Dáil debates

Wednesday, 4 March 2015

Family Home Mortgage Settlement Arrangement Bill 2014: Second Stage (Resumed) [Private Members]

 

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

6:25 pm

Photo of Stephen DonnellyStephen Donnelly (Wicklow, Independent)
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I propose to share time with Deputies Joan Collins, Clare Daly, Shane Ross and Mick Wallace.

I could give a technical critique of the Bill and why it would protect tens of thousands of men, women and children but there is no point because it will be voted down in 90 minutes. Instead, I would like to take the time I have to tell a quick story. In late January, a couple came to see me in Wicklow. They had a mortgage and were both working and getting on with their lives when he suffered health problems and they went into arrears. They went to a personal insolvency practitioner who came up with a proposal. They had the agreement of the Insolvency Service of Ireland, went to court, proposed it to the judge and the bank came in and vetoed it. The judge adjourned the hearing to try to make it happen but the bank vetoed it again. They were forced into bankruptcy and the official assignee has granted a five-year income attachment order. For the next five years, everything they earn goes to the bank. Her wages have fallen as well and now they cannot meet their rent. The rent allowance rules mean that if the rent allowance allocation does not meet the full market rent, people get nothing. Rent allowance does not come close to current market rents in many places. The couple came to me in January not to talk about the mortgage but to talk about their options when they were made homeless.

I am sick and tired of meeting Irish men and women who come into our offices with these stories. I am sick of them coming in and I am sick of hard-working men and women having their dignity taken from them and coming in in fear because they were unlucky enough to get sick or have their wages cut. This Government and the previous Government have done nothing. Inaction by the Government means this couple will be homeless, their lives will be destroyed, it will cost the State a fortune and the bank will not get a fraction of what it would have received through a binding solution. The Bill is a small step in the right direction and should be passed. A non-whipped vote in the Joint Committee on Finance, Public Expenditure and Reform would see it voted through. I commend the Bill to the House and I congratulate Deputy Michael McGrath.

Photo of Joan CollinsJoan Collins (Dublin South Central, United Left)
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I support the Bill and I think it should be passed. It is very similar to a Bill I introduced two years ago. It is similar in seeking to remove the veto of the banks and seeks to use the machinery set out in the Personal Insolvency Act. In 2009, I noticed this when I was knocking on doors during the local election. We knew that things were happening behind closed doors but only in that election campaign did we start hearing people talking about huge mortgage arrears. This is a crisis but one does not get that impression from the Government's response to date. Deputies are aware of the pressure and the distress of tens of thousands of families struggling to keep a roof over their heads.

In 2011, a family from Ballyfermot came into our office. The man had lost his job and the woman was on part-time work and they had three young kids. They had purchased a house a year before that and I could see the stress, grief and anger in their faces. We managed to get a mortgage to rent arrangement and it was like seeing a new couple walk in the door a month later. They were completely different people.

Deputies are aware of the increasingly ruthless and heartless approach by banks. The banks want their pound of flesh and with house prices rising rapidly we can expect to see an increase in repossessions, which is a polite term for eviction. The code of conduct and insolvency legislation are, to put it bluntly, useless. I tried to introduce legislation recently to make it legal. This is not a solution but a pretence at a solution.

The mortgage to rent scheme is the only sustainable option for many families but it was never an option about which the banks were enthusiastic. The limit is €220,000 and that must be increased to €300,000 in Dublin. I ask the Minister to consider it.

Photo of Clare DalyClare Daly (Dublin North, United Left)
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I welcome the Bill from the point of view that its attempt to dilute the power of the banks and enable people to stay in their homes with sustainable mortgages. Keeping people in their homes is best for them and economically best for society, not to mind the personal trauma of that upheaval. The current arrangements mean that, while the final decision rests with the banks, there cannot be an equitable solution. The interest of the banks is not in keeping people in their homes but in tidying up their books and moving things on. Sound human, economic and common sense do not prevail in that situation.

There are many examples but, like Deputy Joan Collins, I will refer to one. Two unconnected families, both of whom engaged with the financial institutions about a mortgage to rent scenario, had set up an arrangement with a voluntary housing arrangement organisation almost one year ago. The bank dragged its heels and is now hiding behind the fact that the valuation levels set in 2012 are redundant for today's market of rising property prices. The value has gone up and now people are being told that the mortgage to rent scheme is off even though they met the criteria at the time and everything had been lined up. Those people faced the prospect of immediate eviction and of uprooting their families from their schools and the areas in which they live.

We paid the piper and the taxpayers bailed out the banks. These schemes need to be adopted to take account of the current situation and the changes in the market. The Bill is a step in that direction.

Photo of Shane RossShane Ross (Dublin South, Independent)
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The Government has been basking in what it reckons are good employment and Exchequer returns figures in the past few days. The Bill put its finger on the great weakness in the figures coming through. There is human suffering going on and a seriously good Bill like this is being turned down to perpetuate people being evicted and homes being repossessed. This is unacceptable and what is extraordinary is that the enormous problem, which everyone acknowledges and every Deputy finds in every constituency, is not being tackled by the Government. The Government has missed every target and evictions are about to begin in an organised and distasteful way, yet Members are sitting back and saying they do not accept a Bill like this. The big difference between Deputy Michael McGrath's Bill and the Government's attitude is the craven way in which the Government has continuously allowed the banks to have the last say on mortgages. The Bill removes that, although I do not think it is radical enough.

I do not see any reason why those who provided the initial reckless loans, and undoubtedly they were reckless loans, should be given the power to review and decide the new terms of those loans and to not support the solutions proposed under this Bill. The solution to the problem lies in debt forgiveness. That is where we need to start because it acknowledges the fact that the banks rather than the borrowers made the mistakes.

6:35 pm

Photo of Mick WallaceMick Wallace (Wexford, Independent)
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The Minister of State, Deputy Kathleen Lynch, does not need me to tell her that there are many people in Ireland in a very difficult place with regard to property. With every passing month of the past seven or eight years since the crisis started the situation has become starker. I know more about banks and receivers than I want to know. Given my involvement in the building industry, I have been contacted by people from all over the 26 counties of Ireland whose stories in terms of what has happened to them are very sad. In bailing out the banks people were of the opinion that because they were paying to sort out the banks' problems their problems would, in turn, be dealt with. However, that is not what happened.

Allied Irish Bank, which is owned by the taxpayer, is becoming increasingly aggressive in trying to dispose of its distressed assets because it is likely to be sold soon. It does not give a damn about the people at the receiving end of its actions. That is the sad truth. We have not put manners on our financial institutions or receivers. Institutions apply the letter of the law when it suits them and they also bend it as they see fit when it suits them. Over the past seven years, it has been the case that power walks tall and the rest can stuff it.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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The next speaking slot is being shared by Deputies Catherine Byrne, Peter Fitzpatrick, Michelle Mulherin, Jerry Buttimer, Arthur Spring and Bernard Durkan.

Photo of Catherine ByrneCatherine Byrne (Dublin South Central, Fine Gael)
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I welcome the opportunity to speak on this Bill introduced by Fianna Fáil and acknowledge the situation of people in mortgage distress. I wish there was a quick fix but, unfortunately, there is not.

