I wish to share time with Deputy Andrew Doyle.
Private Members’ Business.
Mortgage Arrears: Motion (Resumed).
The following motion was moved by Deputy Ciarán Lynch on Tuesday, 3 November 2009:
That Dáil Éireann:
notes the rapid rise in unemployment in the past 12 months and the resulting difficulties that many families are having in meeting mortgage payments;
notes that the number of families in mortgage arrears could be as high 35,000;
notes the irresponsible lending practices engaged in by many financial institutions that have contributed to the growing problem of mortgage arrears;
notes the unprecedented assistance that has been provided to the banks through the blanket guarantee, recapitalisation and the NAMA proposals;
notes with concern that the number of repossession orders issued in the High Court increased by 120% in 2008, and the prospect of a significant increase in home repossessions once the NAMA legislation has been passed and legal proceedings in these cases are transferred to the Circuit Court after 1 December 2009; and
believes that, in the majority of cases, the public interest is best served by ensuring that families can remain in their homes for as long as possible, so long as reasonable efforts are made to meet the borrowers obligations;
calls on the Government to:
bring forward a moratorium scheme that would provide for a minimum period of 24 months from the time that mortgages first go into arrears, before repossession proceedings can be taken, where a borrower makes reasonable efforts to meet their obligations to pay the mortgage on a principal private residence;
apply the scheme to all banks covered by the guarantee or participating in NAMA;
establish the scheme on a statutory basis;
provide for mediation services under the scheme to assist borrowers in coming to satisfactory arrangements with lenders, such as extending the period of a mortgage, putting a mortgage on an interest-only basis, or rolling up interest for a period, and to act on behalf of borrowers in negotiating with financial institutions and public authorities in working out viable repayment arrangements; and
establish as a principle of public policy that, where possible and subject to reasonable limits, a family making a reasonable and honest effort to meet their obligations should be assisted to remain in the family home.
Debate resumed on amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
"notes that:
legal repossessions of home owners reported by the institutions covered by the guarantee amount to 20 in the first nine months of this year;
the mortgage interest subsidy scheme provides an important safety net for mortgage borrowers who get into difficulties and that more than 14,000 families are now benefiting from this support;
the number of home owners in arrears (90 days) with institutions covered by the State guarantee is currently of the order 15,000-16,000 and that the rate of increase in arrears has moderated notably since the early months of this year;
the introduction of a statutory code of conduct on mortgage arrears earlier this year reinforces existing practices at mainstream mortgage lenders and extends legally obligatory protection to all mortgage borrowers;
the code of conduct on mortgage arrears already requires lenders to explore alternatives with borrowers in difficulty and prohibits seeking repossession "until every reasonable effort has been made to agree an alternative payment schedule";
the code of conduct on mortgage arrears already provides that, where circumstances warrant it, the lender must refer the borrower for guidance to the Money Advice and Budgeting Service (MABS) or an appropriate alternative;
the renewed programme for Government envisages an examination of ways of expanding mortgage support measures and new measures to protect families having difficulties including the introduction of new measures to protect families having difficulties with their home mortgage payments;
the renewed programme for Government also provides for the existing statutory code of conduct on mortgage arrears and the recently agreed protocol between the Irish Bankers Federation (IBF) and the MABS on debt default to be further reviewed with a view to expanding the options available for dealing with debt situations, including for example, the use by banks and lenders of more flexible mechanisms to avoid foreclosure in appropriate circumstances and that these could include:
reduced rates;
longer maturity dates;
rolling-up of outstanding interest;
bank taking equity in the house; and
bank taking ownership and leasing back the property to the resident with rent payments coming off the loan;
the renewed programme for Government envisages that ways of expanding mortgage support measures will be examined with reference to the measures adopted in other jurisdictions;
the renewed programme for Government envisages reform of debt enforcement in light of the deliberation of the Law Reform Commission, which has recently published a consultation paper on the matter, the regulation of debt collection agencies, a new system of personal insolvency regulations allowing for a statutory non-court-based debt settlement system, and the establishment of a central debt enforcement office to remove as many debt enforcement proceedings from the courts as possible;
Irish banks continue to rely on international credit markets for a substantial part of their funding and that conditions in those markets, though easier than earlier this year, remain difficult;
rating agencies, perhaps influenced by the high rates of default and repossession on mortgages in the US and UK, are known to be sensitive to anything affecting mortgage lending and are aware that it makes up a large portion of Irish banks balance sheets; and
the introduction of a blanket two year moratorium, as proposed, runs a substantial risk of creating unfavourable perceptions in credit markets about the future performance of a significant part of Irish bank lending, and that such a perception could increase funding difficulties and raise funding costs for Irish banks, with damaging consequences for all of their customers;
commends:
the Government for its actions to stabilise the financial system and to restore the public finances thereby protecting jobs and home ownership
the Government for its increased support for the mortgage interest subsidy scheme; and
the introduction of the statutory code of conduct on mortgage arrears;
expresses its confidence in the success of the Government's efforts to deal with the world-wide financial crisis and its impact on Ireland.
— (Minister of State at the Department of Finance, Deputy Martin Mansergh).
Is that agreed? Agreed.
I will continue where I left off yesterday evening on this important debate.
What gives any Government the right to prioritise assistance to the very banks that are foreclosing on customers on whom they almost forced loans in the boom years? Following enactment of the NAMA legislation, the spate of repossessions will rise with families, who should be encouraged and assisted to remain in their homes, being forced on to the street.
It is a shame.
This is factual despite what Deputy Thomas Byrne and the Minister of State, Deputy Mansergh had to say yesterday in this House. I want to know if the Minister has plans to introduce a NAMA-style rescue plan for the countless hard-working taxpayers whose money the Government squandered? Implementation of the Fine Gael home owners support schemewould allow NAMA to take an equity share in a property following negotiations with the relevant financial institution in relation to the outstanding debt. The scheme would give the home owner the option to buy back the NAMA equity share and if the property is subsequently sold, NAMA would gain its share of the sale price.
There is no point offering piecemeal assistance to those in danger of repossession. Legislation on the lines of the Fine Gael NAMA support scheme needs to be introduced to rescue the victims of the Celtic tiger cronyism. Unless such rescue packages are enshrined in law, help will continue to be inconsistent and those most in need will continue to fall through the net. This is not acceptable with up to 35,000 families currently in mortgage arrears.
According to yesterday's The Irish Times, 18 of 76 repossession orders were granted in the High Court on Monday, 2 November 2009, the highest number in a single day this year. What makes these cases particularly extraordinary is the fact that 11 of the properties were already vacant as homeowners had simply walked away. The despair of owners, unable to cope, was highlighted by one case involving a property that was abandoned and the hall door left open.
Another matter relevant to this debate that needs to be urgently addressed in the current economic climate is the imprisonment of impoverished people for debt. Many are in negative equity and in difficulties caused by lifestyle-related borrowings and excessive use of credit cards, but imprisoning them is not the answer. Over-indebtedness has become a massive problem due to job losses, irresponsible lending and financial over-commitment.
This morning, I spoke to a separated woman with four children who lives in my constituency. She fell on hard times and had her home repossessed by the bank who sold it for less than €100,000 and is now demanding a further €175,000 from her, with the threat of imprisonment hanging over her, which is scandalous. What way is this to treat vulnerable people? How low can this Government go? Is there no end to the harassment of the weakest to support the strongest?
Complete reform of action against debtors, in line with the Law Reform Commission's recommendations, is urgently needed. This has been promised in the renewed programme for Government. It is hoped the Minister can assure us this will be done. The proposal to establish a central debt enforcement office to remove as many debt enforcement proceedings as possible from the courts is welcome.
As is the norm, the Government has its head in the sand when it comes to the protection of the lower and middle income earners. We heard the Minister of State, Deputy Mansergh, deny that there was an escalation in repossessions and of course he made no mention of the likely increase in such repossessions when NAMA is passed. The Minister of State also admitted that comprehensive statistics on mortgage repossessions have not been kept, which seems at the very least——
Suspect.
——careless and, at its worst, part of the generally poor record of accountability which has haunted the banking sector and this Government for the past number of years. We heard more waffle from the Green Party in this regard a few minutes ago, with Deputy Gogarty speaking out of the two sides of his mouth.
