Land and Conveyancing Law Reform Bill 2013: Second Stage

I move: "That the Bill be now read a Second Time."

This is a very short Bill, with the key purpose of restoring our law on aspects of repossession to where it was intended to be under legislation enacted in 2009 and sponsored by the then Fianna Fáil Minister for Justice, Equality and Law Reform. The Land and Conveyancing Law Reform Act 2009, while introducing major reforms in the law, intended also to save certain provisions of old legislation in relation to repossessions under pre-2009 mortgages. However, in the case of Start Mortgages v. Gunn, Mr. Justice Dunne in the High Court determined that this saver did not have the intended legal effect. As a result, there is now an uncertainty in the law on repossessions in relation to pre-2009 mortgages, and the removal of this uncertainty is the main purpose of the short Bill before the House.

For a lender to seek a court order to repossess the home of a mortgagor who has defaulted in repayments should be a last resort when all other avenues to resolve the arrears situation have been exhausted. However, when the recourse to court action for repossession becomes absolutely necessary, it is also necessary that our legal system provides, and is seen to provide, processes which work properly to give effect to a lender's age-old right to repossess where there is serious default. In passing the Land and Conveyancing Law Reform Act 2009, it was always the intention of the Oireachtas to ensure that our legal system did in fact provide for this. The primary purpose of the 2006 Bill, which became the 2009 Act, was to introduce major reform and modernisation of our land and conveyancing law. Part 9 of the Bill contained proposals to simplify the law relating to mortgages, especially mortgages on unregistered land, clarified the respective rights of borrowers and lenders and strengthened the rights of borrowers, while safeguarding a lending institution's right to protect its security.

In passing the 2006 Bill into law, the Fianna Fáil led Government and both Houses of the Oireachtas clearly determined that the repossession arrangements which had existed for centuries should remain in place. Even in the latter stages of the passage of the Bill in July 2009, after it had become clear that the property bubble had burst and the Celtic tiger had expired, various changes and amendments were proposed by the previous Government and made to Part 9 of the Bill, but nothing was done to alter the security of a lending institution. However, the High Court decided in 2011 that the law is now not as it was intended to be under the 2009 Act. There is, as one High Court judge put it, a lacuna in the existing law and this must be corrected. The High Court interpretation has left us in a situation of doubt regarding the availability of the intended legal repossession remedies. This must be corrected simply because our legal system has to provide legal certainty in relation to the repossession rights of lenders when there is a serious default by a borrower.

I have to say that, sadly, it came as no surprise that the current leader of Fianna Fáil, in his recent Ard-Fheis address to the party faithful, committed his party to opposing this Bill. Essentially, what the Fianna Fáil Party is doing is opposing the reinstatement of provisions in our law that it proposed, drafted and supported during the passage of the 2009 Act through the Oireachtas. It is political opportunism and hypocrisy of the worst kind for Fianna Fáil and Deputy Martin to oppose this Bill. It is the type of politics in which Fianna Fáil has specialised over the years but which Deputy Martin assured everyone he was abandoning. He is feigning a concern for the plight of home owners burdened by unsustainable debt and in mortgage arrears and whose difficulties Fianna Fáil ignored following the property collapse in 2007 and the fiscal and economic crisis of 2008. In this context, no one should forget that in its 14 continuous years in government and, more particularly, in the 2007 to 2011 period when Deputy Martin was a senior Minister, he and his Cabinet colleagues did nothing to reform our outdated insolvency laws to assist those in unsustainable debt. Moreover, when enacting the 2009 Act, the then Fianna Fáil dominated Government failed to include protective measures such as those contained in the Personal Insolvency Act for people overwhelmed by debt and at risk of having their homes repossessed and being evicted. This Bill contains the necessary protective measure. It is of immense importance to mortgage holders struggling under the burden of unsustainable debt that the provisions of this Bill are linked to the possibility of entering into a personal insolvency arrangement and a person so indebted continuing to reside in his or her family home.

Unfortunately, we are becoming all too accustomed to this type of strategy from a Fianna Fáil Party which presents with political amnesia with regard to its period in office as it desperately tries to persuade or seduce the people into believing that it should at some future time be again elected to government and entrusted with stewardship of the economy. In his disingenuous Ard-Fheis critique of this Bill, Deputy Martin dishonestly engaged in a game of political charades and attempted a confidence trick at the expense of those for whose indebtedness he and his party are substantially responsible as a result of their cataclysmic failures in Government. This is the man who promised constructive opposition. On this particular Bill, no credibility should be given to any commentary by Fianna Fáil either inside or outside this House. I have great confidence that the electorate will see through the type of self-serving politics currently practised by Fianna Fail. Deputy Martin, having asserted he would no longer engage in a parliamentary Punch and Judy show, presented himself on this issue last Saturday in the guise of Pinocchio.

As I stated, it is clear that the intention of the Oireachtas, during the passage of the 2009 Act, was to ensure our legal system had repossession processes in place. However, the High Court interpretation of the legislation enacted in 2009 has left us in a position of doubt in this regard. The main purpose of the legislation before the House is to restore the position to where the law intended it to be.

In addition to correcting the legal uncertainty to which I have referred, the Bill will ensure that, in any future repossession proceedings concerning a borrower's principal private residence, the court may adjourn proceedings in order that a proposal for a personal insolvency arrangement, PIA, may be fully explored as an alternative to repossession. This will mean lending institutions will not be allowed to proceed directly to the repossession stage without first engaging in good faith in the alternative measures provided for in the Personal Insolvency Act 2012. Where they do not do so, they will know that, should they seek to repossess a family home, the court may adjourn court proceedings in appropriate circumstances to enable the possibility of the difficulties being resolved by the conclusion of a personal insolvency arrangement.

Current uncertainty about the remedies available to lending institutions in the case of mortgages created prior to 1 December 2009 originated in the 2011 case, Start Mortgages v. Gunn, which I mentioned earlier. In this case, the High Court found that the repeal in the 2009 Act of section 62(7) of the Registration of Title Act 1964 in the 2009 Act had the unintended consequence in certain cases of restricting lending institutions from exercising their repossession rights via the courts. The judgment in this case has been appealed to the Supreme Court, which has not yet heard the appeal. While later High Court judgments in similar cases appear to have limited the potential impact of the judgment, the resulting uncertainty is undesirable to say the least and represents, as stated, a lacuna in our law. The Bill before the House confirms the simple point that the law in force prior to commencement of the 2009 Act on 1 December 2009 should continue to apply to mortgages created prior to that date.

Mortgages provide lending institutions with security for their loans. This is a centuries old principle and the basis of all mortgage law. Without lending institutions obtaining such security, loans would and could not be given for home or other property purchases. Such security is a normal part of all such loan transactions throughout the world.

