Colm Burke (Fine Gael) | Oireachtas source

I am giving an example from the Senator's comments. The Senator argued there should be no change in the law and it should be left as it is, even if the house in question is worth €5 million. There is a loophole in the legislation and the Minister has brought forward this Bill, making provision under sections 2 and 3 specifically with regard to a principal private residence, as the courts would have certain obligations with regard to new personal insolvency arrangements. That is to ensure proper procedures are followed so that every opportunity can be given to the home owner in dealing with the matter. There would also be an attempt to reduce costs by ensuring the matters are dealt with in the Circuit Court.

In supporting the Minister and this legislation, it is important that we analyse how the banks behaved when they gave out money prior to 2008. For example, I know of one case where €4.5 million was given to a borrower, with €1.5 million of the sum given to the borrower in order to buy shares in the bank lending the money. There were 11 properties remortgaged in that case and the bank did not hesitate in repossessing those properties. The banks behaved disgracefully in that case. In another example, €180,000 was borrowed by a couple who went their separate ways. A parent tried to help one of the parties who wanted to stay in the house, and an additional €40,000 was borrowed, with the parent signing a mortgage for the full €220,000. That property is now worth 50% of the value. It is another example of unreasonable behaviour from the banks prior to 2008.

At the time the banks were acting on behalf of builders and in order to keep cash flowing, they wanted bank officials to contact colleagues and get customers to buy properties that the banks' clients had for sale. That ensured constant cash flow for builders. One branch would loan the money and another would collect the money in a builder's account. All this went on when the banks had no real control or supervision, which was a major contributory factor to many of the problems we ended up with. I have had discussions with bank officials about their concerns that decisions are not being made at the coal face or by the people meeting borrowers; instead they are made at a central level in Dublin. There is a big concern about the process and banks should ensure that all the facts are being considered before decisions are made.

This legislation must be put in place to remove the loophole that exists but it is also important that the banking sector should deal with the buy-to-let area. In a small number of cases there are people with extensive borrowings collecting rent but making no contribution to the bank. As a result, the taxpayer will unfortunately end up carrying the can when insufficient money is collected for the repayment of those loans. Such issues must be dealt with.

I agree with other contributors with regard to principal private residences, and every opportunity and assistance must be available to families and house owners so that it will be a very last resort for legal proceedings or repossessions to take place. Priority should be given to the house owner and the Minister in the legislation is ensuring that changes have been brought in to incorporate the personal insolvency process and ensuring courts must follow certain procedures. I support the Bill.