Joan Burton (Dublin West, Labour) | Oireachtas source

We have set up a resolution process which was the appropriate thing to do in respect of banks which have many mortgages that have fallen way below their value. People who have lost employment are finding it very difficult to pay off mortgages they may have taken out at the height of the boom. In essence, that is the problem. The Senator asked if there was a resolution process from the banks for the Department of Social Protection. No, there is not. We pay all this money and we do not even get a better deal in return for the people. That is probably one of the most aggravating features of the entire arrangement. At the end of the five or seven years of paying €30,000, €40,000, €60,000 of interest on behalf of the people who have lost their jobs and lost their business, they end up with a higher level of bank debt. That is not helping to solve their problem. Certainly it is helping to solve the banks' problems because they are getting a very large cashflow of money without having to give anything in return. At the same time the families involved are essentially heavily restricted in their capacity to go back to work. These are people who set out, probably full of confidence like everybody else, to buy their homes. They were obviously in work or in business in the context of buying their homes and now they have become parked in many cases on social welfare. The critical issue as the economy recovers is that people who became homeowners and who had a business and were active in employment should be encouraged back to work in order that they can get to financial independence. The mortgage arrears resolution process is under way. If a person has the type of difficulty to which the Senator referred where he or she loses a job temporarily, MARP is in place. That means there has to be an engagement between the lender and the individual.

If a person loses his or her job temporarily, the downside of the mortgage interest supplement is that it almost becomes a locked-in position, a chicken and egg situation, whereby to continue getting the mortgage interest supplement one cannot go back to work. We are trying to move to a model where local authorities and other institutions have, for example, mortgage to rent supplement where, ultimately, I would hope many of those people, if they wish, would be in a position to buy back their home. It is a variation on a low rise mortgage and they would come into ownership of the home again as is done in many countries. While €319 million is going to the banks they are not doing very much for the families in distress who have lost their job and are unable to pay their interest. As it is phased out over a four-year period, it should be noted that some of the people involved have already been on it for seven years. We want to help them to get back to work and to financial independence.