Since taking office, this Government has been working very hard to fix the economy and is making good progress. This is reflected in the growth in international confidence in Ireland. In 2010, when we were in recession and faced with financial insolvency, we sought a €67.5 billion international rescue. In 2011, our deficit was over €22 billion. By the end of 2015, it will have been reduced to less than €5 billion. This is the result of the hard work and determination of the Government and Minister for Finance and, particularly, the people of this country who have suffered for so long because of the major disaster created by Fianna Fáil. When in government it borrowed funds to meet social welfare costs, etc., rather than invest it in areas where it was badly needed. Fianna Fáil caused the property bubble and subsequent crash. It is responsible for many young people and couples having purchased houses which were beyond the reach of the average working person or couple.

This Government is doing its best to help the people now being contacted by the banks and brought before the courts. In this regard, it introduced the Personal Insolvency Bill, which was passed in December 2012, and launched the Insolvency Service of Ireland in March 2013. It has also put in place a range of measures to assist ordinary people who cannot pay their debts, including their mortgages. The Insolvency Service of Ireland helps these people in an understanding way, and has already helped huge numbers of people. The service puts people in touch with a personal insolvency practitioner, PIP, who can help them work through their difficulties with the banks and other creditors. People are being proactively encouraged to avail of this service. Since the suspension of application fees there has been an increase in the number of people availing of personal insolvency arrangements, which are solutions to their arrears problems. More people should be availing of these types of solutions. The first step is to make more people aware of what is possible and to encourage them to actively engage with the insolvency service. This will be the focus of this Government into the future.

The Government is also reviewing the operation of the insolvency service to ensure it has the power to support families willing to work their way through their debt problems. Of course, each situation is different and needs an individual solution. The primary focus of Government is a solution to keep families in their homes. The Government is making headway. The most recent statistics show a significant improvement in arrears, particularly in respect of family homes. The Central Bank figures, which indicate that the number of family homes in arrears has decreased over the last five quarters, underlines this trend.

In 2014, the number of mortgages in arrears decreased by 25,000. Figures from the Department of Finance in respect of the six main banks indicate that the number of cases of arrears in excess of 90 days has fallen by more than 15,500 since the start of 2014. In August 2013, 2,500 split mortgages were put in place by the six main banks. Currently, this figure stands at 19,000 and is rising. During the same period permanent restructuring for family homes provided by the six banks increased from 41,000 to almost 115,000. This is the proper way to go about helping people. We must lead people into the insolvency service where they will meet with people who can help them through their financial difficulties, rather than work against them. Like other Deputies, I could cite many examples of people attending my clinics who are distraught because of the level of debt in which they find themselves. We need to help people to resolve their problems and to do so we need to work together. This evening I call on the banks, which announced huge profits in the past couple of weeks, to do likewise. Bank of Ireland pre-tax profits for the year ending 2014 was €920 million. Ulster Bank made an operational profit of €606 million. It is time for the banks to step up and do what is required of them. The Irish people and the Government have helped to resolve the problem and it is now the turn of the banks.

Photo of Peter FitzpatrickPeter Fitzpatrick (Louth, Fine Gael)
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I welcome the opportunity to speak on the proposed Family Home Mortgage Settlement Arrangement Bill. The purpose of the Bill, as described by Deputy Michael McGrath, is to assist mortgage holders in arrears and to address the current haphazard and inconsistent manner in which arrears are tackled. Every week, I deal with people in my constituency who are in mortgage arrears and meet with them and their banks to try to put in place amicable arrangements that are workable for both parties. As recent figures indicate, my home county of Louth has one of the highest percentage of people in mortgage arrears, which is a direct result of the policies, or lack of policies, of the previous Government in keeping lending and house prices under control. For example, the cost of a standard three bedroom semi-detached house in Dundalk rose from €35,000 in 1998 to over €220,000 in 2007, which is an increase of €185,000 in under ten years. This situation was unsustainable. We now know the Government of the day, led by Fianna Fáil, did nothing to keep the situation under control. It did not attempt to cool the market. Its inability to regulate the banks, despite the many warnings to it in this regard, led to continual over-heating of the market.

Deputy McGrath's Bill proposes a number of provisions, including the introduction of family home mortgage settlement arrangements whereby the mortgage holder in arrears may instruct a personal insolvency practitioner to work on his or her behalf in coming to an arrangement with a financial institution. The Bill also provides that the mortgage holder in arrears can enter only one arrangement. Section 7 provides that a protective certificate can be issued for 180 days and be extended only once. Section 9 provides that the personal insolvency practitioner shall prepare on behalf of the person in arrears a proposal for a family home mortgage settlement arrangement as soon as is practicable after the protective certificate is in place.

Section 11 of the Bill provides that once the family home mortgage settlement arrangement is in effect, a financial institution can apply to vary or terminate it.

I cannot support the Bill as it currently stands. As I noted earlier, I deal with this issue on a weekly basis on behalf of my constituents. The Bill will not help them in any way. It does not acknowledge the Government's ongoing commitment to assist home owners in mortgage arrears or the progress we have made to date in this area. The number of people in mortgage arrears has fallen by more than 25,000 since 2014 and nearly 115,000 restructuring arrangements are in place. The Bill fails to address the complex nature of debt solutions in a fair and equitable manner. Personal insolvency legislation already provides remedies for mortgage holders in arrears and all of the options proposed are already provided for under the personal insolvency arrangements.

The Bill is not only deficient but will also create a series of negative repercussions for everybody involved in this process, including mortgage holders in arrears, the courts, lending institutions, new applicants for mortgages, particularly in respect of principal private residences, and the continuing operation of the personal insolvency system. It ignores the fact that settlements on family homes can be made through personal insolvency arrangements. Even if I were to agree with the principles of the Bill, it would not be possible to accept it as it is currently drafted as it is very weak. The Deputies opposite are well aware that the Government recognises the importance of ensuring the banks engage with personal insolvency arrangements. The Departments of Finance and Justice and Equality are currently working on proposals for making the insolvency legislation more effective in supporting the many people who are trapped in unsustainable debts and reaching solutions that are sustainable for all parties. I recommend that the matters raised in the Bill be referred to the Joint Committee on Justice, Defence and Equality for its consideration.

6:45 pm

Photo of Michelle MulherinMichelle Mulherin (Mayo, Fine Gael)
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I welcome the opportunity to speak on the matters raised in this Bill. As long as many of our citizens struggle with mortgage debt, we have to keep revisiting this issue. The banks have been given targets and timelines for restructuring and dealing with individuals in arrears. I welcome that the number of private dwelling home mortgage accounts in arrears declined by 25,000 during 2014 and that more than 115,000 restructuring arrangements are in place. However, home owners in mortgage arrears continue to encounter serious problems with their banks despite assurances given by the latter to the Taoiseach and the Government.