The Land and Conveyancing Law Reform Act 2009 was the result of a joint law reform project undertaken by the Department of Justice and Law Reform Commission. It repealed approximately 150 pre-1922 statutes, the earliest of which dated from the late 13th century, and replaced them with updated provisions. The statutory provisions on mortgages, which had been contained for the most part in the Conveyancing Acts of 1881 to 1911, were repealed and replaced by the provisions set out in Part 10 of the 2009 Act. Chapter 3 of Part 10 of the Act contains provisions relating to the obligations, powers and rights of lenders. Section 96 of the 2009 Act confirms that these apply in the case of mortgages created after the commencement date, that is, 1 December 2009. As regards mortgages created prior to that date, the intention behind the 2009 Act was that the law applicable on the date of their creation would continue to apply by virtue of section 27 of the Interpretation Act 2005. Section 27 provides, inter alia, that where an enactment is repealed, the repeal does not "affect any right, privilege, obligation or liability acquired, accrued or incurred under the enactment". However, in the Start Mortgages case to which I referred, the High Court interpreted this provision of the Interpretation Act in a manner which restricts the application of the law in force prior to 1 December 2009 to certain cases where both default by the borrower had occurred prior to that date and demand for repayment had also been made before that date. As I stated, a Supreme Court appeal is pending in that case. Section 1 of this Bill, therefore, is the key provision in this context and it does nothing other than restore the position intended by the Oireachtas and then Government when enacting the 2009 Act.

As a specific late intervention provision to protect a borrower who is in court facing a repossession action involving a principal private residence, the Bill also provides for the adjournment of the action where the court considers that the matter could be resolved through recourse to the mechanisms set out in the Personal Insolvency Act 2012. This provision is in line with the commitment I gave in the House in the course of discussions on the Personal Insolvency Bill last year.

As I stated, the clear intention is that repossession will continue to be a last resort. For this reason, there has to be strong focus on what is done to help with and manage mortgage defaults before repossession arises. One of the main priorities of the Government is to put in place the best solutions we can for people living under the burden of unsustainable debt. When I took office as Minister for Justice and Equality in March 2011 it became immediately clear that little work had been undertaken to reform or modernise legislation in the areas of bankruptcy and insolvency, despite the enormous financial difficulties being experienced by so many people.

The introduction of a modern, practical and humane insolvency and bankruptcy process, through the Personal Insolvency Act and the establishment of the Insolvency Service of Ireland, were necessary priorities in our path to recovery and growth. The recent launch of the public information campaign by the Insolvency Service of Ireland is another major step forward in the Government's plan to deal with debt and help people in distress.

The three new insolvency arrangements offered through the Insolvency Service will be of substantial assistance to thousands of individuals and families. The new insolvency arrangements have the capacity to provide certainty for those crippled by unsustainable debt. They provide fair and equitable solutions for those who have no prospect of repaying their debt. The guidelines on reasonable expenses provide an essential defensive shield to ensure that neither financial institutions nor other creditors attempt to deprive debtors of funds they need for reasonable household and family expenditure or deprive debtors in employment from benefiting from continuing in employment where a debt settlement or personal insolvency arrangement is completed.

Included in the Personal Insolvency Act 2012 is a specific provision for a personal insolvency arrangement involving a resolution process for secured debts of up to €3 million and any unsecured debts. There is also a provision in the Act which protects the family home of a debtor where this is possible and feasible. For debtors to be in a position to seek a personal insolvency arrangement, they must also demonstrate that they have had prior engagement with the creditors in attempts to resolve the situation under the arrears resolution process.

The Government believes it is important that all households can contribute to our economic recovery and all those currently affected by unsustainable debt have real hope for the future. Under the new arrangements, people will be given the opportunity to start again, relieved of the financial pressure of unsustainable debt.

In addition to bankruptcy and insolvency reform, Deputies will be aware that extensive other measures are also in place, including the statutory Central Bank code of conduct on mortgage arrears, CCMA, and, within that code, the mortgage arrears resolution process known as MARP. The recent Government statement on resolving the mortgage arrears crisis outlines a range of actions that have been taken or will be taken, including the setting of time-bound targets for the banks to make arrangements with mortgagors in default.

As the House will see, by providing a range of interconnecting measures which are well upstream of repossession, the clear intention of the Government is that repossessions will be the last resort, as I referred to, and will only be sought as such. However, when repossessions are sought, as I have also stated, there is a necessity that the law provides the working processes for dealing with repossession actions.

Nobody in this House can be unaware of the issues that arise where repossession proceedings relate to family homes. It is understandably an emotive and sensitive topic and one to which I and the Government have given extensive consideration in formulating this short Bill. For this reason, in the course of preparing the Bill I sought and obtained Government approval for inclusion of section 2, which will allow a court to adjourn repossession proceedings in such cases to explore whether a personal insolvency arrangement under the Personal Insolvency Act 2012 would be a more appropriate and acceptable alternative to repossession. Section 2 will apply only to the principal private residence of the borrower and will not apply to buy-to-let or commercial properties.

In line with the aim of the Bill, as I set out earlier, section 1 seeks to ensure continued application of certain repealed provisions of the Conveyancing Acts 1881 to 1911 and Registration of Title Act 1964 to mortgages created prior to 1 December 2009, the date on which the repeals took effect on commencement of the 2009 Act. As I indicated, the intention is to remove the uncertainty which has arisen in relation to lending institutions' remedies in cases of default.

Section 1(1) provides that the section shall apply to mortgages created prior to 1 December 2009, the date on which the 2009 Act came into operation. Mortgages created after that date are subject to the provisions of the 2009 Act. Section 1(2) provides that the statutory provisions referred to in subsection (6), which were repealed by the 2009 Act, may be invoked or exercised by a person as if those provisions had not been repealed in the 2009 Act.

While the High Court judgment in the Start Mortgages case dealt specifically with the unintended effects of the repeal of section 62(7) of the Registration of Title Act 1964, the opportunity is being taken to make it clear that mortgage related provisions in the Conveyancing Acts 1881 to 1911 will continue to apply to mortgages given out prior to 1 December 2009.

Section 1(3) provides that provisions which were amended by the 2009 Act may be invoked or exercised by a person as if those provisions had not been amended by that Act. These statutory provisions shall apply to mortgages created prior to the commencement of the 2009 Act, notwithstanding their amendment by the 2009 Act.

Section 1(4) is a without prejudice provision which provides that subsections (1) to (3) will not affect the ability of any person who is in a position to rely on other rights or entitlements to exercise those rights or entitlements. In short, a lender which is already in a position to seek and obtain repossession within the limits of the Start Mortgages judgment will not be affected by the provisions contained in subsections (1) to (3).