Following on from the Report Stage debate on NAMA and previous discussions in regard to NAMA master and minor SPVs — I am not quite sure how many SPVs there are — and the rounds of the earth to which the Government has gone to facilitate the banks and large developers, it is difficult for ordinary people and families experiencing serious financial challenges to understand why they are being left to go to MABs, which neither has the resources — there is a waiting list of some months for its service — nor the statutory authority to negotiate deferred payments on behalf of individuals. It is difficult when one meets people on the street to defend an opinion that the more one owes the more protected one is and that the person who owes only a mortgage is at the mercy of the banks without any protection.
While I commend the Labour Party on its motion, the Fine Gael proposal to protect home owners reflects the obligation of the banks to acknowledge that during the so-called boom years they loaned money recklessly, providing 100% mortgages over 30 years and more often than not with a current account which ensured people would be in a position to make interest-only payments and would never or, at least for some considerable time, be able to reduce the capital amount of the loan. This happened in the good times. Now, people who are losing their jobs, paying extra levies and tax, taking reductions in pay are struggling and being criminalised. The housing agency, Respond, estimates that the number of people in this position is 25,000 although the figure varies and is often quoted as 35,000. The Government, however, says the true figure is less than that. Nevertheless, it is possibly a figure that is increasing all the time as unemployment and other factors kick in.
The Fine Gael proposal is that NAMA would take an equity share following a suitable write-down in the mortgage to reflect the reckless manner in which the mortgage was given. The reality is first-time buyers who purchased a home between 2002 and 2008, when property prices were falsely inflated, are caught in a spike. These are the people who as a cohort are more than likely, if the two parents are working, to have children in child care and who, if not working, had extended themselves and are now under severe pressure. These people must be protected. The six month code which comes into effect when people fall into arrears is no good because they will not be able to get out of the mess in such a short period.
The moratorium, worthy and all that it is, only defers payments. The proposed home owners protection element of our amendment to the NAMA legislation would allow home owners to opt to continue to make payments at a level they can afford, for NAMA to take an equity share in the remainder and allow the home owners, if they return to an income level which would allow them pay the full amount, to repay NAMA. Also, in the event that the property is sold NAMA would realise its share if a profit is made. This appears to be an equitable proposal.
The Government appears to have buried its head a little, given that its amendment commends the Government on its actions to stabilise the financial system and to restore the public finances thereby protecting jobs and home ownership, which is very laudable. However, yesterday there were fluctuations in the financial institutions' stock value. One cannot state that the actions taken have stabilised anything at this stage. I urge the Government to rethink the issue and to take on board both proposals put forward.
I wish to share my time with Deputies Mary White, Ciarán Cuffe, Michael McGrath, Seán Fleming and Michael Ahern.
Is that agreed? Agreed.
The Government made very clear what it is going to do in the revised programme for Government, which recognises we have a real problem. As a country we became indebted way beyond what we should have and now we must work our way through that debt. We cannot allow a situation develop where families, who as a result of the economic downturn and through no fault of their own or an unwillingness to pay off their debts, must leave their homes. We have given a commitment to those people that we will not allow that happen.
It is happening.
Our banking system is responsible for many of the difficulties in which people have found themselves because the banks lent excessively and recklessly in many cases. We must ensure they now recognise it is not in the interests of householders, the country or banks for us to have a huge scale of closures of mortgages on family homes. As we said in the revised programme for Government, we will take up initiatives such as those that have existed in places like the United States or the United Kingdom. Such mechanisms might include those whereby the banks, rather than foreclosing on a property, would consider a debt equity swap. They could take an equity share in the property and in that way avoid families having to leave their homes.
When is this going to kick in? It is not happening now.
Banks must consider a change in terms and in mechanisms. We have given a clear commitment towards introducing that type of system here. We have also recognised that we need to go beyond that and beyond the Labour Party motion as set out. We must take up the very good advice from the Law Reform Commission with regard to wider changes within the area of our debt management and solvency system. We must get away from a court-based system that works for no-one and introduce the type of arbitration and mediation services into debt management that will help people through a difficult phase. That approach would be far better for the country.
It is not right in these difficult times to try to put people down for 12 years under old 19th century debt, solvency and bankruptcy laws. It would be far better to help them manage through that phase and get back on their feet and working again. That is what we have committed to in the revised programme for Government. We have committed to taking up the recommendations which have been presented in detail and thought through by the Law Reform Commission.
Obviously, the attention of the House has been drawn to the legislation and to the difficult issues that must be addressed, but make no mistake, it would be remiss of us to neglect the decisions that must be taken for the people on budgeting and banking areas. We are as equally committed to protecting individuals who are in debt, restoring confidence in the country and getting people working again, which is our first objective in Government.
We all know that one of people's most terrifying fears is that of losing their homes. We know this is true from our meetings with people in our constituencies. We have a duty to protect these people and we will do that. I welcome this timely debate and thank Deputy Ciarán Lynch for raising the issue. The debate is occurring in a context when many people are extremely depressed and worried about the level of debt they accrued during the boom years, money that was lent recklessly by the banks. Many people who built big houses have now lost their jobs and are having great difficulty repaying their mortgages. People who built more modest homes have also lost jobs and are in trouble.
There are many different types of debt, including personal and mortgage debts. We know from the Law Reform Commission that in 1995 the ratio of household debt to disposable income stood at 48%, a staggering statistic. However, now in 2009 this has risen to 106%. We have gone from being 17th on an international league table of personal indebtedness to fourth, which is extraordinary. We must blame the reckless attitudes of some banks and mortgage providers for this. The problems being experienced in recent years have not helped. There is nothing new in that. All these things are cyclical.
There is much anecdotal evidence that approaches to people in financial difficulty by some banking personnel have been crude and extreme. We know the banks lent fast and furiously, but when the customers or clients got into trouble, the banks hounded them for gross repayments. The Oireachtas Joint Committee on Social and Family Affairs was given an excellent presentation some weeks ago by a financial adviser named Liam Croke. He provided many examples of banks and mortgage providers who told people they could not get help or make different financial arrangements, such as facilitating reduced payments, until they had gone into arrears. That is a nonsensical approach that must be stopped. A thread running through many of the cases he mentioned was that banks and mortgage providers were threatening and extreme with customers but adopted a far more conciliatory approach with financial advisers and third parties. I do not stand for that and we should not stand for it.
Last night the Minister of State, Deputy Mansergh, said the number of repossessions had not increased dramatically and that sub-prime lenders were involved in the majority of such cases.
He said he had no statistical information on repossessions.
Please allow the Deputy to make her statement.
Let me give an example. I know a man who was in negotiation with his bank and the bank subsequently sent him on to a bigger bank in Dublin, the head office. While he was negotiating and trying to restructure his loans, the bank cut off his credit cards and said if he put his card into the ATM he would not get any money. It stopped his credit. It is a nonsense that this can happen in the middle of negotiation. We must stop such actions and ensure people with genuine difficulties are treated sympathetically by our banks. That must happen.
Money management education programmes providing advice on how to handle reduced incomes have been initiated for people taking redundancy. I welcome this. We have moved from such a high standard of living and hit the bottom with such a crash that people are bewildered and frightened by the speed at which this has happened. As one of the negotiators for the revised programme for Government, I am glad we are looking intently at mortgage protection measures and for a review of the existing code of conduct between the Irish Banking Federation and MABS outlets throughout the country on debt default. People feel vulnerable about their homes and their level of debt. In the context of the NAMA legislation, we must ensure that lending will continue so that businesses can keep people in employment and they, in turn, can repay their mortgages. We must ensure this financial circle continues. I look forward to seeing the final report of the Law Reform Commission on the reform of debt enforcement and its proposal on responsible borrowing and lending.
We need to ensure new, rigorous implementation of financial regulation so that banks no longer throw loans at people. That may not be supposed to be happening, but a person came to my constituency office who was offered a 100% mortgage last week. The Minister must ensure that does not happen again.
What penalty is applied in such cases under the code of conduct?
A strong regulatory regime is needed as part of the Minister's current work on financial reform. We must remember when we draw up codes, regulations and procedures that we are dealing with people, not commodities, broken dreams and not just statistics. Many people in trouble now are in despair because of the reckless attitudes of our banks. We have a chance now to change that. The banks need to know that we will enforce tough measures if they employ heavy-handedness towards people to whom they so casually and extravagantly lent money.
This is an exceptionally difficult time for families in fear of repossession of their homes. When there is uncertainty over income and employment, losing one's home is difficult to countenance. I am relieved to note that so far only 20 home repossessions have taken place among the institutions covered by the bank guarantee. Therefore, based on these statistics, repossession is not as widespread a problem as suggested.