The stories that home owners recount of their experiences in dealing with banks bring into doubt the latters' assurances that they are engaging meaningfully or doing their utmost to avoid putting people out of their homes. The banks are occupying parallel universes when it comes to dealing with mortgage arrears. These problems are manifest in the county registrars' courts around the country. These courts are where we can find empirical evidence of how the banks are dealing with people. The cases are often uncontested because people are overwhelmed, owe the money and end up in court. The issues that are being revealed are very troubling. In many cases, people have made no payments on their mortgages for three or four years, which is a considerable length of time for any family or individual to live with the fear of losing a home.

The legal proceedings for repossessing a home, which the banks are entitled to pursue, appear to career along with little regard to the process the Government has put in place whereby banks engage meaningfully with people in arrears to ensure that putting someone out of his or her home is the last resort. On the legal side, civil bills issue and proceedings go undefended because the individuals concerned believe they are dealing directly with the banks and therefore do not file a defence. The solicitor goes into court to say the case is undefended and that there was no appearance but the individual, who is representative him or herself, complains that he or she contacted the bank repeatedly only to be put on to different people each time. There is no resolution other than questions about how the debt will be paid. The individual might be asked to submit a proposal but there is still no resolution. There is no meaningful engagement and it appears in many cases that individuals are getting through to glorified call centres where their details are taken and questions are asked about what is going to be done. Unless these individuals can get help from MABS or legal practitioners working on a pro bonobasis, they are left high and dry by the banks.

We all know if we do not pay our mortgages the banks are entitled to repossess our properties but that is an old conversation and we should have moved on to the point where the banks recognise they have been rescued at the expense of the taxpayer. They owe more to society than their obligations under a mortgage agreement and they need to be continuously pressed in that regard. In County Mayo, 100 cases for final possession orders are being pursued by the banks every month. Many of these are adjourned repeatedly because banks cannot present evidence that they have complied with the code of conduct on mortgage arrears. Solicitors are being instructed by the banks while customers in arrears are trying to engage. It is ridiculous that such people should end up in court. There is no evidence that the banks are distinguishing between people who were unwise to borrow in the first place and have no hope of repaying the loan, strategic defaulters and those who are in difficulty because they lost their jobs and who may come into better times in the future.

The Government has to press harder on the banks. With money never cheaper to borrow, the same provision given to State in extending the terms of repayment of the national debt should be offered to borrowers whereby they could extend the terms of the loan on their family homes to 50 or 60 years. Those who will never afford to repay their loans need a more extensive mortgage to rent scheme to allow them to remain in their homes. This is a pressing issue that is not going away.

Photo of Jerry ButtimerJerry Buttimer (Cork South Central, Fine Gael)
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While I welcome the opportunity to speak on this Bill, we cannot give people false hope. We must encourage engagement both on the part of the banks and people who are in mortgage distress. Banks should be mindful that the importance of the family home cannot be underestimated. It is not a question of bricks and mortar or the number of bedrooms; it is about a lifetime of memories and a key part of a family's sense of place and belonging. Any threat to a family home gives rise not only to financial challenges but also places an emotional strain on every aspect of life and affects the physical and mental well-being of families. All of us deal with constituents who have issues with their banks for various reasons. Perhaps the most devastating impact of the economic crisis has been the tens of thousands of family homes that have been placed at risk by the policies pursued by Fianna Fáil when it was in Government. Husbands and wives, partners and children have been directly affected but there is also an impact on the wider family and neighbours. Unfortunately, the latest figures from the Central Bank indicate that 89,476 mortgages are still in arrears.

While this is far too many, there is, thankfully, a decline from previous months. There also has been a decline of 1,930 in the number of mortgage accounts in arrears for more than 90 days to 62,266. Last December, the number of permanent mortgage restructures increased by 1,916. They are not just figures, they refer to people's lives. I keep making that point. What we must all do is collaborate to put in place a solution to look after these families.

The Minister has confirmed to us in the House that she has completed a review of the personal insolvency legislation as promised under the statement of Government priorities 2014 to 2016. She has said she will bring proposals to Government for any necessary legislative changes following consideration of the review. The wheels of change turn slowly in the House and many parts of the Civil Service. I ask the Minister and Minister of State at the Department to ensure that every effort is made to bring forward proposals to put in place further measures to help all of the families affected.

The mortgage market is a delicate one and we must be careful to ensure that any changes do not discourage lending. At the same time, we must hold banks to account for how they do their business. We should take a more comprehensive look at the types of mortgages available. Currently, when a mortgage is surrendered and the bank sells the property, it can go after the mortgage holder personally for the balance of any money not recovered. In America, they have the non-recourse mortgage which means that when the keys are handed back, the bank cannot go after the home owner personally. It can only sell the property. The advantage of this system is that it forces banks to have an interest in reasonable and realistic prices. It means that if banks engage in excessive lending, they carry the risk also. If we are to avoid a repeat of the disaster we have had, non-recourse mortgages might be considered as a real alternative when it comes to family homes. As banks already use non-recourse mortgages in some commercial deals, why not use them for family homes? Non-recourse mortgages could be restricted to the first loan to purchase a property and it could be provided that they would remain in place only while the property is the primary residence of the mortgagor.

We require creative and effective solutions for mortgage arrears, but we must also look at long-term mortgage policy. I hope the Minister and her colleagues in Cabinet can bring forward proposals as soon as possible in the interests of the families and people who require the assistance of all Members of the House. We must work collaboratively to ensure that we preserve and protect the family homes of so many people.

6:55 pm

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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I welcome the opportunity to speak on the Bill tonight, not to provide people with false hope, as Deputy Buttimer said, but to provide them with some hope. Deputy Michael McGrath has been engaged with this issue over a number of years. For the last four years, it has been one of the topics I have held closest to my heart. I come from the younger generation most affected by negative equity and loan arrears. At one time, Deputy Stephen Donnelly and I sat down to see if we could tackle this problem, but its enormity made it clear that it is best dealt with at Cabinet level where Civil Service support is available.

I am disappointed that it has come to this. We have done the State a disservice and there are better aspects of society. If we are talking about protecting the family unit, the home must be an integral part of that. We should not get carried away with what we have done on this as there is a huge problem of money that must be addressed to resolve the problem. There are some people living in PDHs where the house in question is far beyond their means. There is a very high profile case at the moment where the home is worth multimillions. I am not in favour of protecting just any home, but am particularly interested in cases where there are young children and the borrowers did nothing more than what we all aspire to do, which is put a house over the heads of our families. So many people have been left financially and mentally pressurised and, in some cases, without jobs. The numbers are of an avalanche scale, but they have not crashed just yet.

Delving into my inner cynic, I can say as a former banker that the banks have behaved in an appalling fashion to date.

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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Hear, hear.

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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In apportioning blame for the mess we are in, one cannot say that the directors of the banks before 2007 are not culpable.

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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Hear, hear.

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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One cannot say that those in the institutions governing the State are not culpable. The enormity of the crash was a result of the way the economy was run on construction and credit. It was a fallacy which has resulted in the privatisation of debts on the people who are carrying this forward. I refer in particular to my generation which I call "Generation Jinxed" as so many have left the country and carried enormous debts. I am passionate about this as I am one of them and my friends and family feel this on a daily basis. I find it particularly difficult to understand why NAMA was established for developers under the Administration I call "the FIGS" for Fianna Fáil, Independents and Greens. Anybody with debts of more than €20 million was put into an institution and received a massive debt write down that is not politically influenced at this point in time. The average person at home is dealing with privatised debt, variable rates are going up and those on tracker mortgages are having their tracker mortgages removed. Increased outgoings, including water taxes and property taxes, and job losses have made it a particularly difficult time for a large number of people.