Section 1(5) provides that the section will not apply to any proceedings already before the courts. This is in compliance with the separation of powers principle in our Constitution and in accordance with case law as delivered in judgments handed down by the courts. Section 1(6) is an interpretation section which contains relevant definitions.

Section 2 provides that in repossession proceedings involving a borrower's principal private residence, a court may, where it considers it appropriate or on application by a borrower, adjourn the proceedings to enable the parties to consider whether a personal insolvency arrangement, PIA, under the Personal Insolvency Act 2012 would be a more appropriate alternative to repossession. The intention is to ensure that lending institutions do not resort to repossession proceedings without considering the PIA option under the 2012 Act. The section will not apply to investment or commercial properties. There is, of course, nothing to stop an individual with an investment or a commercial property from seeking to use a personal insolvency arrangement, where the value of that investment or property in question is within the prescribed limits relating to personal insolvency arrangements, outside any provisions contained in the Bill before the House.

Section 2(1) makes it clear that the provision relates only to principal private residences. It also covers situations where the mortgage is in the name of one person only but where that person has, for whatever reason, ceased to reside there and the Family Home Protection Act 1976 applies. Section 2(2) allows the court, either of its own motion or on the application of a person, to consider an adjournment for a period of two months to enable the parties to explore the possibility of a personal insolvency arrangement as an alternative to repossession.

Section 2(3) outlines certain matters the court may take into account in its consideration of an application for adjournment. These include whether the borrower has engaged in a process relating to mortgage arrears, whether payments have been made by the borrower in the preceding 12 months, whether the matter has been adjourned previously and the conduct of the parties to the mortgage in seeking to resolve issues concerning arrears on the mortgage. Bad faith on the part of either party may be taken into account by the court. If, for example, either the lender or borrower has not engaged meaningfully in attempts to resolve the arrears issue, this can be taken into account by the court.

Section 2(4) provides that at the end of the adjournment period, the court may grant a further adjournment if it considers that significant progress has been made in preparing a PIA. Section 2(5) provides that the section will apply to mortgages created both before and after the coming into operation of Part 10 of the 2009 Act on 1 December 2009 and section 2(6) contains relevant definitions. Section 3 is a standard provision containing the Short Title and a commencement provision in respect of section 2.

As stated, this is a short but important Bill. It will not, as erroneously and disingenuously suggested by the leader of the Fianna Fáil Party in his recent address to that party's Ard-Fheis "make it easy for the banks to repossess family homes". The Bill makes it no more easy for a lender to repossess than did our law up to 2009 or than did the 2009 legislation, which was enacted during the term of the previous Fianna Fáil-led Government. In circumstances in which cases before the courts have raised doubts with regard to specific statutory provisions, this Bill, in section 1, simply restates the law that has existed for the centuries and which enables a lending institution to rely on its security in respect of a mortgage.

I reiterate that home repossessions should be a last resort. Financial institutions have an obligation to engage constructively with home owners whose mortgage payments are in arrears. It is crucial that they do so and that full information on the options available to them are provided to people who find themselves in such difficulties. It is also of importance that letters sent by such institutions to indebted home owners in mortgage arrears detail the options available to them in dealing directly with the financial institution and, where appropriate, in engaging with a personal insolvency practitioner to consider the possibility of negotiating a personal insolvency arrangement. It is also crucial that those in genuine financial difficulty with mortgage arrears engage with their lenders and I again encourage them to do so.

Section 2 seeks to ensure that where repossession proceedings concern a principal private residence, full account is taken of the alternative options now available under the Personal Insolvency Act 2012. This Bill will restore legal certainty, promote utilisation of the options available under the personal insolvency legislation, enhance protection levels for borrowers and provide certainty for lenders. On this basis, I commend it to the House.

Behind all the legal jargon contained in the Title, the Bill is purely and simply a mechanism to allow for home repossessions. No amount of legal gymnastics on the part of the Minister can hide from the tens of thousands of struggling home owners throughout the country the fact that this legislation jeopardises their family homes. It places power over family homes firmly into the hands of the very banks which brought this country over the edge. The Bill follows hard on the heels of personal insolvency legislation that shifts the balance of power towards the banks and gives them an effective veto over debt negotiations. It further compounds that shift in power and tightens the vice-like grip banks hold over struggling families. The legislation threatens to open the floodgates of repossessions at the whim of the calculations of the very financial institutions whose predatory lending practices have trapped countless families in the mire of debt in the first instance.

Power over the future of family homes will be placed in the boardrooms and back offices of bankers who are desperately trying to cover up the greed and recklessness they displayed in the past. The impact of an acceleration of repossessions on the fabric of society and on the families concerned will be of little consequence to them. Power will be shifted to balance sheet-driven bankers who have already been bailed out by the taxpayer but who pay no heed to their social obligations.

The term "moral hazard" has been widely used to justify the legislation. However, the moral hazard I see is the sheer immorality of bailed-out banks repossessing family homes. The moral hazard I see is that relating to bonus-laden bankers on more than €200,000 per year making life and death decisions with regard to family homes. The moral hazard I see involves the banks which fuelled a property boom placing the burden of their mistakes on the shoulders of ordinary families. Moral hazard has been exploited as a form of hand wringing on the part of the Government and has been used to depict struggling home owners as being complicit in their financial difficulties. It conveys a sense that home owners are strategically defaulting and avoiding their financial obligations. In my experience of dealing face to face with hard-pressed families in Limerick and across Ireland, I am aware they are not the cold calculating defaulters the concept of moral hazard implies. In reality, which is a long way from the ivory tower, they are ordinary families trying to make ends meet in the midst of an unprecedented recession. They are trying to find a light at the end of the tunnel but are now faced with the banks' forthcoming veto over personal insolvency arrangements and the new arrangements under which the latter will be empowered to repossess their homes. Their fight should be the fight of every legislator in this Chamber but instead the Government has shifted more power into the hands of grossly irresponsible financial institutions.

What of the obligations of the banks which aggressively financed the property boom in the first instance? They are not subject to any moral considerations. Ethical considerations seem to begin and end at the front door of mortgage holders. They do not apply to those in the banks in which those mortgages were given out. At the behest of boardrooms and back office executives, ordinary staff in branches across Ireland will find themselves chasing struggling mortgage holders out of house and home.

In my county of Limerick, I all too regularly meet families that are trying to keep their heads above the rising waters. The crisis represents a major burden on the national economy. More importantly, the statistics are a chronicle of human misery. The emotional and psychological exhaustion owing to the ongoing toll of grappling with apparently unending debt is quietly devastating lives in homes. The untold damage of grave financial difficulty will be further compounded by the impact of this Bill.