The Government has protections in place. The code of conduct on mortgage arrears has moved from voluntary to statutory and applies to all regulated lenders. It provides a scheme through which borrowers and lenders work together to rectify the situation and sets in place a plan for clearing built up arrears. It talks about the broader point of repossession being the last resort. It is important to get the message out that if anyone is in difficulty, the first thing to do is to sit down with the lender and work through it. There is an onus on the lender to do that, which is crucial as a first port of call.
I note from recent court reports where a couple had fallen into debt that the judge refused to allow a repossession order so there is judicial discretion. The Judiciary is working to avoid repossessions. I note comments from the free legal advice centres, that they are getting a huge number of calls to their information lines. People are seeking information and it is important it is available to them so it is clear what is happening.
Deputy Mary White pointed out that there is good wording in the programme for Government that must be delivered into both regulation and legislation to protect those who are in financial difficulty. There is a menu of choices in the programme for Government, whether it be the bank taking equity, rolling up the outstanding interest, longer maturity dates, reduced rates or lease backs. All of these are being examined and we will choose from the menu to ensure that people are as well protected as possible.
The political system and decisions over the past 15 years contributed to the problem that arose. The Green Party in its policy instruments in the late 1990s and during the early 2000s stated clearly that change was necessary, to legislate for and regulate mortgages to ensure people were not duped into difficult situations. I am worried at the moment, however, that the banks are not doing sufficient stress testing and that they are allowed to offer 100% mortgages or mortgages over 40 years. I am not convinced due diligence is operating. I receive Garda Review and from reading it I see that financial institutions are still offering 100% mortgages. That can put people in a vulnerable situation where they may have the income now but in four or five years circumstances may change and they might find themselves in difficulty.
This Government, however, will legislate and regulate where appropriate to ensure people are better protected. We are half way through a process of considering many of these options, we have the Law Reform Commission report and it has specific recommendations. I am sure my colleagues in Government will act on those.
I thank the Labour Party for tabling this motion during Private Members' business. It is a good time to discuss these issues, before any trickle turns into a flood. We must act as a Government and take action to protect the vulnerable and to protect families.
I also commend Deputy Ciarán Lynch and the Labour Party on tabling a motion on this pertinent issue. I acknowledge that many people are in a grave financial situation, drowning in personal debt, the principal component of which, in most cases, is the mortgage. People who have lost their employment or are suffering from a loss of income or reduced income through reduced hours or increased taxation in recent budgets, coupled with the fact that many people paid over-inflated prices for their property, have combined with the result that very many people are in negative equity and finding it difficult to make their monthly mortgage payments.
It is frightening to see the statistic that up to 16,000 people are in arrears of 90 days or more. It is clear that while the number of repossessions to date has been low, it is inevitable that there will be a time lag between the onset of the recession and when it begins to affect people, leading to an inability to make mortgage repayments and proceedings being taken by the financial institutions towards repossession. It is also inevitable that we will see more cases, we must be honest about that.
It is incumbent on us, as legislators, to provide assistance in terms of policy in a measured and proportionate way. That is what we must do in a responsible fashion and what this Government seeks to do. It is important to acknowledge that there are already significant supports in place through the mortgage interest supplement scheme, a practical support for people that gives cash to them to assist with their mortgage interest requirements. Almost 14,000 families are benefiting from that today and it is a significant contribution by the State to assist people who are facing difficulties. We are all aware of the good work the 65 MABS offices are doing for people who find themselves in difficulty.
The statutory code on mortgage arrears was introduced earlier this year and it contains tangible provisions that are of assistance to people when it comes to their debt. It states clearly that all genuine cases must be handled sympathetically and positively by the lender with the objective at all times of assisting the borrower to meet his or her obligations and that the lender must explore a number of options before initiating any proceedings, including changes to the level of monthly repayment, deferral of the payment itself, extending the term of the mortgage and changing the type of mortgage. All of those avenues must be explored before a lender is permitted under the code to initiate proceedings. It is important that people get every reasonable opportunity to meet their mortgage commitments and we must encourage people, as soon as they think they are in difficulty, to come forward and engage with the institutions and with MABS to find a way to work through the loan and to overcome the difficulties, which are hopefully temporary.
Some Deputies referred to the commitments in the new programme for Government that require further thought and analysis. Some of them have potential, particularly the idea of the bank taking an equity interest in the house thereby releasing an appropriate percentage of the mortgage.
We have a great love of owning our own home in this country, a tradition that does not exist elsewhere in Europe. Over time we will see shifts in our society towards new models of property possession and occupancy and we are beginning to see the roots of that. The model we should work towards is one of maximum flexibility between the borrower and the lender, where the lender is compelled to work with the borrower to identify an appropriate solution on a case-by-case basis. Such a model, however, cannot involve the writing off of any element of the debt because that would be a dangerous signal to send out. To be fair, no Deputy has suggested that, because many people who are making their mortgage payments are doing so by the skin of their teeth and if we sent out a signal that it was acceptable to miss payments, that there was another way out, it would set a dangerous precedent.
We must have an appropriate response that is sympathetic to the genuine needs of families who are in difficulty to provide a clear path for them to work their way through the difficulty. The last thing any of us wants to see is a family losing its home, the most important asset it possesses.
I appreciate the opportunity to speak on this motion and I thank Deputy Ciarán Lynch for tabling it. There is a common concern on all sides of the House about the concerns of home owners who are in financial difficulties.
It is important to state that there are people in that category who have genuine concerns. Everyone has recognised that the most important thing is to approach the financial institution as early as possible to discuss issues rather than to let problems accumulate. Many people still in good employment are able to meet their monthly mortgage repayments. Ireland has historically been good in this area because Irish people want to own their homes. We should not create unnecessary fear in the population, especially in those who do not have a problem, by dwelling too much on an issue that is serious but does not affect the majority of householders.
Judges dealing with some financial institutions in court have been astounded at the reckless behaviour of the banks issuing the loans. Those cases did not proceed because the banks got the message that they should go home and negotiate rather than march into court to seek a repossession. That is one reason for the banks to be happy to negotiate voluntary agreements because they will get no sympathy from judges who see the level of mortgages they granted to some who clearly could not have paid them. They were unsustainable from day one. Banks are still giving 100% mortgages. I would have been happy in the past if the mortgages were only for 100% but the banks were giving 130% mortgages which they justified on the basis that the property market would continue to increase by 20% or 30% over the following two years and the mortgages would then be worth 100%.
Each of us must have met people in our clinics who not only have 100% mortgages but the cost of whose weddings, honeymoons, two car loans and credit card bills were all lumped into the mortgage.
The Deputy is right. That should be outlawed.
I have met people in my constituency office who have 130% mortgages. I would love to see some of those cases going to court where a responsible judge would tell the banks that they had entered unenforceable contracts. I am one of the few in this House who has no fear for somebody going to court because the day of people being afraid of the banks should be over. The banks must do the bidding of the people from now on, not the other way around.
We should not simplistically point the finger at the banks because we all have a responsibility. Several local authorities have repossessed houses in the past year and previously. In some cases they move more quickly and sharply than some of the commercial banks. Some of the sub-prime lenders were very reckless. Many of us have dealt with cases of people whose community welfare officers granted them a mortgage interest subsidy. Some, however, have been refused and gone to the social welfare appeals office. In those cases the community welfare officers tell people they should not have got their mortgages because they were not sustainable and the banks should not have entered into that agreement. Community welfare officers, who are not financial experts, use their common sense in saying that banks were reckless.
In fairness to the banks they have recently been doing more than they want to admit publically. In the past year or two I have heard of many cases in which the bank has taken back equity in a house and let it to the customer so that not even the next-door neighbours knew. The banks probably do not want to say this up front because they do not want to be seen as a soft touch. Those figures are probably well hidden in the bowels of the banks but it is happening because the last thing the banks want is empty houses for sale because then they will lose through negative equity.
There is a high penalty for transferring from a fixed to a variable rate when it suits a person to do so. Local authorities, however, charge the same penalties.
I thank the Labour Party for tabling this motion. The renewed programme for Government is the way to deal with this problem in the months and years ahead.
I am delighted to have the opportunity to say a few words on this motion and I thank the Labour Party for tabling it. This issue is of great importance to every sector of society. We in Fianna Fáil and in this Government recognise that many families are in deep trouble due to the severe pressure imposed by the serious downturn in the economy.
It is Fianna Fáil's fault.
