must offer proper solutions to debtors. I commend Deputy Collins for giving us the opportunity to discuss this issue.

Photo of Mick WallaceMick Wallace (Wexford, Independent)
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I wish to share time with Deputies Collins and Ross.

I also commend Deputy Collins for her introduction of this Bill. It is really important that this issue be kept on the agenda. If we say nothing, worse can happen. If people speak up and if the Government puts a bit more pressure on the financial institutions to behave differently, things could get better. All of the arguments have been made and we have gone around the houses on this issue for the best part of this Parliament's term. A number of points stand out. It is not rocket science and there is little doubt that the priorities of the banks are being given preference over those of the citizen. If that were not true, we would not have given billions to the banks without conditions. It would have been nice if the last Government had attached some conditions to the bank bailout. It would have been nice if the Government had said that it would bail out those failed financial institutions, which failed largely due to their own poor management and which should have been allowed to go broke, but only on condition that they then look after everyone else who is in trouble. Some might say that is very idealistic, but I do not think it is quite so mad.

I note that NAMA boasted last week that it got the full 60% back from a builder. The builder in question owed the State banks €1.5 billion. NAMA bought that debt at 60%, equating to approximately €950 million, and got its money back when it sold on the assets. That is fine, and I am sure the builder will trade again. However, there is actually more than €500 million missing, and that bill is being picked up by the taxpayer. But everything is grand - sure we are keeping businesses going. Small and medium-sized businesses in Ireland are in a very difficult place at the moment because, generally speaking, people have very little money in their pockets, and the mortgage crisis is playing a huge role in that regard. It is challenging for many people to pay their mortgages simply because the mortgages are too big.

More than 1 million people are left with €50 of spending money after they pay their bills each month. While the Government can claim we have economic growth with the green shoots of recovery emerging, living standards are continuing to drop with people finding it increasingly difficult to make ends meet. Mortgage debt is a significant factor in that.

It is okay to rescue the failed financial institutions to the tune of billions of euro. It is okay to help big businesses to overcome their problems because we need them to provide employment to get the economy going again. However, the Government seems to believe it does not need the ordinary citizen to be on a good footing. That is really important as we will never have a real recovery until it happens.

There is talk about moral hazard and that some will take advantage if they are helped out with mortgage repayments. Do those who do not need help realise they would be better off when those who need help are given it? We will all be better off when our society, domestic economy and living standards come around and recover from the doldrums.

7:00 pm

Photo of Shane RossShane Ross (Dublin South, Independent)
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I thank Deputies Joan Collins and Wallace for sharing time with me.

Deputy Boyd Barrett asked me when he sat down if he convinced the Government. It is indicative of the seriousness with which the Government takes this House and an issue of this sort that, for the past 45 minutes since I came into the Chamber, that, apart from Members on this side, there have only been two ushers, two clerks, the parliamentary reporter, two civil servants in the bull pen and one Government Member, a Minister of State at that, in the Chamber. No Cabinet Minister has come into the House in that time.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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They were here before the Deputy came into the Chamber.

Photo of Shane RossShane Ross (Dublin South, Independent)
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No Member from Fine Gael or the Labour Party has come into the House.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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They were here for the start of the debate when the Deputy was not.

Photo of Seán BarrettSeán Barrett (Dún Laoghaire, Ceann Comhairle)
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Can we get back to the Bill?

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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Deputy Ross was not in the Chamber all the time.

Photo of Shane RossShane Ross (Dublin South, Independent)
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I did not say I was here all the time. The Government has a majority of over 100. Maybe, some of its Members could be here taking this issue seriously.

Photo of Seán BarrettSeán Barrett (Dún Laoghaire, Ceann Comhairle)
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Can we get back to the Bill?

Photo of Shane RossShane Ross (Dublin South, Independent)
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Obviously, they are not interested and were not here to support the Minister of State when she gave her speech. That is really insulting to the proposer of this Bill, Deputy Joan Collins.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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Did the Minister see what happened on Seanad Private Members' business tonight?

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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One never sees Deputy Ross during any other Private Members' business debates.

Photo of Seán BarrettSeán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will Deputy Ross get back to debating the Bill?

Photo of Shane RossShane Ross (Dublin South, Independent)
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My point is that the Government does not take the Dáil seriously on issues of this sort. It is a pity it does not because this Bill contains good ideas and constructive suggestions. They should at least be given the courtesy of being paid a certain amount of attention. It is a pity the Minister of State has been on her own for this period. I hope it will not continue.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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I have not been here on my own.