Statistics published by the Central Bank on 7 March indicate that, of the 792,096 mortgages for primary residences, 143,851 were in arrears on 31 December 2012, with 94,488 - 11.9% - more than 90 days in arrears. This 90 days plus figure represents an 11.5% increase on the end of quarter three in 2012. A further 28,421 mortgage loans secured on buy-to-let properties were also more than 90 days in arrears on 31 December, representing 18.9% of all residential mortgages secured on buy-to-let properties. These statistics are exacerbated by the fact that the types of mortgage restructuring arrangements agreed to date by banks with distressed borrowers have largely been of a short-term nature, with almost half being interest only or less than interest only. Problems have been temporarily buried but will re-emerge.

Behind the figures, mothers and fathers, husbands and wives, couples and ordinary workers in kitchens and sitting rooms in every community are trying to make the numbers add up. Today's Bill is another direct blow to them and their fight to keep their homes. The Government needs to take steps to protect them rather than the banks. Instead, it has fundamentally tilted the balance of power in favour of the financial institutions. Last week, we witnessed the unedifying spectacle of a partly Government-owned bank that received €5 billion in taxpayers' money to bail it out from its self-inflicted financial woes rewarding its chief executive with an €843,000 per year pay deal. This issue is not about cruel populism or bank bashing, but about fairness. For any society to work, there must be a degree of solidarity among people. In hard times of severe cutbacks, wage reductions and high unemployment rates, we must ensure that everyone plays a part. The appalling vista of chief executives in Government-supported banks being paid extraordinary amounts while the Government empowers the very same institutions to repossess family homes is a step too far. The bonds of solidarity cannot withstand such gross unfairness.

The Government has already refused to place an extra charge on people earning incomes of more than €100,000 per annum in order to help meet our fiscal requirements fairly. The implementation of this legislation marks another departure from the concept of fairness. The image of exorbitant wages paid to bailed out bankers overseeing family home repossessions is a damning indictment of the Government's failure to follow a fair road to recovery. Instead, it has trod a path strewn with broken promises.

Tomorrow is 1 May, the date upon which some 1.6 million households across the State are due to be evaluated for the imminent property tax. For the families close to the edge, the raft of additional charges coming down the line will be the straw that breaks the camel's back. For the homes mired in negative equity and grappling with the burden of mortgage arrears, the property tax on the family home is the wrong tax at the wrong time in a way that is far more immediate than the Government seems to understand. The impact of additional charges will push them over the edge while the future prospect of onerous water charges will keep them there. This legislation is another step by the Government towards the abandonment of the route of fairness. It will throw struggling home owners over the edge. The plethora of charges placed upon families will fatally undermine their capacity to continue to make ends meet while this Bill will take away their security.

The Government's financial strategy is condemning more embattled homes to its equally flawed personal insolvency process and the cold arms of the banks. The much vaunted personal insolvency regime is running months behind schedule. All the while, thousands await the chance for a fresh start to end their financial nightmare and the country awaits the boost of removing the crippling millstone of unsustainable debt from its neck. The black morass of debt facing home owners throughout the country is a deeply personal crisis for those families struggling to keep things together in tough times amid a national crisis that is dragging the economy down in a vicious spiral. Instead of a personal insolvency regime that gives home owners under pressure a fighting chance to come to terms with their banks, the Government has given all of the cards to the financial institutions. The process is fundamentally flawed, as it has no commitment to an independent process at its heart. Instead of an independent arbitrator and appeals mechanism, the Government has created a banker's veto on progress in tackling debt.

Today's Bill is yet another step in that direction, placing additional power in the hands of the banks. Home owners will be left with only the final desperate nuclear option of bankruptcy to save themselves if the banks wield their powerful veto over any arrangement. Home owners now face the real prospect of losing their family homes.

I wish to address a number of issues raised by the Minister. He has outlined the origins of the Bill in terms of the 2010 Dunne judgment and a lacuna in the original Land and Conveyancing Law Reform Act 2009. It is not necessary for me to thrash out the finer detail of that judgment, but it is important to address the context of the original Act and the Minister's complacent dismissal of this Bill as simply addressing a legal oversight.

The 2009 legislation was a sweeping Act reforming many areas of land law, including ownership, trusts, co-ownership, conveyances and, relevant to the current Bill, mortgages. The purposes of doing so were to simplify existing land law, which stretched back into the mists of feudal times, and to enable the introduction of e-conveyancing. The Act was a product of a detailed Law Reform Commission, LRC, project undertaken by Mrs. Justice Catherine McGuinness and Professor John Wylie. The LRC project began in 2003, with the Bill introduced in the Oireachtas in 2006 with all-party support. Mortgages were one part of a major overhaul of a complex set of law. The Bill was a product of a different economic and social context of a country experiencing high levels of economic growth. The prospect of a collapsing housing market and a mortgage arrears crisis on the scale that we are now witnessing was never considered by any party in this House.

The housing market collapsed in 2007, in case the Deputy did not notice. The economy collapsed in 2008 and the Act was passed in 2009.

We are living in a changed country. Our laws must reflect the dramatically transformed economic context and the sheer scale of the mortgage arrears crisis. Addressing the oversight in the original Act is one matter, but empowering the banks to pursue wholesale repossessions is another matter entirely. The need to address the law and the problems with the Government's approach will be dealt with in our amendments, to which I hope the Government will give genuine consideration. Our amendments will level the playing field and balance proceedings in favour of the ordinary householder in difficulty.

Fianna Fáil will table amendments to the Bill to give the courts the power to consider refusals to accept the proposals of personal insolvency practitioners relating to family homes and to help rebalance the system in favour of home owners. Such a measure would provide a roadblock to banks intent on repossession.

It is vital that in addressing the lacuna in the law we recognise the current reality and strengthen the position of struggling home owners. We will seek to lengthen the time period available to seek a personal insolvency process to ensure that the time limits do not act as a barrier to a fair resolution. We will put forward amendments to make the code of conduct on mortgage arrears admissible in court proceedings and ensure that lenders comply with it, thereby strengthening the hand of mortgage holders. Our amendments will also impose a limit on costs for debtors in court proceedings to level the playing field between banks with big legal teams and ordinary mortgage holders already struggling to keep themselves going. The information deficit that undermines debtors will also be addressed. Amendments will require that debtors have adequate legal and financial information and advice in legal proceedings.