We have always had at the centre of our economic and social policy the support of those in difficulty. This applies across the House. Now home owners are in difficulty, through no fault of their own, facing ruin and the loss of their homes. This Government has brought forward assistance for them in three ways, the application of a new code of conduct introduced last February on how the building societies and banks should approach people in mortgage arrears.
It is a bit late.
There is also a mortgage interest scheme under the supplementary welfare allowance system. The social welfare system is helping many people in difficulties. There is also the Money Advice and Budgeting Service, MABS, which has successfully been advising people for years. Statistics have been thrown about but the number of people who have lost their houses per capita is way below that in our neighbouring jurisdiction. While that is a statistic we must recognise that individuals and families are faced with the threat of repossession, having lost their jobs and being unable to pay their mortgages. They need help.
Respond! recently gave a presentation to the Oireachtas Joint Committee on Finance and the Public Service about how we should change our system in order to help and protect people. The presentation has been sent to the Department of Finance and deserves serious consideration. The Government could put many of its proposals into operation. The Law Reform Commission is also examining how to deal with debt repayments. We must consider all these studies in order to create a system that will help people who are in trouble.
In the programme for Government, the Government has committed itself to introducing new measures to protect families having difficulty with their repayments. I urge the Government to immediately work on those propositions to allay the fears of people, many of whom will hopefully not lose their homes as the economy picks up. The Government should get a proper programme going to help those in trouble and offer light at the end of the tunnel. I think the banks recognise that repossessing homes and throwing people out on the highways and byways is not profitable for them. If the banks and building societies want to make a profit they should keep people in their houses. I will not enter any further philosophical discussion on that issue. I thank the Labour Party for bringing forward this motion and to assure it that in principle I support it.
Will the Deputy vote for it?
I will be looking forward to the Deputy's support.
Some of its detail, however, is not the be all and the end all. The Government will come forward with a comprehensive programme. I am sure that it will be supported by the Labour Party in due course.
Fianna Fáil needs to hurry up on that.
I wish to share my time with Deputies Mary Upton, Joanna Tuffy, Michael D. Higgins, Jack Wall and Kathleen Lynch.
Is that agreed? Agreed.
I thank Deputy Ciarán Lynch and the Labour Party for putting this motion before the House.
During the period of financial madness, large numbers of families were forced to purchase their homes 50 miles to 70 miles from their workplaces and communities at high prices. A high percentage of them have recently lost their jobs or businesses and are no longer able to pay the high mortgages on their homes. The finance houses, banks, building societies and sub-prime lenders will take off their sheep's clothing and be seen for the greedy wolves that they are, mercilessly pursuing the home owner for every last penny due. Home owners will be dragged before the courts where their homes will be taken from them and be left then with the further debt arising from the negative equity on their homes.
The Labour Party motion, if passed and implemented, would take the first steps in preventing this inevitable scenario. Last night I listened to the Minister of State, Deputy Martin Mansergh, reading a script outlining the Government's position. I was somewhat surprised the Office of Public Works has taken over responsibility for housing. His speech was pathetic. It refused to accept or recognise the reality of the crisis facing thousands of families whose homes are threatened, instead claiming there was no practice of mass evictions in modern Ireland. It stressed we should be careful lest we upset the banks as it may affect our credit rating.
Either the Government is blind to reality or it could not give a damn about the little people. The Government could find €54 billion to bail out the banks and its friends, the developers and builders. As far as those home owners in trouble are concerned, it is a case of let the devil take the hindmost. For this Government, the home owner with a mortgage he cannot pay is the hindmost and can go to the devil.
Deputy Willie Penrose in a forceful contribution to this debate described the financial carousel that faced the home seeker during our period of financial madness when second-hand council houses could change hands for up to €500,000. Home buyers were faced with the might and resources of the finance houses and developers only to be poorly served by the surveyors and solicitors they hired. Banks with their sheep's clothing on shovelled money at the home buyers, convincing them to buy now before there was another increase in price.
In one instance I know of in my area, a developer increased the price of houses in one day by €20,000 per unit. The banks sanctioned the extra loans and mortgages over the mobile telephones of purchasers. The response was simply, "Get in quick, no problem with the extra money". I am sure some bank manager got a bonus for that nice deal. The builder certainly did.
The sheep's clothing is off now and we can see the greedy wolves for what they are while the Government says not to disturb the bankers. All of this could have been prevented and avoided. The Government played a key role in creating and magnifying the problem which is now a crisis. If the Government had implemented the Kenny report on building land, thereby controlling its price, regulated the financial institutions and not adopted the McCreevy light-finger regulation, none of this would have occurred. Of course, Fianna Fáil never had any intention of doing so as it would have offended their paymasters in the Galway Races tent. Now the home owner must pick up the tab and is abandoned by the Government. The Fianna Fáil-Green Party Government has been derelict in its duty.
The stark reality is that tens of thousands of families are unable to pay their mortgages. They must be housed somewhere which they can afford. Instead of them swelling the lists for RAS, rent subsidy or social housing, the Labour Party argues the best option is to let them stay where they have already established their homes with their families. In turn, they should be allowed to pay what they can afford and when their situation improves they can resume full payments on their mortgages.
Unfortunately, during our period of financial madness, houses were used as a common commodity to be speculated on, to invest in and to increase the wealth of those already well-off. If the speculators are in trouble now, they will not get any sympathy from me. A home is not just a piece of real estate or property. A home is usually a once-in-a-lifetime purchase where families put down roots and become part of a community. It is where family members love one another and children are born and reared to adulthood. It is the place where members of a family are protected, cared for and can feel secure. A home is a permanent place of shelter, the roof over one's head and the place to where everyone returns. The right to a home is a basic human right. To treat a home as just another piece of property that can be given or taken away at the behest of a financial institution is immoral. It is the denial to that right to a home and shelter. I urge the Government to seriously think again before rejecting this Labour Party motion.
I thank Deputy Ciarán Lynch for tabling this motion. It seems hard-pressed home owners do not have the same direct line to the Government that the bankers have even when they end up bankrupting the State's largest banks.
This Labour Party Private Members' motion seeks fairness and protection for the people bearing the brunt of the economic catastrophe for which this Government, the developers and the bankers are largely responsible. When one engages in dodgy dealing, bringing the banks to their knees one is retired to a golf course. However, those who have lost their jobs or were panicked into getting onto the mystical property ladder by a coalition of developers, mortgage lenders, Fianna Fáil politicians and newspapers, live in fear of being pursued to the fullest extent of the law.
A potential crisis is looming. The numbers of mortgage holders estimated to be in arrears is roughly 35,000. This includes families with young children, many living in half-finished estates on the edge of towns far from where they used to work. Last Monday, we witnessed the largest number of home repossession for the year so far, 18. The banks which are to avail of the NAMA bailout are merely waiting for the ink to dry on the transfer of toxic debt to the State before they begin vigorously pursuing those who have mortgage arrears. They do this to shore up their asset base to make themselves more appealing to the stock market, not for the good of the country to which they are now beholden for bailing them out. Neither do they have any concern for unfortunate mortgage holders who cannot keep up with their repayments.
The core value of the Labour Party's motion on which we will vote tonight is that whenever possible the family should be assisted to continue residing in its own home. It is of no benefit to the bank to evict someone when they will not be able to sell the house. It would be much better and more responsible to attempt to establish a new mortgage agreement, one which can be met in the longer term. It is certainly of no benefit to the State if we see waves of people evicted from their homes. Thousands are already waiting on social housing lists across the country, some for almost a decade. The McCarthy report threatens to close family resource centres and our suicide prevention strategy was recently exposed as a sham by a report in the Irish Examiner. In short, as a society we are not ready for the wave of repossessions that are likely to occur in the new year once NAMA is whipped through this House.
This motion seeks some fairness for hard-pressed mortgage holders. Where they are trying to pay they should be given time and space from the fear of eviction and the spectre of sleeping rough, since we have never implemented all of the recommendations of the homelessness strategy. In many cases the banks and other mortgage lenders, not in NAMA, went crazy in sub-prime lending. I know of one case where a woman on a community employment scheme was given a top-up mortgage of €170,000. She never had any real chance of paying it back. Now the benevolent mortgage provider is looking for its pound of flesh. This means leaving this woman and her children homeless.
Surely some of the Government backbenchers are in touch with the real world. While listening to some of them this evening, I became convinced they will be supporting this motion. Every day at our advice clinics we meet the people who, having lost their jobs, see no hope in the short term of keeping up repayments. These people need assurances that they will not be evicted and end up on the homeless list. Our responsibilities and duties are to everyone in the State and not merely to the well connected. These people must be given some breathing space.
