The issue of mortgage and personal debt is having profound implications for the well-being of everyone in society and it will continue to do so for decades to come unless positive action is taken now. I am pleased to see the Government, after such a short time in office, is recognising the severity of the problem and actively examining measures to combat it.
There are few solutions to be found in apportioning blame but it must be acknowledged that there is an element of collective responsibility. Banks lent too much and too freely in the recent past; Irish banks were pumped with money by European banks looking to cash in on the Irish property market; builders built quick and fast and, as we are now seeing, to a less than acceptable standard in some instances; some borrowers accepted mortgages too readily without fully thinking through the consequences of the onerous obligations which a mortgage brings; and the Government failed to provide a proper measure of oversight and regulation with catastrophic consequences.
The new Government set up the interdepartmental mortgage arrears working group to examine methods of assisting those grappling with mortgage arrears. It was also set up to ensure that help is provided to those who cannot pay and not to those who choose not to pay.
There is a consensus, not just on the magnitude and the urgency of the debt crisis but also on the solutions to address it. Most of those engaged in the debate believe that new, reformed bankruptcy legislation is required; most recognise that it is not only mortgage debt, but multiple sources of debt, which need to be tackled in a holistic way; and most correctly believe that the vast majority of those suffering from debt problems are genuinely unable to pay rather than simply refusing to do so. It is these who must be supported by Government.
The report is correct in concluding that a blanket debt forgiveness plan would not be practical or beneficial. The cost of such a scheme would be colossal and, more worryingly, it could provide an opportunity for certain persons to escape their responsibilities. It would also be extremely unfair to those with long-established mortgages who have made sacrifices for ten, 20 or more years so as to be able to pay off their home loans, and it would also be unfair on those who, for whatever reason, choose not to take out a mortgage but to rent a home instead.
I fully welcome the recognition from the group that some mortgages are simply unsustainable leaving people in hopeless situations. It is in no-one's interest that such mortgages be allowed to continue with all the negative effects over-indebtedness can have on individuals and families. Another proposal, that of introducing a mortgage-to-rent scheme, could provide a real solution to some struggling homeowners and would allow families to stay in their homes and the communities in which they have built their lives.
On the legal side of the matter, I positively welcome the Government's commitment to reform the bankruptcy law which began with the commencement of the new bankruptcy legislation on 10 October. A non-judicial debt settlement system must form a significant component of the reforms on which the Minister for Justice and Equality, Deputy Shatter, and his Department are working.
Perhaps the one area which the group overlooks is the existing supports in place. Ireland is quite progressive in European terms in having the Money Advice and Budgeting Service, MABS. Some 53 locally-managed companies, guided by the Citizens Information Board, provide crucial advice and assistance to over-indebted persons. MABS, along with other groups such as FLAC and the Society of St. Vincent de Paul, are working on the ground, hearing directly of the desperate situations. With a wealth of experience and information, these groups are providing a message loud and clear that the Government must listen.
MABS is already well established and has a proven track record in helping people. Any new debt management and settlement system which would seek to address the totality of a person's debt, including mortgage debt, credit cards, personal loans etc., must work closely with MABS. Further support could be provided by experts in the NGO sector who are more firmly consumer-oriented, as opposed to the banks which never have trouble finding resources to fight their corner.