The prospect of a wave of repossessions across Ireland cannot be defended morally. We in Fianna Fáil are committed to pursuing constructive opposition and we will put forward meaningful amendments that address the lacuna in the law but also ensure that power is not completely shifted to the very bankers who generated the crisis. The integrity of the family home must be paramount. No amount of legal jargon and manoeuvring can be allowed to obscure that goal. Our job as legislators is to protect ordinary citizens in the name of the common good. No good can come from wholesale repossession of family homes, and the Bill in its current form cannot be supported by anyone committed to help ordinary home owners struggling to make ends meet. For the Government it appears the path of broken promises is irrevocable and it is ordinary home owners who are bearing the burden of its mistakes.

On a point of order, a Leas-Cheann Comhairle.

There are no points of order.

On a point of order, a Leas-Cheann Comhairle.

On another point of order, I am very happy that the Minister took time on Saturday night to look at the Fianna Fáil Ard-Fheis. I do not know whether it says more about the Minister or about Fianna Fáil.

Deputy Collins should allow the House to hear the Minister's point of order.

It was very good of the Minister to look at proceedings.

On a point of order, do we know whether there is a procedural mechanism whereby we can refer a performance in this House for the possibility of an Academy Award, because the Deputy deserves one for fiction?

That is not a point of order. I call Deputy Mac Lochlainn.

He should be congratulated-----

That is enough. Deputy Pádraig Mac Lochlainn has the floor.

-----for keeping a straight face as he managed to stagger his way through his script.

On a point of order.

What is the point of order?

It is very interesting to hear that the Minister had to spend his Saturday night watching the Fianna Fáil Ard-Fheis. That speaks volumes about him.

Okay. I thank the Deputies. Neither of the points raised was a point of order.

I had a very pleasant Saturday night out. I just read about the Ard-Fheis the following morning.

I would say the Minister did.

I call for silence for Deputy Mac Lochlainn.

Prior to speaking about the specifics of the Land and Conveyancing Law Reform Bill placed before us today, I wish to outline yet again to the House the reality of mortgage difficulty. I am not convinced that the Government grasps just how dire the situation is for tens of thousands of households across the State. As I speak, almost one in four households is in mortgage distress. That is more than 180,000 households, which is a huge number. It is important to remember that this is not just a number or a statistic. These are real people, most with real families to take care of. That means hundreds of thousands of citizens - men, women and children - feel the impact of mortgage distress. Since the Government came to power, the number in arrears has almost doubled, just like it did in the last 18 months of Fianna Fail’s tenure.

As we witness an increasing number of people fall into mortgage arrears, we also witness a change in the demographics of those who are in mortgage arrears. We are seeing people from all walks of life struggling to keep up with their mortgage repayments, not just those at the very bottom of the ladder. It is not just younger people who bought during the boom. We are now seeing more middle-aged and elderly people in mortgage distress. A report by the money advice and budgeting service, MABS, published just two weeks ago found that clients in mortgage difficulty are primarily households with children, located in urban areas and headed up by people between the ages of 45 and 65. These are all families who put their faith in politicians, economists and the great and the good. Let us not forget the newspapers, radios and TV channels with their property supplements and programmes which fed the message that we all needed to get our foot on that ladder and to do it now before prices increased further. That was the environment and the culture that fed this mess we now have to untangle as a people.

I listened to reports from the Garda Representative Association’s annual conference yesterday and the stories of many rank and file gardaí who are no longer able to pay their mortgages. The people who are at the front line of protecting the citizens of this State can in some instances no longer pay their mortgages. That is what Ireland has become in 2013. It is a shame the Minister was not present to hear the stories. I hope the relationship will build again in the near future. One could ask what we do to resolve the situation. Let us examine the action that has been taken. We look after the banks, yet again, and make it easier for them to repossess family homes. We are now, as a modern society, putting people out of their family homes in order to help the banks, as if we had not done enough for the banks.

The Fine Gael and Labour Government is turning its back on people, while supporting bankers at State-supported banks to pay themselves grotesque salaries. Before I speak to the details of the legislation, it is important to put it in the context of the soon-to-be up and running Insolvency Service of Ireland, ISI. My party and I have a number of problems with the system. First is the bank veto, which means that people who are struggling with high debts are effectively barred from entering the insolvency process if their bank, which accounts for most of people's debts, disapproves of it. With so many people struggling under the weight of unsustainable mortgage debt, there is an onus on us to come up with a response to the crisis which does not put banks in control. It is not the right response for banks to be in control and to have a veto. Remarkably, in today’s Ireland the banks still rule. We paid the price to bail them out and yet they are just not stepping up to the mark to resolve the crisis, one they had more than a hand in creating. Sinn Féin has called for an independent body that would force banks to accept reasonable arrangements on a case-by-case basis. That could include write-downs in some instances. It is important to remember that write-downs must be part of the solution in some cases.

We also have concerns about the role of personal insolvency practitioners, PIPs. There are genuine concerns that the private sector route that has been chosen will mean that many personal insolvency practitioners will cherry-pick cases with greater opportunities to make money, which means that those who are in the greatest need will not be able to get access to a PIP. Sinn Féin has long advocated for a public insolvency service. I fail to understand why the Minister did not consider making MABS the practitioners, and resourcing it accordingly. It has respected mediators of long standing and it has contacts throughout the State. The service would be well placed to deal with the issue.

I wish to reiterate a point that has been made many times previously. The rushing of the personal insolvency legislation through both of these Houses with inadequate time for a more thorough examination of the Bill was wrong. Given the scale of the crisis, the fact that it is getting worse, and the major flaws in the personal insolvency system, now is not the time to make it easier for the banks to evict people from their homes. The biggest problem with the Bill before us is that it will result in an increased number of people being put out of their family homes. However, that is not the only thing that this legislation will do. It is important to bear in mind all that goes with the family home being repossessed. I refer to the stress, strain and anxiety it places on people, relationships, the impact on children who live in such homes and the huge negative effect on families. That cannot and should not be underestimated. The Bill has the potential to break up families and to ruin people’s lives.

Another important point relates to the large number of mortgages which are with sub-prime lenders who are no longer operating in the State. Certain banks, such as Bank of Scotland, have left this country and just want to cash in. There is no incentive and nothing in the Bill that would force them to make sustainable arrangements. Section 2 of the Bill allows the court, either by its own motion, or on application by a relevant person, to adjourn repossession proceedings for a maximum period of two months to allow for the consideration of the making of a proposal for a personal insolvency arrangement.

What will this mean in reality? Why two months? Why not four or six months, to give real time for people to put in place a plan B? Two months is no consolation to someone who is about to lose his or her home and may eventually do so. Sinn Féin will continue to argue that a different approach is needed. We would make protection of the family home the priority and establish an independent body to force banks into pursuing reasonable arrangements. Sinn Féin is opposed to this Bill as it stands and will not be voting for it. One thing we can agree on is that relying on a loophole in the law is never a good way to do business. However, in the current crisis, this loophole has been a relief for many. My party agrees, as do I, that a loophole in the law is not acceptable moving forward, but until such time as the necessary safeguards are put in place, we should not close it. As long as the banks have the final say, as per the Personal Insolvency Act, and as long as this Government does not force the banks to deal reasonably with people who are doing their best to pay their mortgage, then we will not support this Bill which will make it easier for banks to repossess the family home.

