Darragh O'Brien (Fianna Fail) | Oireachtas source

I move:

That Seanad Éireann notes:- the worsening crisis in respect of mortgage arrears with over 94,000 residential mortgages in arrears for greater than 90 days and over 28,00 buy to let mortgages in arrears for the same period;
- almost one in four family home mortgages and more than one in three buy to let mortgages are now either in arrears or have been restructured; 
- the slow progress made to date by banks in identifying and implementing solutions for distressed borrowers; 
- the additional burden being placed on families struggling with their mortgage arising from cuts to child benefit, PRSI increases, the Local Property Tax and other measures in Budget 2013; 
- the adverse impact on mental health, the well-being of society and the domestic economy arising from the failure to adequately address mortgage distress; 
- widespread concern about the threat of a significant increase in family home repossessions arising from the Mortgage Arrears Resolution Targets Programme, the proposed changes to the Code of Conduct on Mortgage Arrears and the government's plan to reverse the Dunne judgment;
- in effect, the bank will retain a veto in the vast majority of cases over any proposal to restructure the mortgage under the planned new personal insolvency service; Recognises:- the importance of tackling the mortgage arrears crisis to support economic recovery;
- the best interests of society is served by ensuring that families can remain in their homes so long as reasonable efforts are made to meet their mortgage commitments;Calls for:- the establishment of clear, consistently applied guidelines in respect of reasonable living expenses for distressed borrowers;
- the family home to be protected from repossession unless every other possible alternative has been exhausted including giving the borrower the option of entering a mortgage-to-rent arrangement;
- the government not to introduce legislation to remove obstacles to the repossession of family homes until such time as the Central Bank is satisfied that the banks are properly addressing the mortgage arrears crisis by entering into meaningful long-term sustainable solutions to mortgage distress with individual borrowers, 
- the setting up of an Independent Mortgage Resolution Office under the new Insolvency Service to arbitrate between borrowers and lenders and where necessary to make a binding mortgage resolution order; and
- treater emphasis on implementation of long-term sustainable mortgage solutions such as split mortgages, shared equity and permanent interest rate reductions. 

I acknowledge that the Minister of State at the Department of Finance, Deputy Brian Hayes, has been heavily involved in trying to address the worsening crisis of mortgage arrears and mortgage distress. I offer my personal thanks to him in this regard because I know he is very concerned about the issue and that he shares my frustration at the slow rate of progress, for want of a better word, in this area. The motion notes that 94,000 residential mortgages are in arrears of 90 days of more, as are 28,000 buy-to-let mortgages. These were not developer-led properties, as a large number of them were investments people made in their futures. In respect of mounting arrears of between 30 and 90 days, close to one in four principle private residences and up to 40% of buy-to-let mortgages are in arrears.

We are particularly concerned that the problem is getting worse. Householders are now facing the additional burden of the residential property tax, which we have debated at length. That tax does not take into account ability to pay or the possibility that somebody could be paying the tax on a property that is already in mortgage arrears. All of us meet people in our areas who are either already in arrears or are just about able to pay their bills. The Irish League of Credit Unions and others have independently reported on the amount of disposable income that remains available to people.

I propose to offer solutions rather than simply lambast the Government for the slow rate of progress. I think we can all agree on certain matters. Nearly one year ago the Minister of State suggested to this House that the Personal Insolvency Bill would be a game changer. I am sorry to say that I do not agree. I do not mean that in any disrespectful way but because I am particularly concerned with the veto allowed to the banks. For this reason, the motion proposes that the Government should consider the legislation that my colleague, Deputy Michael McGrath, has introduced to establish an independent debt settlement office. If we leave the resolution of the mortgage arrears crisis to the lender without protecting the mortgagee, we will still be dealing with this issue in four or five years' time. The fairest approach is an independent office with full arbiter powers to adjudicate on specific cases.

Furthermore, the Government needs to establish a view on how to define a sustainable mortgage. It is not acceptable to me, my colleagues or the vast majority of citizens that the definition of "sustainable" is left to the bank to decide. I ask the Minister to reconsider the provision suggested by New Beginnings and FLAC that no more than 35% of net take home pay after tax should be used to service a mortgage. If that can be set as the benchmark we can begin to consider solutions such as split mortgages, which are happening sporadically, and extensions to mortgage terms. This House had a late night debate on the wind down of IBRC and the new terms for the promissory notes. Ireland in effect received an extension of a mortgage term and a reduction in interest rates. The general public, who are doing their best to pay their mortgages, are asking for the same thing. I am not sure that debt write-downs are the way forward but many of the people who are in arrears have 20 or 25 year mortgages and have the capacity to extend their mortgage terms. However, when they request extensions the banks revalue their properties at the current market rates and, even if they agree, allow a maximum loan-to-value of 80% on the new valuation. That is no use to the applicants because their mortgages are higher than the new valuation. The Government needs to set out clearly what sustainability means. We cannot leave it to the banks or the Central Bank to define this. We need to state what is fair because people need hope in this area. There is no hope as matters stand.

Last year the Minister of State at the Department of the Environment, Community and Local Government with responsibility for housing, Deputy Jan O'Sullivan, addressed this House at length about the mortgage-to-let solution, whereby and individual would hand the property to a local authority and pay rent on it. I described this proposal as an abomination but in any case most local authorities refuse to even operate the scheme.

When we leave it up to lenders or local authorities to actually come up with good faith solutions, it simply does not happen. The domestic economy will not move unless we work towards resolving the mortgage crisis. It cannot be done by simply setting a target for our pillar banks to talk to X thousand people a month on a case-by-case basis. As we wait for solutions, the problem is getting worse. Will the Government review its proposals to get rid of the statutory code of conduct on mortgage arrears and its plan to reverse the Dunne judgment?

I disagree with the Secretary General of the Department of Finance, Mr. Moran, that the level of repossessions is unnaturally low. I do not agree with letting the market decide as there is no society but an economy, as advocated by a former Prime Minister in our nearest neighbouring country. This should not be the policy that Fine Gael or Labour follows. If the statutory code of conduct on mortgage arrears is removed, the levels of distress among borrowers will increase exponentially. Furthermore, if the Dunne judgment is reversed, it will tell the banks to carry out wholesale repossessions of homes and not just on principal private residences.

The Minister for Finance, Deputy Noonan, has spoken at length about second properties and the buy-to-let sector. I do not believe this area should be fair game either. Up to 40,000 families invested in buy-to-let for their future because they may not have a pension scheme. They are not necessarily speculators or developers. They also need some protection. Nobody should take the legs from under these people who have put tens of thousands of euro into these properties.

We have raised several matters in this motion. It will be seen from it too that it is not a political motion. We are not lambasting the Government but are trying to put forward genuine solutions to this problem, solutions which my colleague Senator MacSharry brought forward over a year ago in his Family Home Bill which was defeated in this House by only three votes. We are trying to come forward as a party with solutions to assist. We are imploring the Government not to leave the personal insolvency legislation as it stands with a full veto for the banks and without recourse to an appeals process, as well as reversing the Dunne judgment and tearing up the statutory code of conduct on mortgage arrears.