Aideen Hayden (Labour) | Oireachtas source

This Bill is viewed with concern by many for whom I have the deepest of respect as part of a wider strategy to permit easier repossessions, coming as it does on foot of the revised mortgage arrears resolution process, which appears to place lenders in an even stronger position than heretofore. Well-respected organisations such as the Free Legal Advice Centres, FLAC, have stated that the revised code reconfirms the lender as the sole arbiter of whether a mortgage is sustainable. A bank will decide whether a borrower is co-operative and what solution will be sustainable. No proper appeals process is in place and there is no provision for the borrower to take credible independent advice when dealing with a lender.

I regret the Bill's timing. It would have been more appropriate to introduce it when the personal insolvency service was up and running and the manner in which the service was going to do business was clear in the public mind. We have not reached that point.

While attempts by the Government and the Central Bank to force the six main mortgage credit institutions to offer solutions to distressed borrowers by way of the 2013 mortgage arrears resolution targets are well meaning, they have yet to show tangible results. Among the wider public, there is considerable fear that, as the housing market recovers in parts of the country, particularly Dublin, banks are proposing so-called solutions that they determine in their sole wisdom to be reasonable, but that will achieve nothing in the long run other than repossessions. It would have been wiser to propose this legislation after the efficacy of the solutions being offered to borrowers could be seen to be just.

The Minister views this legislation as part of a jigsaw, in that it removes a loophole enabling those in mortgage arrears who will not pay - I distinguish between those who will not pay or are reluctant to reach agreements with their lenders and those who cannot pay - to avoid coming to the table in a meaningful way. Not for one moment do I believe the words of Ulster Bank's CEO when he asserted last week that one in three of those in long-term arrears were effectively in the category of those who would not pay. It was a serious overstatement of the situation. However, some people are in that category. They could make payments but choose not to do so. They do an incredible disservice to those who must deny themselves and their children basic necessities to make mortgage repayments. Among this latter group, there is genuine fear that this legislation, intended for others, will be used to dispossess them of their homes. We must address this concern by demonstrating that we are willing to listen to them.

In this context, will the Minister review the revised code of conduct on mortgage arrears as a matter of urgency? Too much power has been placed with the lending institutions. In particular, that a lender has been allowed the discretion to decide what constitutes a sustainable and affordable solution for a borrower goes against the principles of natural justice. A more level playing field must be introduced to balance the rights of borrowers and lenders. The absence of expert legal and accounting advice for many borrowers at the negotiating stage of an agreement is a powerful impediment to the creation of confidence in the system. While the Money Advice and Budgeting Service, MABS, is a wonderful organisation, it is woefully under-resourced in this crisis.

Moreover, there is a lack of transparency in the system. No one knows which lender is offering what to which borrower. This is unacceptable and leads to a lack of confidence in the system. Why a lender cannot be open about what solutions it is offering to borrowers is beyond credibility. The refrain that every borrower and every situation is different rings hollow to someone who is trying to determine whether to accept an offer from a lender. This culture of secrecy leads to the suspicion that those who owe more are being treated better by lending institutions than those who owe less.

I am well aware - I was a practising solicitor - that it is nonsense to behave like King Canute in the face of what is a legal lacuna and to propose that a lender should not have recourse to charged assets. Countries which have an inadequate legal system have, by extrapolation, an inadequate mortgage system. If we want to see the recovery of our housing market, we need to see a robust legal system where lenders have access to the charged assets. However, it is not appropriate to introduce this legislation at this time. I will ask the Minister to take into account the serious concerns in the public domain and to consider delaying the implementation of this legislation until such time as the Personal Insolvency Service of Ireland is up and running and we see what results come forward from the six banks required to reach agreement with borrowers.

I have a major concern I would like to bring to the Minister's attention which relates to recent statements by the Governor of the Central Bank of Ireland, Professor Patrick Honohan. He stated that he foresees that repossessions will be focused on the buy-to-let property sector and not on family homes. That is perfectly understandable but we must understand that currently 20% of the entire housing market comprises people renting their homes. Currently, we have no procedures in place as to how those repossessions are to be treated and how the families in those homes are to be treated. That is a very significant lacuna in the law as it stands.

I understand the necessity for this legislation to remedy the lacuna which has come to pass but the Minister should exercise his discretion and take into account the serious concerns in society.