Damien English (Meath West, Fine Gael) | Oireachtas source

I thank Senator Mulherin for raising this issue of the Rebuilding Ireland home loan scheme and the issue in general of people who have gone through difficult times in this country but wish to get back on their feet again.

Senator Mulherin mentioned the mortgage-to-rent scheme, which I will come back to in a moment. It is another important scheme. I am glad we were able to reform it to make it more workable and user-friendly. Many more people are now interested in using that scheme. They are finding it as a solution to remain in their family home. That is what it is about. The mortgage-to-rent scheme is about keeping people in their family homes. It is a successful scheme and I hope more will avail of it. Despite the scaremongering some go on with, we are in the business of protecting people in their family homes. The courts respond to that. Certainly, as a Government we have responded to that and changed legislation to accommodate it.

The Rebuilding Ireland home loan scheme enables creditworthy first-time buyers to access sustainable mortgage lending to purchase new or second-hand properties in a suitable price range where they cannot obtain sufficient mortgage finance from a commercial lender. To be clear, the lending criteria in terms of creditworthiness is probably the same for the Rebuilding Ireland home loan as it would be for the banks. It is to do with making it more affordable because there is a lower interest rate. It is for people who could not get enough money from the bank.

As with the previous local authority loan offerings, the Rebuilding Ireland home loan is available to first-time buyers only. The availability of loans through local authorities are for first-time buyers. This is set out in the regulations governing the scheme and ensures the effective targeting of limited resources. Like the help-to-buy scheme, we are trying to intervene for first-time buyers because we do not have the resources to stretch for everyone. The taxpayer cannot be involved in everyone's home. We try to match the resources where they are needed most. Historically, that is where the schemes have been targeted.

If an individual has previously defaulted on a mortgage he or she is obviously not a first-time buyer. That is why such a person would not qualify for the scheme as it stands. We do not have any immediate plans to change this provision because it has been in place for a long time. Again, it is about trying to stretch our resources as best we can. That does not mean we cannot try to find other solutions for that category of people. This is something we can look at again and I will be happy to engage with Senator Mulherin on it.

Applicants for the Rebuilding Ireland home loan must be of good credit standing and have a satisfactory credit record. The Housing Agency provides a central credit assessment service to local authorities and credit checks are undertaken as part of the credit assessment process. A person who has been discharged from bankruptcy and is eligible in all other respects, including being a first-time buyer, for a Rebuilding Ireland home loan may apply for a loan and will be subject to the same credit assessment process that applies to all applicants. Even if such a person is involved in other debt-forgiveness mechanisms and insolvency arrangements, being a first-time buyer will not preclude the person from being involved in the scheme. The final decision on loan approval is a matter for the relevant local authority and its credit committee on a case-by-case basis. Decisions on all housing loan applications must be made in accordance with the regulations establishing the scheme and the credit policy that underpins the scheme to ensure prudence and consistency in approaches in the best interests of both borrowers and the lending local authorities.

The Senator referred to the credit history of people. I have been involved in helping several people in recent years through difficult times. I have worked with them as a Deputy and I have a general interest in the area, coming from a finance background. Many are able to turn their affairs around, clean up their credit rating and go back to a bank to secure finance, whether through the bank or credit union. I urge people not to despair. If someone has had difficult credit times or credit history it is possible to turn it around and work with professionals to clean up the credit rating and credit history. My understanding is that there is a time limit and a point when the position changes. The banks only look back for a given number of years. The banks have different proposals but we can get clarity on that for the Senator. If people have been through difficult credit times it is important that they immediately try to correct the situation and keep their affairs in order in future. Banks generally focus on the most recent years and whether people have managed to pay bills on time and manage their accounts. Everything is looked at when it comes to credit history. It is not only what happened in the past but what is happening at present as well.

The mortgage-to-rent scheme is successful. We have changed it. The initial scheme did not have the best design although it had the best intentions. We made changes during the past year or two. There are now more players or stakeholders in the market. I believe the mortgage-to-rent scheme is an opportunity for families who are still living with an unsustainable mortgage. The mortgage-to-rent scheme is a good scheme to keep people in their family homes. These people end up renting their home from the local authority or housing body, but the option is available in the years thereafter to buy back the house if they wish. It is a good scheme and a great solution for many families who are stuck with an unsustainable mortgage and who do not see any plan. Generally, the banking and lending institutions work with people to try to find a solution to keep them in their home. I always find that. We always hear stories in the media about those affected but if people engage with the banking system and try to find a solution then an effort is made by all sides. The courts look for that and judge that. Anyone being brought forward is asked to try to find a solution to enable them to stay in their family homes. The mortgage-to-rent is a good solution thereafter. If everything else fails the mortgage-to-rent is a good endgame solution.