We are particularly concerned about the bank veto and the fact that there is no incentive to engage with the personal insolvency process in a fair and reasonable manner prior to seeking repossession. We believe that the code of conduct is skewed against the mortgage holder and that there are insufficient protections for families who are in the most distress. We are also concerned about the fact that there is not sufficient scope in this Bill for judges to assess whether the banks are being reasonable in their assessment of cases. I intend to table amendments on a number of these issues, to be discussed on Committee Stage in what I hope will be a reasonable manner. I want to amend this Bill to make it a solution and not part of the problem.

I wish to share my time with Deputies Donnelly and Boyd Barrett, with the agreement of the House.

This Bill has been described as a technical one but there is nothing technical about it for the people to whom it will apply, especially those on the borrower rather than lender end of the spectrum. It would be remiss of us not to draw attention to the nightmare scenario before us. The measures that are coming before us now might not have seemed draconian had they been put in place ten years ago, before the crash happened, but because they are being introduced at a time of crisis for so many people, they add to the problem. The Personal Insolvency Act was heralded as a great solution for people, but for many, the harsh process will not seem to be a solution at all. It is amazing how people at the end of the spectrum, who seem to be carrying everything, have the spotlight on them while the big institutions that could not predict what would happen are still respected. We continue to rely on institutions such as Fitch, Standard and Poor's and Moody's, one of which made predictions on the Irish property market today. I would not believe anything those people say because they have been so discredited in recent times. Despite that fact, their international reputations are, somehow, still intact.

We all know that there was very little effort by the banks to tackle the mortgage arrears problem in a sustainable manner. They have been dragged, kicking and screaming, into action. The Taoiseach has been in the House on numerous occasions saying that he and the Minister for Finance were frustrated with the delays, but they did not seem to be able to force the banks, into which we put so much money, to do anything about this enormous problem.

The proposed code of conduct on mortgage arrears will not be admissible in legal proceedings, which is a major omission. The Government may say that the Personal Insolvency Act will prevent a flood of repossessions but, in truth, there is no onerous legal requirement on the banks to engage with debtors on any realistic footing. We know that the balance is in their favour. There is a very lopsided power imbalance sewn into the Personal Insolvency Act, which is also sewn into this Bill. Banks can and will repossess homes and we will most assuredly see that, once this Bill is passed, which it will be, given the enormous Government majority.

There is no doubt that the banks behaved recklessly during the property boom, facilitated by a lack of regulation, the political culture and the Government of the day. However, all of the difficulties emanating from the crash are being picked up by those on the other end of the spectrum. We never hear of moral hazard except in the context of ordinary people and their lives. An issue of natural justice is not being properly considered here. Most distressed mortgages are with the covered institutions which received €32 billion in taxpayers' money. Those same banks are not meeting their lending targets, have failed to pass on interest rate reductions and have actually increased their variable interest rates, despite reductions in the ECB rates. In many cases, they have pushed more people over the edge and into mortgage distress. We have seen massive write-downs for big borrowers, the most recent example being Independent News and Media, to the tune of €138 million. The arrangement involves the lenders taking a stake in that business, including AIB and Bank of Ireland. There was much talk of swapping debt for equity in people's homes at the onset of this crisis. It seems that equity swaps can be done for big institutions but not for ordinary individuals and their homes. The large NAMA developers are getting, in some cases, lotto-type payments to resolve their debts. That process is completely beyond public scrutiny, while at the same time the personal insolvency process is entirely public, about which many people feel aggrieved. Indeed, the public nature of that process is one reason people will not engage in it.

If the Government was seen to put the public interest ahead of the interests of the banks, trust in politics would be restored. The Government should be approaching this in a much more balanced way. Some of the suggestions made by the Free Legal Advice Centres, FLAC vis-à-vis this Bill would considerably improve the situation. People who are currently in arrears must be provided with certainty that their mortgages will have the code of conduct applied to them and not just those who obtain mortgages in the future. The overriding imperative must be to prevent large-scale repossessions by the banks, but that imperative is not guaranteed through the Personal Insolvency Act. There has been no acknowledgement by the Central Bank or the Government that the banks are not engaging honestly or fairly with borrowers. There is no acknowledgement that in some cases banks have acted in an extremely harsh manner towards borrowers. I have come across many such situations, including attempts by some banks to take people off tracker rate mortgages, although I know there have been some improvements in that regard lately.

The Government frequently refers to the low level of repossessions, many of which occur by consent. However, in reality it was the Dunne judgment and the defects in the 2009 legislation that restricted wholesale repossessions. The case in question was Start Mortgages Limited v. Gunn, and according to the court documentation, the sums in question had not been demanded before 1 December 2009 and, therefore, the right to apply for a summary order no longer existed following the repeal of section 62(7) of the Registration of Title Act 1964. Of course, there were other methods of securing payment but the one that was favoured was the one that put people under most pressure.

FLAC has made a number of very reasonable suggestions regarding this Bill.

I tend to listen to organisations that have been involved for a long time in the resolution of these kinds of issues with people in debt and distress. The Bill will effectively make it easier for lenders to process repossessions through the courts, according to FLAC, and the organisation is anxious that there should be a balance in the powers. It seeks an amendment to the legislation so that the court examining an application to repossess a family home could also examine whether a lender had fully complied with all the steps of the Central Bank's code of conduct on mortgage arrears. It is not an unreasonable request. If it is not satisfied by the compliance, it could refuse the application until such time as the lender could demonstrate full compliance. As the Minister stated earlier, the Bill proposes a two month adjournment to allow a person explore a personal insolvency arrangement. As mentioned by a previous speaker, and as argued by FLAC, the two month period appears very limited. A period of four months - or six months, as advocated by FLAC - would give people time if they enter the process in good faith.

Currently, many lenders bring proceedings to the High Court, which is easier administratively for lenders but it makes the process much more expensive. In FLAC's view, section 101(5) of the 2009 Act envisages that all repossession proceedings on foot of a housing loan mortgage would take place in the Circuit Court, and this should be the preferred position, rather than requiring borrowers countrywide to go to the High Court in Dublin. However, section 96 of the 2009 Act raises some doubt about whether the exclusive jurisdiction of the Circuit Court applies only to mortgages entered into after 2009. FLAC is seeking that this Bill would clarify the position, and such clarification would be an improvement.