I wish to cite two examples of the type of person who now needs assistance, who differs greatly from the type of person who needed assistance in the past. A story published in last Saturday's edition of the Irish Independent outlined the difficulties faced by a man and his wife who had taken out a mortgage. The man had a monthly salary of €4,700 and monthly mortgage repayments of €1,500 on a €230,000 mortgage. He worked in construction, but lost his job. He has credit card debts of €16,000. He now has a weekly wage of €400. If he were to sell his house, he would make no more than €180,000, which would be €60,000 less than the value of his mortgage. A credit card company telephoned him and offered him a €10,000 credit limit, which he accepted at the time.
I know of a similar case in my office involving a young couple. One partner who is a carpenter worked in construction. The couple purchased a house for more than €300,000 and they have monthly mortgage repayments of €1,500. The partner who worked in construction on losing his job applied for jobseeker's benefit and was only given such benefit for 12 months. When he applied for jobseeker's allowance and account was taken of his partner's income, that brought him just over the qualifying income limit. The couple were turned down for mortgage interest supplement and family income supplement, for which they were just over the qualifying income limit. They are now in severe financial difficulties, have mortgage arrears and cannot pay their bills. Their mortgage repayment protection policy has run out and they are in dire straits.
These cases are extreme in one sense but they are becoming typical and will become more so. We need to adjust to this new type of person who needs assistance. In a sense they are the new poor. Some of these people are in receipt of social welfare payments now, never having been in receipt of them previously, and more of these people are not in receipt of any form of social welfare assistance. There is much talk about the need to protect the poor and we need to do that. Traditionally, that has been taken to be people on low incomes, social welfare recipients and often people living in social housing or people who have low mortgages. We also need to protect people who, traditionally, were middle-income earners who have now fallen on hard times. We seem to forget that the ratio of mortgage payments to income in the case of middle-income earners is far greater than it was in the past, even though these people might appear to have good incomes — although they incurred reductions recently — compared to incomes 30 years ago. That is all a product of the housing bubble and the Celtic tiger. We need to protect those people. Our system is not geared towards protecting those new families who are experiencing difficulties.
The Society of St. Vincent de Paul has a comment on its website, which I find striking, to the effect that some conferences working with individuals and families, who did not benefit from the boom, are experiencing little change in their workload. I am not surprised by that because the position of a person on a social welfare income, living in social housing a few years ago and his or her position now has not changed much. We need to protect those people. Deputy Gilmore raised that issue this morning. We must continue the progress being made in lifting those people out of poverty and make sure that relative poverty does not increase. In doing that, we do not want to allow the middle income group to fall into poverty, whereby we would have a reduced middle income group. We talk about the middle class but often these are people in the middle who have huge mortgages and outgoings. We need to remember that these people are now struggling.
The Minister's response to the difficulties faced by such people is often to refer to MABS or the mortgage interest supplement, but many of these people do not qualify for that supplement. In its pre-budget submission, MABS refers to helping the poor, its clients mainly being people on low income and social welfare recipients living in social housing. It does not cater for the new type of person facing financial difficulties. Much of that is related to the geography of where its offices are based, which tend to be in the more disadvantaged areas. There is no MABS office in Lucan where many people are losing their jobs. Lucan would be very representative of the commuter belt where people are in difficulty. We need to gear up our system to deal with the new type of people who are facing financial difficulties. We need to provide them with assistance, the type that Deputy Ciarán Lynch outlined in his motion. This is not a short-term problem that can be dealt with by providing more staff, MABS or a 12 month grace period in respect of home repossessions. This is going to be a long-term problem. We need to restructure our system to help these people pay their mortgages. We need to consider mechanisms such as the State or the banks taking an equity in these people's houses to allow them a longer period to pay off their mortgage. We must do something to address this issue which will become a growing problem.
I welcome the opportunity to speak in support of this motion tabled by my Labour Party colleague, Deputy Ciarán Lynch. It is astonishing that people would speak with apparent compassion yet be ready at 8.30 p.m. to vote down a motion. If there was an ounce of sensitivity and reality shown for the position of people who are threatened with repossession of their homes, the Government would accept this motion. It would make whatever changes it wished to it. It is a modest proposal. It involved bringing forward a scheme which would address the issue and put proper obligations on the banking system, yet the Government will not do that.
This motion is being debated in the middle of Report Stage of the National Asset Management Agency Bill. That is interesting and tells one a great deal. When we conclude the NAMA Bill this week we will ask ourselves if anything has changed. The Government now has a chance to show that something will change, that is, the relationship of banks with those who are relying on having a roof over their heads, something that they call their home. As Deputy Stagg said, it is important to realise that the home which provides for looking after one's partner and one's children is totally different from other assets. The word "home" is different from a principal private residence and has nothing to do with getting one's foot on the first rung of the property ladder. The word "home" is about children, communities and participation in education. That is what is at stake, and the Fianna Fail-Green Party Government is doing nothing about it. It is saying it will go to the banks that broke this country and ask them to be kind to their mortgagees and try to behave a little better and so forth. There is no statutory obligation in the NAMA Bill that will put any lean on the banks in regard to mortgage holders. That opportunity is not being taken. Even the intention of doing something beyond that will be refused tonight by all those who are pouring out compassion but in the end it is their feet and their fingers that will count in terms of how they will vote at 8.30 p.m.
In regard to the scheme proposed in this motion, I want to be immensely practical about this. Those who end up in financial difficulty will often be couples where both partners were working. They will both have been forced into the housing market and forced to take an excessive mortgage, badly, and sometime fraudulently, assessed, driven by the banks and the developers and in many cases one or other partner will lose their job. These are the people who are in difficulty. They have a fictitious relationship with the concept of housing.
As to what is to happen to them, people have referred to MABS and so on. MABS is doing a useful job but it is under-resourced. It can only deal with a small number of cases. Are we to wait for all the children to be out on the side of the road before we act? We could take measures such as creating the capacity for a person to move from having a mortgage to having a lease and being a tenant. In the NAMA legislation there is no dividend that the Green Party spoke about, for example, that local authorities could take some of the land on which houses have been built or even the vacant houses and use them to reduce the housing list or to deal with people who may be coming on to the housing list. The same people who we are dealing with in the NAMA legislation, forced mortgages on to people who did not want them. Instead of giving people a mortgage that was two and a half and three times their income, it gave mortgages that were ten and 12 times people's incomes. I refer to greedy developers who are not builders. Builders are good decent people who put one brick on top of another. It was the developers who hoarded land at exorbitant prices, fuelled on by banks, which knew that they were talking to a Government that liked that kind of thing and who would contribute to the party, who created this disaster, which involves couples now in difficulty. The children of these couples and the partners of these couples who have been failed by the economy are not the people who should be at risk. Tonight, at half past eight, even the intention to do something will be voted on. In the NAMA legislation we will see where, in fact, the Government stands — with speculative bankers rather than with those whose homes are threatened.
I thank my colleague, Deputy Ciarán Lynch, for putting this motion forward.
Prior to the NAMA legislation coming into the House, in my constituency many people came to me because they were in trouble with their mortgages. I remember saying to a number of them, and, indeed, to members of the Fianna Fáil family, that the Government had a wonderful opportunity, either in tandem with or prior to NAMA, to show that it was a caring Government and would help families in trouble.
I hear the Government Deputies hanging on to one point, that there has only been X number of repossessions in recent months. That relates to final orders, but thousands of letters have gone out.
The threats.
The threats from lending agencies have gone out right around the country to people with families who are under immense pressure.
I wonder about some of the cases that have come to me. When I was told that there were only a certain number of repossessions, I thought they could not all be in my area. When people come and tell me they saw a letter stuck on their door telling them to hand over the keys on a given date, that may not be the final order but, by God, it puts some pressure on the family concerned to try to address that matter.
On assessment of the loan applications, I always said that the local authority method was the best. When considering shared ownerships, the one point the local authorities made was that if there was even one day in the year for which the income of the person could not be accounted, they would not give the loan. They set an example that could have been followed by everybody else. However, the banks were so greedy, together with the developers and with the solicitors, that they wiped that to one side. They did not believe in that.
A man came to me who had sold the family home, a small house in Meath, and bought a house near me. When he moved, unfortunately, and sadly, his wife was diagnosed with cancer. When he came to see me, because he had to give up work to look after his wife, he wanted to apply for mortgage interest relief, which we eventually got through for him. I asked him how he got the loan and he answered that the amazing thing was that he had only to prove to himself that he could repay the loan because the guy at the far side of the counter would have given him twice what he wanted on the basis he would get a share of it. That was the standard the banks set and, suddenly, they are crying into their milk saying we are telling stories that are untrue.