I welcomed the fact that we had a Cabinet that was of an age that could show maturity, that had experience and could go into the teeth of the abyss of the biggest catastrophe the State has every faced. I welcomed the fact that their shoes had been around the table before. However, it is a different generation that is feeling the brunt of the problem. I welcome that there are so many young speakers on this tonight. I do not know what quantum of money we will get, which is where I get to the problem I have. The banks have played masterful chess in this regard. They are now putting the boot in as their balance sheets have started to be repaired. Every loan they have is on a balance sheet and if property prices were suppressed and as low as they were five years ago, there would be no point in trying to squeeze people. They have left people at the end of their tethers due to the fact that they were not dealing with them. Now that they are dealing with them, they are saying "Hey, if you cannot afford the house, there is only one option". On the other side, is the State coming in and are local authorities providing homes for these people? Are we providing rent allowance immediately?

This is only going to get bigger. According to the figures with which I have been provided, Court 9 in the High Court is potentially dealing with 15,000 houses. That represents 15,000 families and 15,000 homes that may be removed from them. Time is too short on this. The finance committee has done an enormous amount of work and we have beaten the living daylights out of the banks when they have been in front of us. There is only one way this will be resolved and that is with an enormous chunk of money. It is not like the money that was given to NAMA. No money was left behind by the previous Administration and no money was provided for in the contributions of any Member of the Opposition in the debate on this Bill. The banks should not be sold until such time as they deal in a meaningful manner with the majority of those who can be accommodated in their homes. The debt must be socialised, not privatised to screw the individual.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I am delighted to have the opportunity to speak on the Bill, acknowledging that it is a Private Members' Bill and notwithstanding the fate of those in the ordinary course of events. I congratulate Fianna Fáil on bringing the matter before the House at this time. It is an issue many Members have dealt with privately and face to face with banks in recent years. My history on this goes back to 2008, when the issue first raised its head.

What we need as a matter of urgency is support for those who find themselves under pressure. I hold no brief for those who have made no attempt to deal with their debt problems. The fact is that there are a great many people out there who I, and I am sure many Members, have advised that they must pay something. They must pay what they can. Many people have done that and they are entitled to be treated with respect. They are entitled to be treated with the same respect with which the banks were treated just a few short years ago when they found themselves in difficulty. The taxpayers of this country - perhaps without their permission, which is a matter for another debate - came to the rescue of the banks and bailed them out. That is what happened. Now, the banking institutions have an opportunity to repay the trust they received in the first instance.

I will not mention banks by name. I have been in and out of most banks in the past years and in the past week as well. I have been in and out of the courts on numerous occasions over the past five or six years along with constituents. Some banks went out of their way to help the borrowers and they were prepared to draw up a restructuring of loans. However, some banks did not do so; they looked at the debt and they decided they would wait until the equity changed and the price of property rose and repossess the property at that stage. Some banks showed no compassion from day one and they were absolutely callous in how they dealt with a borrowers' circumstances and situations. They were certainly not prepared to accommodate borrowers. We need to deal with that kind of situation as a society because it is our duty to stand by people who have made a genuine effort. Some people bought property worth €1 million and they have also taken a hit but I would not expect the State or anyone else to help them to live in that kind of luxury. However, I would expect in the case of a family home that some provision would be made to assist those who might otherwise become homeless on the side of the road. We have a moral obligation to help them.

I sat across the table from a lending institution three times this week with three different customers. I was told that the banks, by their criteria, had determined that the borrowing was unsustainable. This was the same borrowing that the lending institution had afforded the borrower just a few short years ago. Did the bank take into account that the individual might not stay in the same job forever, that circumstances might not remain the same? These circumstances were brought about by the lending institutions' own stupidity, for want of a better description. I will not dwell on the situation where people were loaned money on an interest-only basis with no proposal for repayment, good, bad or indifferent. The lending institution has now informed them that their loans are unsustainable; they were unsustainable the day the loans were awarded in the first place, so I ask what are they talking about.

This Bill is not what I believe is required because we need regulations specifically to oblige the lending institutions to elongate their loans, to extend them over a longer period and to provide for a warehousing of part of that debt for a period of time, just the same as the country was obliged to do because otherwise we would not have survived. Unless the country was given that kind of facility from the IMF and from our European partners, we would not have been able to survive. I congratulate the Government on the tremendous success it has achieved in that area.

The Irish people have been trusting of the lending institutions. They agreed on the necessity to ensure the lending institutions prevailed, that if everything went to the wall then everyone would suffer. There is an opportunity for the Central Bank to put in place regulations to ensure nobody is evicted from a family home once he or she has made an effort - in some cases a valiant effort - to meet his or her commitments.

7:05 pm

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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Deputy Michael Kitt is sharing time with Deputies Robert Troy, Éamon Ó Cuív and Seamus Kirk.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I compliment Deputy Michael McGrath for introducing this Private Members' Bill. He has caught the mood of the discussion in the media and on the airwaves in view of some recent highly publicised cases. A total of 37,484 families have mortgages in arrears for more than two years and are in danger of having their homes repossessed. This is a very chilling figure. I hope Deputy McGrath's Bill, the Family Home Mortgage Settlement Arrangement Bill 2014, will remove the bank veto on solutions for mortgage debt. Banks should not be allowed to dictate the pace of any restructuring arrangements but it is a very worrying fact that repossessions have doubled in the past few years. Decisive action is required to ensure the number of repossessions is not increased in 2015.

The Bill proposes to refer these cases to a court of law but these cases have already come before the Circuit Court, with more than 8,000 civil bills for an order of possession lodged in the Circuit Court. Both the Taoiseach and the Tánaiste, as well as many Ministers, have stated they are not happy with a situation where some banks ignore the recommendations of personal insolvency practitioners to deal with distressed mortgages.

I am very concerned that banks have been allowed to use legal action as a means of meeting the targets in the mortgage arrears target programme. More than 15% of mortgage accounts for family homes are in arrears and they account for more than 20% of the outstanding value of all family home mortgages. The Central Bank figures show that the mortgages on 117,000 principal home dwellings are in arrears and 60,000 of those are in arrears for one year or more. With rising prices there could be a greater risk of homes being repossessed.

I refer to an article in last Monday's The Irish Timesby Dr. Rory Hearne, about the housing crisis, as he termed it. He wrote that Central Bank rules have allowed banks to reclassify mortgages as restructured if a legal notice for repossession has been issued. This has been done to 50,000 homeowners, with a potential flood of repossessions and evictions if the trends in the courts continue. I cite the lovely Irish saying that a problem shared is a problem halved but a mortgage problem cannot be halved and this is becoming very clear to people. I have met constituents who made that point to me. I would welcome any assistance from banks but there is no engagement to deal with the serious issues facing people. I hear information about interest charges and surcharges on loans and the banks are very quick to explain the charges per month and per annum applying to accounts in arrears. This is an issue which demands our urgent attention.

