Colm Burke (Cork North Central, Fine Gael)
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I thank the Minister of State for being here at this late hour. This is an important issue. I have come across a number of people who have applied to their respective local authorities for loans. The process seems to be cumbersome and drawn-out. To give an example, I we contacted by a couple who applied for a loan over six months ago. They were advised by the local authority that they had to get a mortgage protection policy with a particular insurance company and they proceeded to do so.

They filled out all the documentation over five months ago. They contacted the insurance company consistently throughout January and February and were advised that the company could not give them the information about whether they had been approved for mortgage protection. Eventually the local authority wrote to them on 8 March advising them that they had been turned down for mortgage protection. Therefore, they were back to square one and had to go and organise mortgage protection. However, it turns out that the mortgage protection company had notified the local authority on 21 January and the local authority did not notify the loan applicants until 8 March, a gap of six weeks. The problem now is that by the time it eventually came for approval to the local authority the house had gone back up on the market and the price has gone up by €20,000. That is not acceptable.

It reminds me of a time when I dealt with nothing but house purchases and when people were on 18% bridging finance. The entire process was drawn out. People were on bridging finance for up to six months. They could not draw down the loan until they were registered as owners of the property, the mortgage was signed and a mortgage was registered in favour of the local authority in the Land Registry or the Registry of Deeds. We are going back to the same system as we had in the 1980s, where processes are far too slow and hurdles appear to be constantly put in place. It is time there was an audit of every local authority regarding how many applications they are processing, the timeframe from the time the application is made to the time it is approved and then with regard to the draw down of funds. Again, I have received a complaint about the delay in the draw down of funds. Vendors are getting frustrated and they are using conditions in contracts to get out of contracts because they know they can get a higher price for the property they are selling. The price of property is going up by the day. It is a major problem. It is an issue we must deal with immediately. There must be a fast, efficient system.

The other issue is why local authorities are advising people that they must have a particular mortgage protection policy. It is normally left to the person's own devices to get mortgage protection. Yes, it must have certain rules and must be in accordance with what the local authority has in place, but why is it specifying that the person must go through its company first and if the company turns the person down, he or she can start to seek mortgage protection from another company? Finally, the mortgage protection company has been engaged by the local authority. That company advised this person that the company could not correspond with the person to tell the person whether cover was being provided. That is wrong. These are the people who will be paying the premium and they are the people who should be told first whether they have the policy.

These are the issues that are arising. I am hearing this constantly from legal colleagues as well. It is a long, drawn-out process. It was fine when the market was stable and prices were not increasing dramatically. It is a different ball game now, and we have to deal with it.

Malcolm Noonan (Carlow-Kilkenny, Green Party)
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The local authority home loan is a Government-backed mortgage for first-time buyers and other eligible applicants delivered through local authorities. The scheme provides mortgage financing for those who are unable to secure a sufficient commercial bank loan. It was introduced on 4 January 2022, replacing the previous Rebuilding Ireland home loan.

It is worth setting out at a high level how the approval process operates. While my Department has no direct role in processing individual applications, it provides guidance and supports to local authorities to assist them in scheme delivery. A credit policy has been issued, as well as supporting guidelines. The receipt and processing of the local authority home loan is a matter for individual local authorities. The length of time required to process a loan varies depending on the specific details of each application and the quality and completeness of the information received. Only when all the required information has been provided can the application be considered as validated and sent to the Housing Agency for review by its specialist team of underwriters who issue recommendations to the local authorities to approve or refuse applications, on average within five calendar days. The local authority credit committee decides whether a loan application should be approved. In most local authorities, the credit committee meets monthly, depending on the number of applications on hand. The credit committee's decision is then communicated to the applicant.

From this point onwards, the house purchase process reverts to the approved applicant. The length of this process is largely dependent on the applicant finding a house and the conveyancing process, and can vary depending on each transaction. Since many elements of the mortgage process are not under the control of the local authorities it would not be realistic to set deadlines for processing times. I note that one element of the process that is internal to the public sector is the underwriting decision on validated applications. That is completed on average in five days, which I consider to be timely.

My Department is in regular contact with local authorities regarding the local authority home loan and stands by to offer any assistance or guidance that is required to support the timely processing of these loans. At this stage I do not see a need for a policy change or audit regarding processing. However, my Department keeps the operation of the local authority home loan under review and will respond if further information comes to light, as the Deputy has brought forward tonight. I do not have county breakdowns but under the previous Rebuilding Ireland home loan 2,700 home loans were drawn down from 2018 to 2021. The data on draw downs is not yet available for the local authority home loan, which commenced on 4 January this year. The underwriters for the home loan have reported that 26 Rebuilding Ireland home loan applications and 213 local authority home loan applications were processed by the Housing Agency in April 2022. Of the 213 applications, ten were invalid, 82 were recommended for approval, which is 43%, and 121 were recommended for decline.

The Deputy also asked a question about the mortgage protection policy, which is left to the homeowner. I will make an inquiry within the Department about that for him.

Colm Burke (Cork North Central, Fine Gael)
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I am concerned about this. It reminds me of the 1980s when there was a long, drawn-out process for getting loans. We are back to square one. We are in a world where the market is moving very fast and we must respond accordingly. It is like with the housing assistance payment, HAP, scheme where landlords have started saying that if somebody is drawing the HAP, they would not take the person on as a tenant. This will happen now with vendors. They will say they will not take people on as purchasers if they are going to get a local authority loan. That will happen and there will be a large number of people excluded from the market.

We must deal with the real world. A credit committee meeting once a month is totally inadequate. That is an issue we must prioritise. We must examine it now and see what can be done to expedite the process. If there is a step-by-step process set out for the applicants and each of the boxes are ticked before the local authority gets the application, including all the documentation, it should not take six months for the application to be processed. This is happening with some of the other financial institutions as well; it is not just the local authorities. It is causing massive problems for young people who have only one opportunity of getting on the housing ladder. What if they miss it?

The couple I am dealing with, and I have dealt with a number of others who have the same problem, are unlikely to come back onto the market again. This is the sad problem we have. That is why this issue must be prioritised before we have the same thing as happened with the HAP scheme whereby the vendors will say that if it is a local authority loan they will not get their solicitors to send out contracts to people. I ask the Minister of State to give serious consideration to what I have said.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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If I could comment, and I probably should not, it occurs to me that we are living through a housing emergency and if the Housing Agency can turn around a recommendation in five days to a local authority, that the local authority should then take a month to look at that recommendation is patently ridiculous. It is certainly not the local authority recognising anything by way of an emergency.

Malcolm Noonan (Carlow-Kilkenny, Green Party)
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I take those points on board. There are very important issues raised by the Deputy that we have to address.

The processing time of individual loans can legitimately vary. There may be specific information required to confirm eligibility or creditworthiness, depending on the facts of the case. There may be delays in the transaction that are not under the control of the local authorities, but I accept that there may be some variations in processing times across local authorities. I agree with you, a Cheann Comhairle, that this needs to be addressed. I will ask my Department to look into the concerns Deputy Colm Burke has raised this evening. It is really important we do so. The last thing we want is to inhibit families from taking up the important opportunity to be able to purchase a home.