I brought a chap to a social welfare hearing who had a letter from a lending agency stating that it was looking for €560 a week from him when the only income coming into his house was a social welfare payment of €400. I blame the solicitors and the banks for their lack of understanding of how this mechanism should have worked. They should look at what the local authorities did.
Where stand those who have shared ownership with the local authorities? Many of those own 75%, 60%, 50% or 40% of their house and the local authority owns the rest. Now they are not able to pay. Is the responsibility for such loans shared with the local authority or is it the case that the person is the tenant of the house on one side and the owner of it on the other? Is the local authority responsible in such cases as well? I would hope that the Minister will look at the matter and come up with a solution because there are hundreds in that position who want to know where they stand.
When Lehman Brothers went to the wall and the Government decided in an emergency meeting last year — behind closed doors, of course, which is where the banks always did their business — to bail out the banks to the tune of €11.5 billion, for which people in this country had worked hard and for which we are now borrowing, we thought that the world had changed. As we quickly found out, however, the old order is still intact.
The old order is the little golden circle that always existed in this country, and still exists. The banks gave the developers the money to buy fields and build houses. The developers then put the houses on the market and the banks gave the people the money to buy the houses. The house prices were vastly inflated because the banks did not care. If the developer did not sell the houses, the banks did not get repaid and, therefore, the banks had to give to the people as well. It went around and around, repeatedly, in such a circle until there were people paying twice, sometimes three times, what the house was worth. We are in a position where the same banks who caused this bubble have collapsed and the same taxpayers, who have been fleeced in buying the houses, now must bail out the banks. Those very banks are threatening to put those people out of their homes, for which they paid too much in the first place and for which they cannot now pay. That is incredible. It is incredible that there are not mobs at the gates of this place to tear down the old order. They will, eventually, tear down the old order because they will eventually realise the awful injustice that has been done to them.
I would ask people to think seriously about those who have lost their jobs and have mortgages of anything up to €1,600 a month to whom the Department of Social and Family Affairs states they must renegotiate the loan. I hear all the backbenchers in here tonight, from the Green Party to Fianna Fáil, speak of sympathy. They can have all the sympathy they like. What these people need is help, and they need it immediately. The type of resolution that the Labour Party has put forward is the kind of help and security they need. Come this Christmas they will be worried, not just about putting food on the table but about keeping the roof over their heads.
I ask Deputies to close their eyes and imagine themselves, with two small children, unable to find that €1,600 this time next month. You may decide that all you will pay is the interest and that you will extend the loan to 35 years. You spread it out to 35 years and now you are paying interest only, which amounts to €1,100 a month. Now the bank has decided to move in on you. The same bank that has caused this to happen is now being subsidised by the State, again, through mortgage interest relief. Here, again, with mortgage interest relief, is another way of transferring the taxpayers' money back into the banks. Most of these people will be almost 65 by the time these mortgages are paid. Have we thought about the consequences of that? They will probably have retired and still be paying a mortgage.
Say you lose your home and you must go into private rented accommodation, from whom do you rent a house?
Landlords, again.
From landlords and developers. Does the Government not see the awful circle? Does it not realise that it must do something about this, and that it is a changed world and people are prepared to accept that there must be a new order? It is said the Irish people give more per capita in times of famine abroad because we have an inherited memory of famine. Equally, we have an inherited memory of dispossession and eviction and we do not want it reinforced by allowing to happen the awful catastrophe which is so clear and coming down the road towards us. The Government has the opportunity to stop this happening and, for once, to break out of the awful cycle that has run this country into the ground.
The Minister for Finance may share some of my time. On behalf of the Government, I thank all the Deputies for their contributions to this debate.
The provisions contained in the code of conduct on mortgage arrears still seem to be confusing to some Deputies nine months after the statutory code was introduced. The code requires a lender to wait at least six months from the time arrears first arise before applying to the courts to commence enforcement of any legal action on repossession. In the case of AIB and Bank of Ireland, which have been recapitalised by the State, the moratorium period has been extended to 12 months for the duration of the subscription agreement. This means that if a homeowner falls into arrears on 1 November 2009, the lender must wait at least six months from that date, or 12 months in the case of AIB and Bank of Ireland, before commencing enforcement of legal action. The suggestions made by Deputies that the moratorium will run out in February 2010 are wide of the mark. I stress that the code gives borrowers important legal rights, and the borrowers should not hold back from getting in touch with their lenders if they get into difficulty.
Deputies were informed in the House yesterday that the proposal to extend the moratorium to 24 months has real potential to cause serious funding problems for Irish banks and, ultimately, for the State itself. International credit markets are a source of funding for the Irish banks and these markets are fully aware of the exposure of Irish banks to the residential mortgage market. It is very important not to give the message to funding markets that it is somehow acceptable to default on a mortgage in Ireland. It is also important to state that the Minister has been reassured by the guaranteed banks that they are not intending a campaign of repossessions against homeowners who are in arrears.
I will share the remainder of my time with the Minister, Deputy Brian Lenihan.
It is an interchangeable script.
I note the suggestion made by the Labour Party for the establishment of a national house mortgage service. A clear flaw in this proposal is the over-detailed regulation of normal business activity by lenders. Deputies will appreciate that a balance must be achieved by the Government between influencing private banks through the bank guarantee scheme and other financial support incentives while at the same time being seen to have a hands-off approach to the day-to-day running of these institutions, which must operate on a strictly commercial basis.
Since when?
Other elements contained in the proposed national house mortgage service are already reflected in the code on mortgage arrears.
Deputy Terence Flanagan stated in the House yesterday that 18 repossession orders were granted by the courts earlier this week. I do not dispute this figure. However, it is not clear how many, if any, of these repossession orders apply to owner occupiers. It is abundantly clear from media reports, however, that most repossessions involve sub-prime lending, which by its nature is much more risky than ordinary mortgage lending. Repossession orders affect tenanted properties as well.
Wait until they have NAMA.
The Labour Party is persistently putting out this story that an avalanche of repossessions will take place after NAMA. That is simply not true. It is political scaremongering and it is extraordinarily unfair to owner-occupiers in this country.
That is codology and rubbish.
Allow the Minister to continue. He has very little time.
What the Labour Party is engaging in here is highly irresponsible. In the past ten days I have met several constituents whose feelings on this subject have been inflamed by scaremongering from this particular political quarter.
It is not scaremongering.
It is, because it is untrue.
Where is the evidence?
I had five people in my clinic on the one day on this issue.
Please, Deputies.
The Government is fully committed to protecting home security. Those commitments were written into the programme for Government. We will do everything in our power to keep the roof over everybody's head. What we cannot do is simply give a blanket two-year exemption for everybody and bring into question the entire financial system.
Nobody asked the Minister to do that.
The Labour Party is well aware of that.
I wish to share my time with Deputy Ciarán Lynch, who I also wish to compliment and congratulate on bringing this motion before the House. This is not an issue of scaremongering. The Minister for Finance in his very minimal contribution to this debate should not have introduced that note to what was otherwise a very reasoned discussion on all sides of the House. He should have been present to hear Members from his own side acknowledge that this is a very real problem and that they are encountering it in their constituency clinics, just as the rest of us are.
I did not say it is not a problem.
The Minister said it was scaremongering.
This is a very reasonable motion put forward by the Labour Party. The Government is missing an opportunity, first, to accept a reasonable proposal that is put from the Opposition benches, and, second, to deal with a problem that will have to be dealt with eventually.
There is a fundamental contradiction in the Government's response to the motion. On the one hand, it says there were only 20 repossessions this year, or 90 including sub-prime lending, and that, therefore, there is not really a problem of repossession. On the other hand, it says that if the Labour Party motion is passed, it will have a disastrous consequence for the country's financial position. Speaking during the debate yesterday, the Minister of State, Deputy Mansergh, stated, "The proposal for a lengthy moratorium is highly dangerous in terms of financial market perceptions and the effect they might have on the funding of the banks on which the whole economy ultimately depends." If the problem is so small, how could it have such an enormous effect?
The answer to that is also contained in the Minister of State's contribution, where he acknowledges, "The number of home owners in arrears for 90 days or more with institutions covered by the State guarantee is currently of the order 15,000-16,000." That is just with the institutions covered by the State guarantee, without talking about people who are in the sub-prime situation. Second, he also acknowledges there are currently some 14,000 people in receipt of mortgage interest supplement, an increase of more than 200% on those receiving the payment at the end of 2007. Clearly, even on the Government's own admission, there is a problem which is real and will have to be addressed.