Growing numbers are facing the prospect of losing their family home because they cannot repay their mortgage. The House has been informed that the number of home repossession cases has increased so dramatically that additional court sittings are being scheduled to deal with them. The Seanad was told recently that 8,000 civil bills for an order of possession were lodged in the Circuit Court last year. The pressure is so great that some cases are being heard by county registrars rather than by a judge. The problems are clear. It has been suggested that this surge is because the banks believe that rising house prices in Dublin in particular have given them an opportunity to recoup some of the losses they had faced when forced to sell a property.

Deputy Michael McGrath said the banks should have a clear strategy to ensure they do not take any further legal action for repossession. His Bill is a fair response and it should be supported as an appropriate legislative intervention which could have significant implications for people who are in mortgage distress.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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I welcome the opportunity to speak to this extremely important issue which affects tens of thousands of people across the length and breadth of this country. I raised this issue as a Topical Issue before Christmas. The Minister who was taking the debate said I was scare-mongering, that the issue was not so serious. We now know its seriousness because each of us meet constituents every day in our clinics who tell us about the special court sittings every month in Mullingar, Athlone and Longford, for example. On average, 40 to 50 cases of family home repossessions are being presented to the court. This is not scare-mongering.

These are the hard, cold facts of what is happening at the moment. Two weeks go, we had the pitiful situation where the Taoiseach, in reply to a question from my party leader, said he was "not happy" with the banks ignoring the recommendations of personal insolvency practitioners for dealing with distressed mortgages. He was hopeful, he said, the PIPs and the banks were listening to him when he brought in their representatives and articulated his concerns. Where is the leadership there? It is greatly missing. Where is the hope for the thousands of affected families looking on? Where can they find evidence the Government is taking this issue by the scruff of the neck?

The reality is that the banks are still calling the shots and the personal insolvency legislation that was initiated more than two years ago by the then Minister for Justice and Equality, Deputy Alan Shatter, is not working. When the former Minister brought that legislation before the Dáil, he predicted that 21,000 applications would be dealt with in the first year. As we know, at the end of 2014, just a handful of cases were dealt with and only a fraction of them related to family cases. This is happening at a time when 118,000 families are in arrears, 60,000 of them for more than one year and 37,000 for more than two years. In my own constituency, almost 20% of mortgages in Longford are in arrears, while the figure for Westmeath is 15%. That is confirmation that the system introduced by the Government to help these families is failing. It is proof that the banks' veto is intolerable and must be changed. We advised against including that veto in the Bill when it was published.

We are not the only ones making these points. Members of the Minister of State's party are saying the same. This week we heard on "Morning Ireland" that a number of Government backbenchers are bringing forward legislation in recognition that the Government's system is not working. I take this opportunity to acknowledge the courage of those Government backbenchers in producing legislation to address the problem. I ask the Government to do the same by, at a very minimum, affording the Deputy in whose name the Bill will be tabled the opportunity to bring it to the floor of the House. That Deputy should have the chance to present his proposal that the period of bankruptcy be reduced from three years to one year. Let us have the opportunity to debate that proposal. In indicating his intention to bring forward legislative proposals, this particular Deputy referred to what he called the "shocking statistics" relating to the lack of help available to people with mortgage arrears. That is why he is bringing forward his proposal, in order to give ordinary Joes a hand. I ask the Minister of State and his colleagues not to do to that legislation what they did to the Bill the same Deputy introduced concerning the erection of wind farms. The latter proposal was allowed to be brought forward in the House but has been gathering dust on a shelf somewhere ever since.

People might argue that some of the problems we are facing today are a consequence of decisions made and policies initiated by previous Governments. That is true in some cases. There was an over-reliance on incentives for property investment, but two wrongs do not make a right. This Government has been in office for four years and it is high time something is done to support struggling families. Since 2011, the number of people in arrears for more than 90 days has doubled. The banks, once again, retain control. Bankruptcy is an option for some of the investors, entrepreneurs and risk takers in our society who have created employment down through the years. Those people must be supported to be in a position to create more employment. However, for the purposes of the Bill before us today, we are talking about ordinary family homes. The vast majority of people in mortgage difficulty who come through the door of my clinic, as is surely replicated throughout the country, want to retain home ownership. Their home is their castle and they want to keep it. A couple came to me recently who had borrowed €135,000 to buy an apartment, which reflected the value of the property at the time. Today, it is valued at €50,000. This couple are making a repayment every month, but the bank wants them to sign up to an agreement to pay €1,000 per month for 30 years. For an original loan of €135,000, they are being asked to repay €360,000 and they were told to take it or leave it. There is nothing to bind the banks to be reasonable or practical in their dealings with people in that situation. Dealing with this issue is necessary as a social good. It makes good social sense as well as good financial sense to ensure people can remain in their family homes.

The reason the banks are ramping up their efforts is that house prices are increasing. They have only one focus, namely, to return to profitability and to hell with the consequences. The Government, unfortunately, is stuck in the mud and seems to consider it acceptable that the banks should direct and dictate the pace. Why does the Government not accept this legislation? Members opposite are forever saying there is nothing positive coming from this side of the House. Here is a positive proposal which will ensure that where home owners can come forward with a real, sustainable and practical solution, which is independently evaluated, it is binding on the banks to accept it. In such circumstances, the banks could look at such options as splitting mortgages, implementing a debt for equity arrangement or reducing the repayment capacity. This would ensure people who have the wherewithal to put forward a sustainable solution are accommodated.

I acknowledge that in some instances, no sustainable solution will be available. Where that is the case, the mortgage to rent scheme should come into play. This was another scheme the Government claimed would keep people in the family home. Fewer than 100 home owners have qualified for that scheme in two years. I am attending a meeting with their bank next week of a couple who have no hope of repaying the mortgage they took out. They bought out their local authority home and owe some €200,000 on it. Both are in their late 50s and their only income is social welfare. Their application to avail of the mortgage to rent scheme was rejected because there are only two of them living in a three-bedroom house. The bank is telling them they cannot stay in their home, but it will ask the local authority to provide them with a two-bedroom house. That is terribly unjust. We must ensure the mortgage to rent scheme is available to people who cannot come forward with a sustainable solution.

The time for procrastinating over this issue is long gone. The time for platitudes and bringing forward proposals without any follow-through is past. The time for being hopeful, as the Taoiseach described himself some weeks ago, is over and finished. It is time now for action. It behoves all of us, across all parties and none, to bring forward legislation that will ensure, at a very minimum, after all that people have gone through, including wage reductions, job loss and so on, that they can hold on to their family home and have a roof over their heads. If we can agree on nothing else in this Dáil, we should agree on that and put all supports in place to ensure it happens.

7:15 pm

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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It is difficult to follow Deputy Troy, who was very eloquent in his articulation of what needs to be done. Most of the solutions that have been put in place to address this issue are not actually solutions.

