Michelle Mulherin (Fine Gael)
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I welcome the Minister of State to the Chamber.

One undoubted fallout of the financial crash, which happened not too long ago, is that many of our citizens ended up getting into both mortgage and personal debt and some of them even lost their homes. Thankfully many people have managed to get through a very difficult time and have gone through the debt resolution process. We see also that unemployment figures have gone from 16.1% to the all-time low figure of today. People are in a much better position as to their finances and can afford to service loans.

The problem for some people at this juncture is that they find that they cannot borrow. These are people who have gone through the debt resolution process, settled their debt - they are not just people who went bankrupt - but who now wish to acquire a house, buy a home, as opposed to renting, and have found they cannot get a loan from the high street banks.I know the Government has provided the Rebuilding Ireland home loan scheme to allow first-time buyers to acquire a home mindful of the market and to encourage more housebuilding and house ownership. However, as the Minister of State is aware, this does not apply to people who are second-time buyers. This might arise where people have lost their homes and have gone into mortgage debt. They may find that their credit ratings are shot or poor and they cannot get loans. I am asking that such people are catered for under the Rebuilding Ireland home loan scheme. I believe this is required to facilitate the increasing number of people who have gone to the mortgage-to-rent scheme. The scheme in its current incarnation has been far more successful than the original scheme, for which there was poor take-up. Basically it is a scheme for people who had owned houses but cannot afford the mortgage. They now rent the property but at some time in future there is the prospect of buying it. These people equally need to be catered for in terms of how they will borrow to buy their houses. This is another cohort of people who need to be catered for.

As part of the solution the Central Bank and other banks should be pressed to make their position clear in respect of lending to people in this situation. The banks should make it clear to people that there is a finite time for the credit record to be blackened. After that the people should have a clear and clean slate. There is much confusion and people are missing out. Many people are frustrated. The scheme should operate in keeping with the philosophy that people did not cause the financial crash. People lost their jobs through no fault of their own and could not service mortgages. Now, they have put themselves on an even keel and need a fresh start. We need to support policies that allow them the fresh start we envisage for all our citizens in the wake of the financial crash.

Damien English (Meath West, Fine Gael)
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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.

Michelle Mulherin (Fine Gael)
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I thank the Minister of State. We have covered a good deal. I am bringing up this issue because I am aware of several constituents who are having this difficulty with the banks and with their credit rating. One person has sorted out a previous mortgage debt after falling into arrears. The mortgage is now settled and the person is looking for a fresh start but the high street banks are not playing ball. Perhaps as the Minister of State suggested, we can get some clarity from the Central Bank. It is appropriate for the Central Bank to send out the message that a poor credit rating or history is not a life sentence. The banks should be monitored in respect of how they are operating the rule or consideration when they are deciding whether to give someone a loan.

One of the conditions for the mortgage-to-rent scheme is that applicants in future might be able to buy back the house when they get into a sounder financial position, which is fantastic. However, some of these people will get into the same problem that I have described if they have lost a home previously.

More work needs to be done in this area. I welcome the fact that the Minister of State is willing to engage. I know that is his general disposition. He might provide clarity for me on several of those points. I would appreciate it. It would enable me to go back to people and give them some comfort about their situation and give them hope. It is important that they are not stuck in limbo, renting forever when they can financially afford to get a loan.

Damien English (Meath West, Fine Gael)
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I will absolutely engage to get some more answers for Senator Mulherin. We will address some of the questions to the Department of Finance. I cannot comment for that Department but we will certainly engage with the Department of Finance.

Senator Mulherin is right to say a poor credit rating is not a life sentence. It can be cleaned up and corrected over time. Time is a great healer in this regard. Banks are in a position to make judgments on the existing record of people and how they are handling their affairs at present. It is important that people know that.

We went through difficult times when probably everyone was affected in some way by what happened. It is not that long ago, although most people seem to have forgotten it. It was only seven or eight years ago when some of the people I met while out knocking on doors were concerned for the future of the country. Thankfully, this has been turned around but there are still many individuals who have difficulties. They are still dealing with legacy debts from the past.We need to help them through that journey and get them back on the right track.