Fidelma Healy Eames (Fine Gael)

I commend Senator MacSharry on tabling this Bill. As Members of the last Seanad, we spoke at length about protecting the family home. The objective of the Bill is laudable because I do not know what we would be without our homes. The issue of home repossessions continues to seep through our constituencies, with ripple effects on children, relationships and families. The issue should not be underestimated because, as one couple told me recently, worry has entered people's beds. Family home repossessions also put pressure on State agencies and local authorities, not to mention the NGOs that work in the area of housing.

The spirit of the Bill, therefore, is laudable. We should view it as a spur for considering new ideas, creative approaches and realistic schemes to release families from the threat of repossession so they may continue to enjoy a working relationship of some form with their banks while maintaining their dignity. The aims of the Bill accord with our public policy of keeping families in their homes. Countless reports and statistics point to a correlation between a secure home and education and health. A secure and unthreatened home is the foundation for a better future for our children. Bearing in mind our earlier debate, children should be at the centre of our deliberations.

Home repossessions invariably involve a lengthy process of negotiations between banks and mortgagees. The period before repossession can be very stressful for families who are just about keeping their heads above water to make their repayments. Such families have yet to become repossession statistics but none the less they suffer anxiety and stress because the mortgage is only one of many bills they must pay.

The Bill gives rise to certain issues, however. It prohibits repossessions in a number of instances, including the enforcement of a power of sale, a possession order and a well charging order. Section 4 provides that repossessions will be prevented where it is shown that the Central Bank's code of conduct on mortgage arrears has not been followed. However, pursuant to the Central Bank Acts the code and the revised code already have a legislative basis. As the language used in the code is explicit in requiring lenders to apply the protections of the code to borrowers, the provision under section 4 appears to be accommodated in existing schemes. Codes also offer a more flexible means of responding to a changing environment and can be easily adapted to fill gaps and deal with new developments. As Senator Hayden noted, the Bill is overly reliant on judicial solutions to a problem that is not judicial in nature.

Section 5 prohibits repossessions in the absence of an independent report prepared by MABS. Has the opinion of MABS been sought regarding this consultancy role? Does it have sufficient resources to supply such reports in a timely and efficient manner and what principles would it apply? I fear that, similar to the backlogs that exist in the Garda vetting unit, the result could be further delays that prevent banks and mortgagees from working together to produce alternative solutions.

In regard to the reference in Section 5 paragraph (b) to the "original mortgage application", is it not the case that the rules of evidence would demand that the original documentation be presented, in which case this section is unnecessary? I note the efforts of the group of lawyers, working as New Beginning, in their examination and defence of mortgage holders. It is my understanding that this issue of the accuracy of documentation was a key aspect in the defence of those facing repossession in that case, as it should be. Section 7 ties in with this in the provision that a mortgagor will face repossession where he or she has perpetrated a fraud on a bank. However, if a mortgage applicant claims to be earning a multiple of his or her actual wage, is there not, in the context of the relative bargaining positions of the two parties, a higher obligation on a bank to seek proof of such claims instead of relying on what might be termed "constructive knowledge"?

It is incumbent on us as legislators to arrive at new and more reasoned solutions to the problems that arise on a daily basis in this area. I accept that this is what the Members opposite seek to do in bringing forward this legislation. However, there are other, more appropriate, solutions we can consider. Two years ago, I spoke to a retired and honourable bank manager who said his claim to fame was that he had never foreclosed on a home during his 30-year career. His solution to the problem of mortgage debt arrears was that in the case of a mortgage of €300,000, for example, where the mortgage holder can no longer make the repayments, that he or she be reassessed and, on the basis of that reassessment, the mortgage split into what he called a "live" portion and a "parked" or "warehouse" portion. The "live" debt would be serviced based on the applicant's current ability to repay, while the remainder would be warehoused, with the mortgage holder having to meet only a small payment at a simple interest rate on that portion. This would facilitate people in meeting their repayments while ensuring the debt, instead of becoming a bad debt, remains as a performing asset on the bank's books.

In the United States, legislation has been introduced whereby mortgage repayments must account for no more than 37% of a person's or couple's income. This will support home owners' ability to meet their mortgage repayments while protecting the sustainability of their financial commitments and, thus, their quality of life. While Senators opposite referred to the lengthening of mortgage repayment terms, I would go further in proposing that we consider inter-generational mortgages. People nowadays have smaller families and larger homes. This working generation should not have to shoulder the entire burden of debt accrued via the neglect, irresponsibility and lack of regulation of previous Administrations. We must look at these and other solutions.

I commend Senator Marc MacSharry on his efforts in bringing forward this legislation. Our motto in tackling these issues must be carpe diem. I look forward to the Minister of State's response.