It appears the Government is hoping that if it sits there for long enough, this problem will solve itself and it will not be obliged to get involved. I am absolutely stunned that the Taoiseach thinks this Bill might be unconstitutional. I would be very surprised if he was given that legal advice. When one looks at the constitutional sections on private property, they state that one cannot pass a general law abolishing private property as happened in the Soviet Union, for example, during the 1930s. However, the Constitution does state that property rights are subject to the "exigencies of the common good". Were the Minister of State to check the emergency legislation Fianna Fáil introduced when it was in government on the advice of a well-informed Attorney General, he would notice that at the beginning of that legislation, there is paragraph after paragraph outlining the crisis we were in and stating that therefore, the exigencies of the common good meant that property rights, including pension rights and so one, could be interfered with. The Government of the day was given rough guidelines as to how far one could go with that interference. Nobody can be absolutely certain unless a court case is taken. The Government is stating that despite there being hundreds of thousands of people in mortgage crisis and despite the steps taken by the Government having been utterly ineffective, the exigencies of the common good do not involve curtailing the absolute veto of powerful banks against the people. I find that extraordinary. I find it extraordinary that anybody would believe a court in this country would rule that a curtailing in a detailed process of that right might be unconstitutional.

I compliment Deputy Michael McGrath on his excellent Bill and note Fianna Fáil does not suggest the mortgage holder should have the whip hand in this regard because the process involves allowing a judge in a court to make the final decision as to what is right and reasonable in the case. Therefore, the discretion or the balance is not on one side but it is a balanced solution.

7:25 pm

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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Hear, hear.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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In any event, the unsecured creditors do not have these rights. Consequently, it is time to stop hiding behind the Constitution. I put it further to the Minister of State that since this Bill is urgently needed, since the Government's mortgage-to-rent scheme has failed completely, having helped 50 people out of the 117,000 people in arrears, of whom 60,000 are in arrears of more than a year and since the Personal Insolvency Act has made no dent of any material amount in the number of people in arrears, if the Government really believes the Bill is unconstitutional, it is time to bring forward a one-line constitutional amendment to correct it.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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Hear, hear.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I am sure the Government would get more support for that amendment than it might get for many other things it has been considering in the Constitutional Convention.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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Hear, hear.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Therefore, the Minister of State should not hide behind the Constitution because the Constitution is the people's document. It was put there not to protect banks but to protect the people.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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Hear, hear.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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The reality is the Minister of State and I know what happens. Banks are demanding that people sell houses. If, for example, someone has a mortgage of €250,000 and could afford to pay on €170,000, the bank will not cut the deal. The bank takes the house, sells it at €120,000 and then tries to collect the balance in some future debt on that family.

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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Shame.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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That is happening all the time.

I will hear this great argument put forward to the effect that the Government could not help the ordinary people because of the moral hazard. Most ordinary people who bought family homes did so in good faith and paid the price in the market at the time. In the case of family homes, they bought them because they wanted to have a family home. Talk to them about moral hazard when, at the time at which they bought, it was the only price they could pay. I do not refer to trophy houses here but to ordinary three-bedroom houses and other ordinary houses or apartments people bought. Second, there were reasonable expectations, as I often have pointed out. In the case of two civil servants who bought a house together back in 2006, in the normal course of events they would have expected that by 2014, not only would their income not have fallen but that it would have increased. Things change and it was necessary to make hard decisions but to talk about moral hazard in such a situation and for banks and bankers to talk about moral hazard is absolutely obscene and absurd.

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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It is a joke.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Basically, tá na maidí ligthe le sruth. The Government is like a guy sitting in a boat who has allowed the oars to fall out and who is letting the boat drift down the river. In the meantime, the rate of repossession is escalating. Next week, representatives of Phoenix Project Ireland are coming to Leinster House. I have worked with the project closely since I was a Minister and its representatives will tell one of the problems being faced by people week on week because of the intransigent view of the banks. What is it all about? It is that the bankers wish to make as much money as possible and will walk over everybody in this country, including the Government, to do so. They know the Government will sell its share way ahead of time and the bankers then wish to make a killing on the market when the banks go on the market. The Government should make two decisions. First, it should force resolution that is reasonable and balanced in favour of the citizen and second, that no further bank shares will be sold until we as a people have recouped all of our investment into all of the banks.

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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I call Deputy Mathews. There is a new line-up and a substitute has been brought into the team here. The Deputy has four minutes, two from Deputy Kirk and two from Deputy Ó Cuív.

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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I owe a big debt of thanks and gratitude to Fianna Fáil colleagues present and in particular to Deputy Michael McGrath for bringing forward this legislation. It is shameful that the Government has not attended to the huge problem that has arisen and that has been staring it in the face since 2008 or 2009. Because my time is short, I intend to read a statement into the record. The real banking inquiry should be what Members are talking about. The other one being held by the Oireachtas joint committee is looking in the rear-view mirror. Here is where the problem lies and here is where the citizens are hurting, as Deputy Ó Cuív has noted. The bank boards and the auditors clearly and measurably are at fault. I have evidence to hand in a one and a half page statement, which I will read into the record because I do not have enough time.

A couple of things happened within the last 48 hours. The chief executive of Bank of Ireland announced with pride that profits of €900 million are being reported in the most recent results, a turnaround of €1.5 billion due to the real hard work of the bank and its people. He stated the bank made mistakes and that he was on the team that made the mistakes. Why is he not paying for them? I have been involved pro bonoin five cases with the two so-called pillar banks where, again on the evidence, they are out of control operationally. They are not even communicating with the customers who are being beaten up and assaulted financially. I use those words advisedly because I have had 20 years of experience in banking and restructuring loans and coming to agreements. There are no agreements at present. Although they say there are agreements, there are not; there are guns to the heads of customers.

Split mortgages are a joke and are not done for businesses or people. It is obscene to believe that 60,000 mortgages in arrears for more than a year means, at a multiple of three per household, that 180,000 citizens are in deep distress. How dare a temporary investor like Wilbur Ross make a profit of €500 million on an investment in Bank of Ireland guaranteed - maybe not on paper but in reality - by the State? He, the most powerful and influential director on the bank’s board, put in place a policy of no loan write-downs or write-offs in restructurings. How obscene was that? He has even left the country.

The Government should wake up out of its arrogance. It accuses us on this side of scaremongering but this is reality. I told the late Brian Lenihan in 2009 that there will be true losses in the Irish-owned banks of €65 billion on commercial-type loans and a minimum of €30 billion on the mortgage loan books. That is exactly what occurred. Deputy Troy gave an example of negative equity. There is no such thing as negative equity; it is a loss. It is forcing a loss or realising a loss by putting in receivers on loans. My paper shows how the banks and their boards should be collectively at the banking inquiry answering questions about the evidence in their balance sheets of how they broke the domestic banking sector by bringing the system from three times to over five times the size of national income in six years. That was a recipe for a Ponzi result to a credit pyramid bust.

7:35 pm

Photo of Séamus KirkSéamus Kirk (Louth, Fianna Fail)
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This is important legislation and we are all grateful to our colleague, Deputy Michael McGrath, for introducing it in Private Members’ time. It is timely and important in getting to the nub of the problem affecting many families as various Members outlined. Having 37,484 families in mortgage arrears for over two years, with many more in arrears under that time, graphically illustrates the challenges involved.