The Government will come to the House and tell us that dealing with the banking situation and the State of the public finances is urgent and cannot be postponed. However, the only comfort it will offer to the unfortunate householders faced with mortgage arrears as a result of having lost their jobs, or their businesses being in trouble, or because of the recession which was caused by Fianna Fáil, is to say that, on the one hand, those people can deal with the banks under the code of practice and, on the other hand, that there is the revised programme for Government. Frankly, one of those is worth as little as the other.
We suggest that the problem of repossession and the problem of risk to people's homes is something that should be dealt with sooner rather than later. Early intervention is better because it will cost less. Inevitably, if somebody's home is repossessed, the State will have to bear the financial consequence at the end of the line, either through the provision of social housing or through the provision of rent allowance, the RAS or some other intervention. It will cost and, in the meantime, it will cost not just financially but in human and emotional terms because of the grief that people have to go through due to going through the repossession process. It is better in everybody's interest to deal with this early, which is what the Labour Party motion calls for — early intervention.
The second reason our motion should be accepted is that it removes the element of fear. The big problem for people, even if they have not got the letter or heard the knock on the door to tell them they will be brought to court, is that they fear the possibility that they may lose their homes. That is one of the factors that is contributing to the decline in consumer confidence, which in turn is reflected in revenues, in unemployment and in the difficulty we are having in recovering like other European countries.
The third reason the Government should accept this motion is that it will give it something real with which to secure agreement on the other measures that are required to turn around the country's finances and economy. I suggested to the Taoiseach yesterday that the Government should seek to negotiate an agreement for national recovery which would contain a number of elements, one of which would be a guarantee to people that whatever happens during this recession, provided their situation has arisen from the economic circumstances, they will not lose their homes. If that were put on the table, I believe it would be possible to secure agreement on a whole range of other things with those currently engaged in talks with the Government.
The Government is missing an opportunity to ease the fear among people who are afraid of losing their homes and to ease the real pain they are suffering at the moment. It is also missing an opportunity to carry out an early intervention which will cost less in the long run, and it is giving up something with which it can secure agreement on the other measures that will be required to turn around the public finances. Unfortunately, by voting down this motion tonight, the Government is spurning that opportunity. It is regrettable that it is doing so, and it is very short sighted in taking that approach.
I would like to begin by thanking all those who contributed to this debate in the past two nights. However, it is regrettable that the Government should seek to reject this motion and replace it with what is fundamentally a deeply flawed amendment. It is an amendment that buries its head in the sand and repeats once again that the banking fundamentals are sound, when all statistical information clearly demonstrates that there is a crisis in the mortgage sector and that this is an issue of real systemic importance.
The Government amendment notes that the legal repossession of homes reported by institutions covered by the guarantee scheme amounted to 20 for the first nine months of this year. However, this number has almost doubled this week and, more importantly, legal repossessions are ultimately the final order and cannot be judged to be a true measure of the number of mortgages in difficulty and coming before the courts. Everybody knows that the main banks put a halt to proceedings on repossession cases until NAMA becomes fully operational. It is also public knowledge that there are hundreds of cases pending and that hundreds of cases will commence in the new year. The letters are written and are ready for posting.
The Government's amendment also notes that the number of homeowners in arrears for 90 days with institutions covered by the State guarantee is currently between 15,000 and 16,000 and claims that the rate of increases in arrears has moderated in the early months of this year. The figure of 15,000 may be the figure in respect of the institutions covered by the State guarantee, but this does not take into account the number of sub-prime lenders and other players in the market. These borrowers need and deserve to have their plight taken into account and their numbers are potentially far greater than those potential defaulting borrowers with the State guaranteed institutions.
The Government's amendment makes note of the introduction of a statutory code of conduct on mortgage arrears. In theory, this all sounds fine. Deputy White mentioned this evening that 100% mortgages are still being issued. Has any bank or building society been censured for failing to comply with these terms? There is no explanation as to how this code in its operation is policed, nor is there an explanation of the consequences for non-compliance. In effect, it is a code of conduct that lacks any teeth.
Much mention has been also made of the renewed programme for Government which "envisages" expanding mortgage support measures. The time for envisaging has long since passed. What is required by people in fear of losing the roof over their heads is action and a fair playing pitch in the existing emergency. People are suffering and that suffering is real and present and undermines the family life of tens of thousands of households. Promises for the future are of little use at the moment. Ultimately, programmes for Government, whether old or new, are akin to something stored in the attic — occasionally encountered, seen to be useful and forgotten about shortly afterwards. Programmes for Government for this Government are just passing moments of thought.
According to the ESRI, the estimated number of mortgage loans in negative equity by the end of 2009 will be almost 120,000. The full scope of the ESRI's estimation suggest that by the end of 2009, depending on the individual house price, there could be anything between 116,000 and 188,000 mortgages in negative equity. So much for the fundamentals being sound.
In reply to a parliamentary question I asked the Minister for Social and Family Affairs early this week about mortgage interest supplement applications, the figures show that for the months of August and September there were 1,123 and 1,245 claims registered, respectively. Much has been made on the Government side of the mortgage interest relief scheme. As mentioned last night, there are more than 14,000 people who have received the mortgage interest supplement this year, which is an increase of 200% since 2007. While the mortgage interest relief programme provides some relief for households, it is not a solution in itself and falls far short of what is required. What is required is outlined in our motion.
The Labour Party's motion before the House tonight is an opportunity to address that hardship in a real and measurable way. It is an opportunity to demonstrate clearly to hard-pressed mortgage payers that this House, by means of legislation, is committed to achieving equity and fairness for home owners. At the core of the Government's resistance to accepting our motion is an issue of perception. When the Minister of State, Deputy Mansergh, spoke last evening, he said there is already a perception of risk in connection with the Irish banks' mortgage loan books that is higher than justified. He went on to say that it was therefore essential that nothing be done to raise further fears about the quality of mortgage loan books. Whatever one might think about Ireland at the moment, this was like a comment in a Dickens novel that the lady's demeanour might be disposed to something. The idea that the Irish banking reputation might be affected by extending a mortgage moratorium for two years is a nonsense.
That is the real world.
The real world knows that Irish banks are bust and have been bust for a long time.
That is the real world.
The banks have liabilities that are four to five times their asset base. That is a busted flush. There is no basis to the contention suggested last night that the 24 month accommodation will create any risk of unfavourable perceptions in the markets about Irish banking lending.
Ultimately, the Government amendment is about being more concerned about its friends in the banks than the plight of distressed borrowers. The Labour Party has been accused by the Government of talking up the problem. The Government is in denial of the reality for 35,000 households which are currently in mortgage arrears and is in fact trying to talk down the problem. The Government mantra tonight is the same as on the night of the bank guarantee — the fundamentals are sound, let us not worry about it, all the measures are in place.
When we took action the Labour Party ran away.
We were right.
We stood up to it, but the Labour Party ran away from it.
In April 2006, I recall the then Taoiseach, Deputy Bertie Ahern, coming on the six o'clock news and telling people to go out and buy their houses because their value would keep rising. The Government and its supporters were talking up the property market back then.
It may have been beyond reasonable expectation to have expected this Government to accept what the Labour Party is proposing this evening. However, the minimum we expected was that the Government would recognise the extent of the problem and come forward with real and meaningful measures. That has not happened. The Labour Party will reject the Government's amendment this evening. This complex problem requires many significant measures to be carried out and based within a legislative framework. The Labour Party's motion, which calls for a two-year moratorium on family home repossessions and the provision of a national home mortgage service to assist mortgage holders who are in difficulty, is the first stage of its approach to put in place structures and processes that will establish security of tenure in the residential property market for distressed home owners. Having listened carefully to contributions from both sides of the House during this debate, I have reached the conclusion that a viable and robust mortgage modification programme can be delivered only by means of a statutory legislative code, one that requires the need for a national home mortgage service.
I commend this motion to the House.
Amendment put.
The Dáil divided: Tá, 81; Níl, 74.
Tá
- Ahern, Dermot.
- Ahern, Michael.
- Ahern, Noel.
- Andrews, Barry.
- Andrews, Chris.
- Ardagh, Seán.
- Aylward, Bobby.
- Blaney, Niall.
- Brady, Áine.
- Brady, Cyprian.
- Brady, Johnny.