Photo of Shane RossShane Ross (Dublin South, Independent)
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The Bill puts forward a principle of negative equity of 110%, based on the Norwegian model. It is also constructive because it takes the bankers out of the pivotal position in which the Government has put them. That is what is radical and fundamental about this Bill. The Bill calls for more weight to be given to borrowers and a little less to bankers. Why does the Government consistently concede the final say to bankers? They are the ones who carry an equal, if not greater, responsibility for reckless lending. The emphasis in the Government’s thinking is that it is reckless borrowers who have to pay one way or the other. If one is going to play the blame game, it should go to the lender at least equally as to the borrower. However, this does not figure in the Government’s thinking because the veto still rests with the banks.

The noises coming from the Central Bank - and sometimes the Government, as happened with the Taoiseach this morning - are that it is on some sort of collision course with the banks which are running rings around it. They never collide, however. It is extraordinary how these noises have been made about mortgage arrears for the past five years but the number of arrears is going up with everyone dancing around each other but nothing happening.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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We have introduced personal insolvency legislation to deal with this issue.

Photo of Seán BarrettSeán Barrett (Dún Laoghaire, Ceann Comhairle)
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Sorry, will the Minister of State address her remarks through the Chair?

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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Yes, but Deputy Ross is very annoying.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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The truth hurts.

Photo of Shane RossShane Ross (Dublin South, Independent)
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Last week, the Governor of the Central Bank told the finance committee that the idea of strategic defaulters is a phoney concept, a piece of banking propaganda with which the Government goes along. How is the Government going to deal with that? In her speech the Minister of State referred to a distinction between those willing to pay and those who cannot pay. Strategic defaulters are a non-existent entity but the Government likes to claim they exist because it can put the emphasis back on the borrowers as the guilty party which they are not.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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If only the Deputy was right.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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I thank the Technical Group and Opposition Members who support this Bill and put forward constructive ideas. The key and crucial area of this legislation is the family home. Every time the Minster for Justice and Equality, Deputy Shatter, claims the personal insolvency legislation is a solution, it becomes more obvious it is not. The Governor of the Central Bank made the point that 62% of sustainable solutions offered by the banks to meet Central Bank targets by the end of June involved a demand for voluntary surrender or repossession. If that continues, it will mean up to 60,000 more households facing such demands. After six years this is what distressed mortgage holders, who have been under considerable stress, will face.

The Governor also said the idea of the strategic defaulter is phoney. It angers me then that the Government carries on the banks’ phoney argument by claiming this Bill could lead to strategic default. Everyone working who has a decent wage is paying their mortgage. It is those who have lost their jobs or whose wages have been cut, who cannot afford to pay their mortgages. Up to 500,000 families have less than €50 in disposable income a month after paying their bills.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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That is why we provided solutions.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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These are the people who claim they have not even the money to pay to go into a personal insolvency arrangement.

The Personal Insolvency Act is only for people who have money and multiple creditors. It is not for the ordinary person.

7:10 pm

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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That is untrue.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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We are calling for fairness. Deputy Luke 'Ming' Flanagan was correct. Where was the fairness when unsecured bondholders were paid? Did the Government ask the people if we should pay them off? No, they were paid off. Ordinary people should be assisted out of their situation, that dark tunnel out of which they cannot see. That is what this Bill is about. It is robust, proven legislation which has worked in other countries and should be examined seriously. The Minister for Justice and Equality, Deputy Alan Shatter, will have to examine this because it will happen. Although he says his insolvency legislation will deal with it, it will not and he will have to revisit this issue down the line.

The banks have been recapitalised by €9 billion. For the three Irish banks, the total will probably be approximately €3 billion to €3.5 billion for those families which are in negative equity and arrears. I challenge the Minister to check this out and determine exactly how much it would cost to deal with those families in negative equity and arrears. Having that figure would help the debate very much. Ordinary people are not looking for a freebie. They paid their mortgages when they could afford to and they want to continue to play their role in society. This must be examined regarding the family home.

The Minister has said this is unconstitutional, but that is not the case. Articles 40 and 43 of the Constitution specifically make the point that undue weight is given to property rights, but Article 43.2.2° states: "The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good". Therefore, the State has the right to move in and protect those who need it. As people need it, I ask the Minister to please accept the Bill.

Question put:

The Dáil divided: Tá, 46; Níl, 71.

Tellers: Tá, Deputies Joan Collins and Catherine Murphy; Níl, Deputies Paul Kehoe and Emmet Stagg.

Níl

Question declared lost.

The Dáil adjourned at 9.15 p.m. until 10.30 a.m. on Thursday, 3 October 2013.