The intransigence of the banks in this regard is clearly a problem. Only 129 personal insolvency arrangements involving secured debt have been made by the Insolvency Service of Ireland since it was established in 2014. This highlights the problems we need to confront. There is an avalanche of cases for repossessions coming before the courts. Ours is still a local and community-based society. At the core of many of the difficulties with mortgage repayments is unemployment. Loss of a job diminishes or eliminates a person’s or family’s repayment capacities.

Should we have a State employment agency that registers those with distressed mortgages to ensure they will be advised of the availability of employment from the large range of jobs that are thankfully coming on stream? For someone in a distressed mortgage situation, foraging for employment is a much greater challenge than it is for someone who is not. Given this particular problem, it is important to have a support mechanism in place to help those with distressed mortgages. If a personal representative of someone in such a position could tell the courts in a repossession hearing that their client had just secured employment and their circumstances had changed because of the intervention and advocacy of a State agency, then it would change the dynamics very considerably. I suggest the Minister of State gives some consideration be given to an arrangement such as this.

Photo of Aodhán Ó RíordáinAodhán Ó Ríordáin (Dublin North Central, Labour)
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On behalf of the Minister, I thank Deputies for their contributions in this debate. I am always happy to take legislation in the spirit in which it is drafted and on its merits. Every Member is doing their best to find solutions to the issues in question. The finance committee has done some sterling work in tackling the issue of mortgage arrears. Many Deputies opposite made constructive comments. However, before they lose the run of themselves, they remind me of arsonists giving out to the fire brigade on how best to put out the very fire they started.

The Government is proposing that the House declines a second reading of this Bill introduced by Deputy Michael McGrath for several reasons. The approach proposed is over-simplistic and risks creating a range of serious negative effects. The Minister believes the introduction of such measures would most likely discourage lending for house purchase purposes and exert a negative impact on a recovering housing market. The Bill is not fully thought out on fundamental issues. It would create extensive legal uncertainty and lead to a high risk of legal challenge which does not serve anyone's interests. The Minister has already completed a review of the insolvency legislation and has clearly indicated to the House her intention to bring forward proposals in this regard.

The Minister appreciates, as does the Government, the genuine concerns that Deputy Michael McGrath and others have in raising this important issue. She is fully aware of the stress experienced by families living with unsustainable mortgage arrears who want to pay their way and keep their homes. It is for this reason that she has underlined her intention to put forward proposals focusing on this situation.

Some of the figures cited in the debate on the Bill give a distorted picture of repossessions because they risk causing further alarm, unnecessarily, to borrowers who want to engage. Preliminary figures available to the Department of Justice and Equality indicate the number of civil bills for repossession issued across the country in January 2015 was fewer than the monthly average for 2014. While this is not a cause for great celebration or to belittle the fact that proceedings are being issued, it belies some of the language used and some suggestions of an explosion or avalanche of repossessions.

For example, while I have no doubt the figures for the number of repossession cases listed before the Donegal courts quoted yesterday are correct, the fact is those figures refer to the number of repossession civil bills issued, not to the number of repossession orders actually granted. That is a very important distinction. For the whole of 2014, the average numbers of civil bills issuing each month in Donegal were higher than those issuing in January 2015. Nevertheless, for the whole of the year, only nine possession orders were granted in Donegal.

In stating this figure, I am not by any means downplaying the stress felt by people arising from court proceedings. However, it is important to emphasise that it absolutely is not the case that all or most civil bills for possession issued will lead to possession orders being granted by the courts or to a borrower who wishes to engage, losing their home. Lending institutions often issue civil bills for possession in an effort to seek engagement with borrowers who have not previously engaged with their lenders. Many of these actions result in further negotiations between borrower and bank and in an arrangement which allows a borrower to stay in his or her home.

It remains the Government's priority to ensure repossessions of family homes are absolutely a last resort, where all other avenues to resolve the arrears situation have been properly considered by the lender and have been exhausted. It is for that reason the Minister's proposals intend to focus on this issue, as she indicated yesterday.

The Land and Conveyancing Law Reform Act 2013 was raised by several Members. The Act’s objective was to deal with the legal uncertainty which had arisen as a result of several High Court judgments concerning remedies proposed by lending institutions in cases of mortgage default. The Act merely restored the position which was thought to apply when the Land and Conveyancing Law Reform Act 2009 was enacted, namely that the relevant provisions of the law in force prior to the commencement of that Act on 1 December 2009 would continue to apply to mortgages created prior to that date.

It does not give any new powers to lending institutions and includes a new provision which benefits borrowers in mortgage distress.

Section 2 of the Act provides that in any future repossession proceedings in respect of a borrower's principal private residence, the court may adjourn proceedings so that a proposal for a personal insolvency arrangement under the Personal Insolvency Act 2012 may be fully explored as an alternative to repossession. Unfortunately I have to conclude at that point.

7:45 pm

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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I am disappointed with the Minister of State's response although I did not expect much more. If he is accusing us of being arsonists on this side of the House, his party was certainly the accomplice with the bellows in the sense that the policies it was advocating when it was in opposition were equally expansionist and inflationary. There is no point in trying to hide the fact that it campaigned in numerous elections to spend more and tax less. The Minister of State should not just dismiss a well-intended Bill that addresses a fundamental need, not only in the context of families facing repossession, difficulties and mortgage arrears but also in establishing a principle whereby banks would be brought to heel to an extent by Parliament, ensuring they address the fundamental need of home ownership which we all espouse in this House. We do not like to see families dragged from their homes and put on the side of the street. Every effort should be made to retain a family within its home. That is the purpose of this Bill. It is about tipping the scales away from the advantage the banks have over distressed families and towards giving people a break and another opportunity in life.

We are not talking about trophy homes here. We are talking about people in three-bed semi-detached houses in estates throughout the country who have a home they want to reside in. They do not see it as a capital investment but as a place where they live and rear their children. They should not be under constant pressure and stress from banks that have been saved by the State at a very high cost to the taxpayer and to the country in general. We talk about morality and moral hazard, and there is a moral obligation on us to ensure that the banks behave in a manner consistent with basic decency and fairness. That is not happening and, as the Minister of State can see, the number of repossession orders is increasing dramatically in courts throughout the country. That is going to move forward consistently in terms of the numbers because the banks now see a recovering property market and increased equity in the home. The mortgage holder is still distressed in the sense that he or she cannot service repayments but the gap is closing and the banks are now moving with haste on repossessions.

The Bill is well thought out. The most disturbing point in all of this is that it was forewarned in the sense that when the Government brought forward the personal insolvency legislation and established the personal insolvency practitioners, PIPs, it was pointed out that the banks retained the veto. When we talk about morality, it would be an oxymoron to put banks in the same sentence as that word. It simply is not credible for us to suggest the banks will behave in a moral way or take into account the needs of individuals in society. Their fundamental loyalty is to the balance sheet and their shareholders and that is whom the banks are out to please. The Government is fundamentally wrong and complicit in allowing the banks a free run on assessing what is a sustainable solution, what a family should pay, or whom they pursue through the courts. We have to tip that balance back in favour of homeowners for many reasons, but first and foremost because it is the right thing to do. These people bought homes full of expectation, belief and very often hope and now all of that is shattered through no fault of their own. This was brought about through irresponsible lending practices by the very same banks that the State has saved.

