Tuesday, 15 May 2012
Mortgage Arrears: Statements, Questions and Answers
Trevor Ó Clochartaigh (Sinn Fein)
Cuirim céad fáilte roimh an Aire Stáit agus ceist an-tábhachtach á phlé anseo. Bun agus barr an scéil ná go bhfuil daoine a bhfuil morgáistí acu ag aireachtáil an brú lá i ndiaidh lae agus faoi bhrú ag na bainc. Ní fheiceann siad go bhfuil an Rialtas seo ag déanamh tada fiúntach dóibh. Feiceann siad go bhfuil gach rud á dhéanamh ar son na banc, go bhfuil muid ag cur airgid isteach iontu agus go bhfuil muid ag freastal ar lucht na mbannaí agus lucht na hEorpa agus mar sin de. Ach maidir leis na daoine bochta atá ag fulaingt gach lá faoi ualach breise costas agus mar sin de, níl an Rialtas ag déanamh faic na ngrásta dóibh.
This Government was elected with the support of many families struggling with mortgage arrears and desperate for a solution and some relief. This was a significant pre-election issue and both Government parties made it a priority and made several pre-election commitments. These crystallised into the programme for Government, which included increasing the mortgage interest supplement, extending mortgage interest relief, and transforming MABS into a personal debt management agency with strong legal powers. It also proposed that mortgage holders should be insulated from ECB interest rises. However, the Government is failing to deal with the problem of mortgage arrears. The hopes and expectations of the countless home owners who backed Fine Gael and Labour have been dashed. According to the Central Bank, some 107,708 mortgages are now in distress. This inaction is hurting families and putting them under immense strain, so concrete action is required.
The Government has prevaricated, procrastinated and has totally refused to act. Three expert group reports have been produced over almost two years; any excuse to delay action has been grasped. The Keane report was published last October but it was a disappointing document with little to offer many families who are desperate for some relief. It effectively proposed to leave those in mortgage distress at the mercy of the banks and saddled them with decades of unsustainable debt. There is no question but that this is not a credible route out of our mortgage arrears.
The Keane report specifically ruled out many of those pre-election commitments entirely. The report was clearly flawed to begin with by the composition of the group tasked with its drafting, and in particularly the preponderance of bankers on it. Arguably more remarkable, however, has been the inaction since then. The report took eight months to prepare but in the intervening months, according to media reports, only one family has received any assistance from the Government in the form of a pilot mortgage-to-rent scheme. A staggering 92 families fell into mortgage distress every day in the three months from September to December 2011.
We understand the personal insolvency legislation has been delayed. Why is this so? Is it on account of pressure from banks? The banks have been capitalised with billions of taxpayers' money and are well insulated from any losses. Neither implementing the report nor producing an alternative, they seem satisfied merely to hope the problem goes away. It is plain to see, however, that the problem will not disappear. We need more action.
Sinn Féin is of the view that this could have been handled in a distinctly different manner. The key objective is debt sustainability. The ability of the mortgage holder to service any new mortgage arrangement must be clearly demonstrated. Four key principles underlie our proposals: maintaining the family home, providing appropriate alternatives, ensuring debt sustainability and sharing the burden fairly.
We are aware of the difficulties and have been realistic. We are well aware that a blanket debt forgiveness scheme for all those in negative equity is unaffordable. However, more targeted debt resolution and restructuring mechanisms, such as debt for equity swaps, ought to be considered. Crucially, mortgage lenders must absorb a significant portion of losses on the value of mortgages. We have argued for a strengthened distressed mortgage resolution process with a stronger code of conduct for mortgage lenders. This process must be backed up with an independent distressed mortgage resolution board to ensure that decisions taken by lenders represent an appropriate response to mortgage distress. Where such a response is found to be wanting, the board must have legal powers to enforce the right solutions and penalise lenders for failing to act in an appropriate manner.
Mortgage lenders must absorb a significant portion of losses on the value of mortgages. Sinn Féin does not believe that the taxpayer should foot the bill for the mortgage crisis. We do not believe it is necessary for the taxpayer to compensate banks further for the loss in value of their residential mortgage loan books. There is sufficient capital in the banks at present to absorb a significant proposition of these losses. Considering the billions of euro given to banks both by the last Government and the current one, there is no credible argument against the banks shouldering their fair share of the burden of mortgage distress.
Serious consideration must be given to targeted debt resolution and restructuring with banks absorbing part of the cost in order to enable people to protect their family home. We welcome the fact that Permanent TSB has cut its variable mortgage rate by 0.5%, which we have long called for. However, PTSB still has rates which are considerably higher than Bank of Ireland and AIB. PTSB should have rates which are similar to the other State-owned banks. It is remarkable how little leverage the Government utilises over the banks, given that a number of them are State-owned.
We can no longer afford to let the problem deteriorate and force families to endure high levels of stress and worry over their inability to pay mortgages when solutions are available. Leaving this matter to the banks to sort out is the wrong approach. If we do so, it would appear that we have learned little or nothing from the experience of recent years.