Section 94 of the 2009 Act permits a borrower to apply and a court to grant an order for sale, with the terms envisaged being practical and technical matters. They do not cover a position where a borrower might seek an order that the lender was responsible for all or part of any shortfall in the debt on sale. It has been indicated that this has arisen in circumstances where lenders refuse to permit a sale with a reasonable offer having been made and later agreed to a sale at a lower price. It would be helpful to clarify that one of the terms of an order for sale would be to allow the court to determine the responsibility for the shortfall.

Section 97 of the 2009 Act provides for borrowers to sign a consent for repossession. Some of the forms seen by FLAC are complex and impose considerable financial responsibility on the borrower. It would be helpful if this section included a requirement that the borrower would have access to adequate legal and financial advice and assistance where a lender proposes a form of consent. This is likely to be a growing problem, as one can imagine, and FLAC has a general concern about the lack of adequate legal and financial arrangements. I see Mr. David Hall in the Visitors Gallery and some organisations are providing pro bono assistance to some mortgage holders in distress. We can by no means rely on that arrangement, and we must properly resource the likes of the money advice and budgeting service, MABS, and FLAC in facilitating their work in this regard.

My major concern is with the balance and timing of the Bill. The balance gives the lender far too much additional power, although it is addressing a defect in the 2009 law. If change is to be made, it should be done in a balanced fashion that considers the borrower in a more comprehensive manner than the current Bill does. I hope the Minister will make changes to help that balance. The word "floodgate" has been used and misused in recent weeks, but it is appropriate to say at this point that the floodgates could very easily open, and we could see large-scale repossessions. None of us wants that.

Considering the context of this Bill, it proves to me and most people in the country that there is one law for the billionaires and another for everybody else. At the weekend, Independent News and Media, owned by a billionaire, Mr. Denis O'Brien, had €138 million of debt written off by a consortium including Allied Irish Banks and Bank of Ireland. If a billionaire owns a company, the banks that are owned by us or which have been bailed out by us - with the Government either having a controlling or significant stake - will write off €138 million at a stroke. In the same week, the Government wants to bring forward a Bill that will allow the wild dogs of the banks to be unleashed on distressed mortgage holders to facilitate the repossession of their homes. That is absolutely extraordinary, proving entirely the dictum that if a person owes a bank €100,000, it is that person's problem, but if a person owes €100 million, it is the bank's problem. It is a clear case of one law for the rich and another for everybody else.

Under troika pressure, this is a way to facilitate opening the floodgates of home repossession for people, with the vast majority in mortgage distress not because of anything they did but because of what the banks and developers - along with the politicians who facilitated them - have done. The Government, under the diktat of the troika, is pushing legislation that will facilitate banks hounding people with a view to getting back the homes of ordinary people, taking the roof from over people's heads. It is extraordinary.

I am sure the Minister knows of the horrendous experience of Spain, where there have been 400,000 evictions and homelessness has gone through the roof. There is a dire crisis facing ordinary working class and middle class families as they are evicted from homes. In many cases it is leading to desperate action from people facing eviction from homes. These include 53 year old Amaya Egaña, who threw herself from the window of her fourth floor apartment in the Basque country as court officials were coming up the stairs to evict her. That is just one case but we have 180,000 families out there in distress, suffering, with the vast majority doing so not because they did anything wrong.

They simply sought to put a roof over their head in a market that was rigged by the banks and the developers, with the encouragement of the politicians. It was stoked up while these innocent people sought to put a roof over their heads. They were not out to profiteer or enrich themselves, they were not out to get the obscene bonuses bankers paid themselves to sell these mortgages, they were just trying to put a roof over their heads. In some cases, the banks would tell people that if they had spare savings, they should invest them in property and borrow money to purchase an investment property for their old age or for their children. Why on earth, then, would the Minister introduce legislation to give further powers to the banks? Why would he remove an obstacle to home repossessions by the banks?

The Minister might argue that in normal times perhaps the banks should have the power to repossess, although I would not agree because I do not believe banks should have the right to repossess homes from ordinary people, particularly not in these extraordinary times of crisis created by those banks and developers. In the current situation, however, why would the Government add to the armoury of the banks? I do not understand why it would do that. Could it not at least use this as a bargaining chip and say to the banks that we would consider removing this legal loophole that acts as an obstacle to home repossessions if we see real movement on the restructuring of unsustainable mortgages for ordinary people in distress through no fault of their own? If there is real, tangible progress by the banks in this regard, writing down unsustainable debt and taking some responsibility themselves for the dire situation these tens of thousands of families are in, the Government could say it will think in a year or two about doing this. Why do it now? It is like unleashing the wild dogs and saying we have a plan to house train them. Surely some house training before they are unleashed would be a better idea, rather than opening the floodgates for them to take people's homes from them. I do not understand it.

I would like to hear an explanation from the Government. The only argument I have heard from the Minister when this point is put to him is that there are those who cannot pay but there are also those who simply will not pay. First, I do not see much evidence of that; most people I come across are making extraordinary efforts to meet their mortgage obligations when they would be better off telling the bank they cannot continue such is the level of suffering when trying to meet unsustainable mortgage repayments. That is the reality for the vast majority of people in distress but the banks do not care about that. They want their pound of flesh and the Minister is giving them more ammunition, empowering them to get that pound of flesh from people who are overwhelmingly innocent victims of a crisis created by others.

If the Minister is going to invoke moral hazard as an excuse, where is the moral hazard for billionaires like Denis O'Brien? Not only did he have €138 million of debts written off for INM this week, previously Anglo Irish Bank wrote €110 million of his debts off. That amounts to debts of €240 million being written for a company owned by one of the richest people in this country at the stroke of a pen. At the same time, the Minister wants to empower the banks to repossess the homes of people who can barely put bread on the table.

The Deputy is confused and while I do not want to get engaged with this, it was INM that had the debts written off. The Deputy is obsessing about a particular individual but Independent News and Media had its debts written off. That was the legal framework for what occurred.

That is semantics. He is the biggest shareholder.

The company had debt written off that was incurred over the preceding decade. I am not disagreeing with the Deputy in the context that everyone should be treated equally but I just wanted to make that point.

Fair enough but he is the majority shareholder.

It is just the company that would have debt written off. I am not making any particular point about that.

I am genuinely at a loss, as is the public. Someone sat down with the board of the AIB and I do not know what influence that person used. Perhaps it was it the influence of someone who is very wealthy or several people who are very wealthy or perhaps there was a genuine consideration that this media company should survive and job losses should be avoided. That would be a reasonable basis for the writing off of debts, although there should be a quid pro quo for that. There is talk of the bank taking equity, although it goes from-----

Perhaps some of the Sunday Independent journalists will investigate this for us.

