Seanad debates

Monday, 30 April 2012

Social Welfare and Pensions Bill 2012: Committee Stage (Resumed)

 

3:00 pm

Photo of David CullinaneDavid Cullinane (Sinn Fein)

I would also ask the Minister to remove the section. My understanding is that under this section people will not get the mortgage interest supplement for the first 12 months of the arrears. A previous speaker mentioned FLAC. It also noted that by denying any access to mortgage interest supplement for 12 months from the date arrears arise, inevitably many borrowers in trouble will come out of their period of difficulty with an arrears problem which could have been contained if the mortgage interest supplement had been available. The wording of the section places the onus on the borrower to show that he or she has engaged with the process. That is part of the problem. As Senators said earlier, it again puts the banks front and centre and not the person in difficulty who needs to be supported. Even where an alternative payment option may be offered by the lender there is no guarantee that it will be a fair offer or that the borrower will have the capacity to be able to pay the proposed new sum.

I am sure we all deal with people in mortgage distress who come into our offices who have real difficulties dealing with banks. It can be an intimidating environment for many people, especially vulnerable people who are very concerned about how they will pay their mortgage, keep a roof over their head and deal with all the reminder letters. That is a very difficult situation in which they find themselves. I agree with Senator Byrne that many vulnerable people will find it difficult and intimidating to negotiate with banks.

If the law is amended as proposed, in cases where the lender proposes an interest only repayment for a period, where the borrower cannot pay the full amount proposed by the lender they will not be able to access mortgage interest supplement for 12 months. In those circumstances, mortgage interest supplement could potentially cover the shortfall of the payment during that time but failure to access mortgage interest supplement could result in the borrower accruing further mortgage arrears and falling deeper into debt. In such circumstances the problem is that a mortgage that was manageable can suddenly become unmanageable and unsustainble, and therefore removing the payment of mortgage interest supplement while the borrower engages with the mortgage arrears resolution process for a period of 12 months will also impact on people who only require short-term support. Has the Minister considered that because people who may be out of work for a limited period and who are able to re-enter the workforce after a relatively short period of time will be excluded?

We see fundamental flaws in this section. I agree with Senator Zappone and Senator Byrne that it is flawed. The intent is good. We can all appreciate the logic behind what the Minister is trying to do but I am concerned about what the text of the section means in practice for people, and for that reason I oppose the section and ask the Minister to withdraw it.

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