- Browne, John.
- Byrne, Thomas.
- Calleary, Dara.
- Carey, Pat.
- Collins, Niall.
- Conlon, Margaret.
- Connick, Seán.
- Coughlan, Mary.
- Cowen, Brian.
- Cregan, John.
- Cuffe, Ciarán.
- Curran, John.
- Dempsey, Noel.
- Devins, Jimmy.
- Dooley, Timmy.
- Fahey, Frank.
- Finneran, Michael.
- Fitzpatrick, Michael.
- Fleming, Seán.
- Flynn, Beverley.
- Gogarty, Paul.
- Gormley, John.
- Grealish, Noel.
- Hanafin, Mary.
- Harney, Mary.
- Haughey, Seán.
- Healy-Rae, Jackie.
- Hoctor, Máire.
- Kelleher, Billy.
- Kelly, Peter.
- Kenneally, Brendan.
- Kennedy, Michael.
- Killeen, Tony.
- Kitt, Michael P.
- Kitt, Tom.
- Lenihan, Brian.
- Lenihan, Conor.
- Lowry, Michael.
- McEllistrim, Thomas.
- McGrath, Mattie.
- McGrath, Michael.
- McGuinness, John.
- Mansergh, Martin.
- Martin, Micheál.
- Moloney, John.
- Moynihan, Michael.
- Mulcahy, Michael.
- Nolan, M. J.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- O’Brien, Darragh.
- O’Connor, Charlie.
- O’Dea, Willie.
- O’Flynn, Noel.
- O’Hanlon, Rory.
- O’Keeffe, Batt.
- O’Keeffe, Edward.
- O’Rourke, Mary.
- O’Sullivan, Christy.
- Power, Peter.
- Power, Seán.
- Roche, Dick.
- Ryan, Eamon.
- Sargent, Trevor.
- Scanlon, Eamon.
- Smith, Brendan.
- Treacy, Noel.
- Wallace, Mary.
- White, Mary Alexandra.
- Woods, Michael.
Níl
- Allen, Bernard.
- Bannon, James.
- Barrett, Seán.
- Behan, Joe.
- Breen, Pat.
- Broughan, Thomas P.
- Bruton, Richard.
- Burke, Ulick.
- Burton, Joan.
- Byrne, Catherine.
- Carey, Joe.
- Clune, Deirdre.
- Connaughton, Paul.
- Coonan, Noel J.
- Costello, Joe.
- Coveney, Simon.
- Crawford, Seymour.
- Creed, Michael.
- Creighton, Lucinda.
- D’Arcy, Michael.
- Deasy, John.
- Deenihan, Jimmy.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Feighan, Frank.
- Ferris, Martin.
- Flanagan, Charles.
- Flanagan, Terence.
- Gilmore, Eamon.
- Hayes, Brian.
- Hayes, Tom.
- Higgins, Michael D.
- Hogan, Phil.
- Howlin, Brendan.
- Kehoe, Paul.
- Kenny, Enda.
- Lee, George.
- Lynch, Ciarán.
- Lynch, Kathleen.
- McCormack, Pádraic.
- McEntee, Shane.
- McGinley, Dinny.
- McManus, Liz.
- Mitchell, Olivia.
- Morgan, Arthur.
- Naughten, Denis.
- Neville, Dan.
- Noonan, Michael.
- Ó Caoláin, Caoimhghín.
- Ó Snodaigh, Aengus.
- O’Donnell, Kieran.
- O’Dowd, Fergus.
- O’Keeffe, Jim.
- O’Mahony, John.
- O’Sullivan, Jan.
- O’Sullivan, Maureen.
- Penrose, Willie.
- Perry, John.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Reilly, James.
- Ring, Michael.
- Shatter, Alan.
- Sheahan, Tom.
- Sherlock, Seán.
- Shortall, Róisín.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Tuffy, Joanna.
- Upton, Mary.
- Varadkar, Leo.
- Wall, Jack.
Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Emmet Stagg and Paul Kehoe.
Amendment declared carried.
Question put: "That the motion, as amended, be agreed to."
The Dáil divided: Tá, 81; Níl, 74.
Tá
- Ahern, Dermot.
- Ahern, Michael.
- Ahern, Noel.
- Andrews, Barry.
- Andrews, Chris.
- Ardagh, Seán.
- Aylward, Bobby.
- Blaney, Niall.
- Brady, Áine.
- Brady, Cyprian.
- Brady, Johnny.
- Browne, John.
- Byrne, Thomas.
- Calleary, Dara.
- Carey, Pat.
- Collins, Niall.
- Conlon, Margaret.
- Connick, Seán.
- Coughlan, Mary.
- Cowen, Brian.
- Cregan, John.
- Cuffe, Ciarán.
- Curran, John.
- Dempsey, Noel.
- Devins, Jimmy.
- Dooley, Timmy.
- Fahey, Frank.
- Finneran, Michael.
- Fitzpatrick, Michael.
- Fleming, Seán.
- Flynn, Beverley.
- Gogarty, Paul.
- Gormley, John.
- Grealish, Noel.
- Hanafin, Mary.
- Harney, Mary.
- Haughey, Seán.
- Healy-Rae, Jackie.
- Hoctor, Máire.
- Kelleher, Billy.
- Kelly, Peter.
- Kenneally, Brendan.
- Kennedy, Michael.
- Killeen, Tony.
- Kitt, Michael P.
- Kitt, Tom.
- Lenihan, Brian.
- Lenihan, Conor.
- Lowry, Michael.
- McEllistrim, Thomas.
- McGrath, Mattie.
- McGrath, Michael.
- McGuinness, John.
- Mansergh, Martin.
- Martin, Micheál.
- Moloney, John.
- Moynihan, Michael.
- Mulcahy, Michael.
- Nolan, M. J.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- O’Brien, Darragh.
- O’Connor, Charlie.
- O’Dea, Willie.
- O’Flynn, Noel.
- O’Hanlon, Rory.
- O’Keeffe, Batt.
- O’Keeffe, Edward.
- O’Rourke, Mary.
- O’Sullivan, Christy.
- Power, Peter.
- Power, Seán.
- Roche, Dick.
- Ryan, Eamon.
- Sargent, Trevor.
- Scanlon, Eamon.
- Smith, Brendan.
- Treacy, Noel.
- Wallace, Mary.
- White, Mary Alexandra.
- Woods, Michael.
Níl
- Allen, Bernard.
- Bannon, James.
- Barrett, Seán.
- Behan, Joe.
- Breen, Pat.
- Broughan, Thomas P.
- Bruton, Richard.
- Burke, Ulick.
- Burton, Joan.
- Byrne, Catherine.
- Carey, Joe.
- Clune, Deirdre.
- Connaughton, Paul.
- Coonan, Noel J.
- Costello, Joe.
- Coveney, Simon.
- Crawford, Seymour.
- Creed, Michael.
- Creighton, Lucinda.
- D’Arcy, Michael.
- Deasy, John.
- Deenihan, Jimmy.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Feighan, Frank.
- Ferris, Martin.
- Flanagan, Charles.
- Flanagan, Terence.
- Gilmore, Eamon.
- Hayes, Brian.
- Hayes, Tom.
- Higgins, Michael D.
- Hogan, Phil.
- Howlin, Brendan.
- Kehoe, Paul.
- Kenny, Enda.
- Lee, George.
- Lynch, Ciarán.
- Lynch, Kathleen.
- McCormack, Pádraic.
- McEntee, Shane.
- McGinley, Dinny.
- McManus, Liz.
- Mitchell, Olivia.
- Morgan, Arthur.
- Naughten, Denis.
- Neville, Dan.
- Noonan, Michael.
- Ó Caoláin, Caoimhghín.
- Ó Snodaigh, Aengus.
- O’Donnell, Kieran.
- O’Dowd, Fergus.
- O’Keeffe, Jim.
- O’Mahony, John.
- O’Sullivan, Jan.
- O’Sullivan, Maureen.
- Penrose, Willie.
- Perry, John.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Reilly, James.
- Ring, Michael.
- Shatter, Alan.
- Sheahan, Tom.
- Sherlock, Seán.
- Shortall, Róisín.
- Stagg, Emmet.
- Stanton, David.
- Timmins, Billy.
- Tuffy, Joanna.
- Upton, Mary.
- Varadkar, Leo.
- Wall, Jack.
Tellers: Tá, Deputies Pat Carey and John Cregan; Níl, Deputies Emmet Stagg and Paul Kehoe.
Question declared carried.