The Government should not take credit for a recovering property market. The two groups that have most interest in a recovering property market and an inflationary housing policy are the banks and the Government. The Government is complicit in trying to inflate the property market again to repair the balance sheets of the banks and let them off out the gap again.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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Hear, hear.

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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We have to have an affordable housing policy and if we have learned anything from the past it is that affordability should be assessed independently as opposed to the banks being the ones deciding lending policy, the payment capacity of families and the affordability aspect as well. The banks do not behave in that way.

The Government was accused of being arrogant. It is not arrogant; it is weak and meek when it comes to the banks and that is its problem. If there was a bit of arrogance or cut about the Government, it might stand up and square up to them on repossessions and mortgage arrears. It has thrown in the towel very quickly and did not even rise a gallop or raise a sweat in trying to force the banks to come to heel in some way that is fair, reasonable and rational. The idea that this would undermine and overwhelm the legal system and there would be fundamental change in property and entitlement does not stack up.

The Bill provides for giving independent oversight to somebody who can adjudicate independently, in order to ensure that a fair assessment can be made as to what is a sustainable solution. This would allow a person to present to the bank without the bank having the whip hand or the veto. We have that every day of the week in the context of the independence of our Judiciary, where an independent person sits on the bench and assesses and makes a decision. We have it in this House, where the independent Ceann Comhairle adjudicates and makes findings. However, the bank will decide what is sustainable, fair and affordable, but it will be always from the point of view of the bank, the shareholders, the balance sheet and profit.

Deputy Mathews is right that we now have banks clapping themselves on the back for the profits they are accumulating. We need only look at the way they are addressing variable rate issues. It is very easy to make profits when they have a captive audience. People cannot pack up their mortgage application and go to the next bank because there is no competition in the marketplace. Everybody is trapped or indentured to the bank they are currently with. The idea of going somewhere else for a loan is an aspirational notion. It is time the Government stood up and was counted in the context of addressing a societal issue that goes to the heart of what we are about here, that is, fairness and decency.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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Hear, hear.

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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That is not evident in anything I have seen regarding how the banks are treating individuals who are vulnerable and under stress. Taking the whip from their hands and giving it to somebody else is a sensible, solid proposal which has already been highlighted in this House.

I am disappointed in the dismissive approach that has been taken and am not accepting the fact that 37,000 people are two years in mortgage arrears. It is highly unlikely that they are all up in Gorse Hill in Killiney. There are ordinary families throughout the country who would like to be able to pay their mortgage and make an effort to settle their debt, but want a certain element of security and to know they can do so in a manner that has been validated independently. Over the next months, the Minister of State is going to see an increase in repossessions because the banks now know that the Government, using its moral authority, will say nothing but will sit meekly and weakly on its Government benches. Every now and again, the Government Deputies will stand up and say, "well, we told you so when we were in opposition, we did not support bank guarantees and would have stood up to the banks".

The bottom line is that the Government now has an opportunity to do the right thing, not for the banks but for the people.

7:55 pm

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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I thank every Deputy who contributed to the debate over the past two nights. I am sure we all agree that we are elected to this House to do what we regard as the right thing. I have no doubt whatsoever that if the Whip was not applied tonight, this Fianna Fáil Private Members' Bill would pass with overwhelming support. If I was generous, the reasons cited by the Government for not accepting the Bill are flimsy, but if I was honest and realistic, the reasons cited are nothing short of pathetic.

The Taoiseach said yesterday during Leaders' Questions that the Fianna Fáil Bill was unconstitutional. The Minister gave a very detailed response last night and said nothing of the kind. The furthest she went was to say one aspect of the Bill might engage constitutionally protected rights. That is entirely different from what the Taoiseach said during Leaders' Questions yesterday. The essential premise of the Government is that if a bank owns 34% of one's debt, it has no veto, but that if it owns 36%, not giving it a veto would be unconstitutional. When I read the Constitution, I certainly do not see this in it. It is absolute nonsense. The only constitutional rights the Government is seeking to protect are the constitutional rights of the banks because it is certainly not seeking to protect those of ordinary families. If constitutional change is required to bring about this change and enact the Bill to protect family homes, let us make it. Two referendums will be held on 23 May. There is a perfect opportunity to put this question to the people if the Government was interested in protecting family homes.

I am ashamed, as a person and a Member of this House, at the manner in which some of the banks are treating people. I mention people's physical and mental health. People are under enormous stress and going to bed every night wondering whether another threatening letter will arrive the following day or if there will be a move towards repossession proceedings. I mention the numbers of suicides and families divided. People are absolutely distraught and coming to our clinics every week with stories about how they are being treated by the banks. The Bill is about protecting the family home, not mansions in Killiney which are caught up in a complex web of commercial debt. It is about protecting ordinary homes for ordinary people who are under extraordinary pressure.

Let me contrast how ordinary people are treated by the Government with the way private equity funds, or so-called vulture funds, are treated by it. Does the Minister of State know how many times the Minister for Finance and his officials have met representatives of private equity funds since beginning of last year? They have met representatives of vulture funds no fewer than 28 times, including Apollo, Lone Star and Soros. I could name all of them. How many times has the Government met ordinary people? They will get a hearing at a constituency office from the sympathetic Deputy, the very same Deputy who will come into the House tonight and copperfasten the power of the veto the Government has given to the banks. That is the reality. It is also the reality that the Government does not know how many mortgages it has allowed to be sold to private equity funds with no statutory protection being afforded to these mortgage holders. The Minister said it could be approximately 16,000, but we do not know. People have been left in limbo and a legal no man's land and we are all hearing about the situations that arise as result.

The two major responses of the Government to the mortgage crisis have been failures. The Insolvency Service of Ireland is not dealing with the issue of mortgage debt in a satisfactory way and the mortgage arrears target programme has been hijacked by the banks because they are allowed to define a sustainable solution and use a threatening legal letter as a sustainable solution. The Bill is not perfect, but it is an honest effort to address what is a huge social crisis. The Minister of State might be interested to know, in putting forward his version of the repossession statistics, that for every house lost by way of a repossession order, three family homes are lost by way of voluntary surrender or a voluntary sale forced on a family by the banks. The Government's answer seems to be to force people down the bankruptcy road. Under no circumstances should ordinary people in mortgage arrears have to become bankrupt to extricate themselves from a mortgage arrears problem. The bank veto must be brought to an end. The Government mistakenly gave the banks the power of veto under the Insolvency Service of Ireland. That is one of the reasons it is not working and this is the time to remove it.

Question put:

The Dáil divided: Tá, 47; Níl, 70.


Tellers: Tá, Deputies Seán Ó Fearghaíl and Michael McGrath; Níl, Deputies Joe Carey and Emmet Stagg.

Níl

Question declared lost.

The Dáil adjourned at at 9.25 p.m. until 9.30 a.m. on Thursday, 5 March 2015.