Perhaps they would but in a situation where we own AIB and a significant portion of Bank of Ireland, do we not have a responsibility to ask why different standards are being applied? A major company like INM, with massive debts, can go before the board of a bank that we own and have those debts written off. We do not know why; it could be a favour for friends or to keep the business going or it could be a combination of both.

Deputy Ross is on the inside track. Deputy Boyd Barrett could get him to dig into this.

I would be very pleased if he did but I am asking the Minister, and the Government, as the majority shareholder in AIB, how is it acceptable for a bank that the public owns to write off all this debt while the banks, under pressure from the troika and facilitated by the Government, are being allowed to repossess the homes of people who cannot make their mortgage repayments. The reason most of those people cannot make their mortgage payments is because their incomes have been slashed or they have lost their jobs as a result of circumstances beyond their control. Where is the leeway for them?

Why did the Minister not at least hold this back? The only argument he has put forward is about moral hazard, that there must be some power for the lender-----

I did not mention moral hazard.

In previous debates we have had the Minister has mentioned it.

The Deputy should read my speech. I did not say anything about moral hazard.

Then I do not understand why the Minister is doing this. Why is he empowering the banks now when he could have used this leverage over them to do what he says he wants them to do, which is to restructure debts for people so they become sustainable? Then, after a year or two, if there is tangible evidence the banks are being fair with people, we might consider removing the legal obstacle. That is what he should do.

It is difficult for people not to conclude the Government is being disingenuous on this, that it says it is concerned for distressed mortgage holders and will do something about the problem but it is not the Government's fault how the banks behave, there are legal issues and pressure from the troika.

In reality, the Minister is making this decision the net effect of which is to give more power to the banks to seize people's homes. Why would the Minister possibly do that? He should explain, not only to me but more importantly to the 180,000 families who are in serious distress - one could probably add to their number the 1,000 a week who are falling into arrears - why there seems to be two different laws and two different standards when it comes to being in debt in this country.

At the outset, I welcome the legislation and congratulate the Minister, Deputy Shatter, not only on this legislation but, more importantly in the context of our overall ambition, on the insolvency legislation that preceded it. The two together represent a realistic effort on his part to have the question of personal indebtedness and mortgage distress dealt with. They represent a reasonable effort to achieve that. The two pieces of legislation, combined with the Central Bank recommendations and targets set on the banks, will have the desired effect. It is critical that we deal with mortgage distress and personal debt issues, not only for the individuals concerned which in itself would justify it, but also for the well-being of the economy. We will not be fit to regain normal economic activity and have a normal economy functioning again until we deal with personal debt, whether in the form of mortgage distress or other personal debt. All of us in this House will be aware that what has distinguished this recession from previous recessions is the degree of personal indebtedness which has matched the overall societal debt in national sovereign debt. There is personal indebtedness and then, of course, the structural problems within the banks.

I am happy to speak on this Bill. Last year the Government made a commitment to introduce legislation to remedy the loopholes identified in the Land and Conveyancing Law Reform Act 2009. This came on foot of an inherited mortgage arrears crisis which is an ongoing problem, not only for the banks but for the wider economy. An ESRI statement in the latter end of 2012 reinforces this fact. In this statement, mortgage arrears were seen to be a challenge to bank profitability, apart from any other personal issues involved. Some 95,000 mortgage accounts were in arrears over 90 days at the end of 2012. Central bank figures for mortgage arrears show there has been an increase of 8.6% in those in arrears between 2009 and 2012. We cannot continue to ignore the fact that this is a real crisis. In light of this, I commend the Minister for bringing forward the legislation to deal with this issue for once and for all.

The Bill deals with two main provisions. It seeks, first, to provide statutory provisions on repossessions for mortgages created before 1 December 2009 and the repeal and amendment of the provisions in the Land and Conveyancing Law Reform Act 2009. This arises from the decision of Mr. Justice Dunne in Start Mortgages v. Gunn, which demonstrated unintended effects of the 2009 Act.

Second, and importantly in the context of what we all are seeking to achieve, it provides for the adjournment of repossessions relating to the family home where the matter could be resolved by referring back to the terms of the Personal Insolvency Act 2012. Basically, that allows the courts to exercise their discretion and insist on a personal arrangement being made between the financial institution and the borrower.

I will briefly touch on the first provision of the Bill. Section 1 deals with the new safeguards for mortgages created before 1 December 2009. It addresses the current uncertainty in law where, under existing legislation brought in in 2009, lending institutions were restricted from asserting their repossession rights. Historically, this comes out of the High Court case, where it was found that where a Start Mortgages mortgage was created before 1 December 2009, the banks would only have the legal right to seek a summary repossession when the principal sum was due and was demanded prior to 1 December 2009.

It is important to stress that this legislation will not make it easier for banks to repossess family homes. Any efforts by Opposition spokespersons to create a smokescreen or an illusion around this are wrong. Everyone knows that the approach taken is the same one. Unfortunately, we cannot write a charter that writes off debt. Unfortunately, we cannot create a mythical fairyland type of response. Unfortunately, the response that we create must be grounded in reality, must have a factual basis and must have a structured basis. As was implicitly recognised by Deputy Boyd Barrett, the question of moral hazard must arise because one must take account of the reaction of those who see a neighbour being dealt with differently. All of that still must happen, but it cannot be done in an unstructured way. The introduction of this legislation is to address the area of uncertainty around the loophole and comes out of a revised memorandum of understanding between Ireland and the troika. It certainly firms up the position taken by the previous Administration when it enacted the 2009 Act. I remind Deputy Niall Collins that such was the purpose of the 2009 Act until Mr. Justice Dunne's judgment in Start Mortgages v. Gunn.

The second provision of the Bill is addressed in section 2. This section provides a specific safeguard for borrowers in repossession actions, subject to certain conditions. Under the terms of section 2(2), the court is allowed to adjourn repossession proceedings, for up to two months, regarding the family home-principal residence, in other words, the court can and will stop repossession proceedings. This is in order to ascertain whether or not a personal insolvency arrangement, as per the terms of the Personal Insolvency Act 2012, would be a better option for all concerned. I welcome this provision. In many cases, a personal insolvency arrangement is a better option, from both the bank and the borrower's perspective. Repossessions are costly procedures from a financial and emotional perspective and the financial costs involved usually diminish the amount of money the lender can recoup, and obviously, with awful implications for human beings and for communities and fractious relationships arising from sale of the property, etc. Under current legislation, provisions exist to ensure that borrowers can continue to maintain ownership of the family home in cases where this is appropriate. This is always seen to be the best option.

While repossessions are seen to be a last resort, it is vital that legislation is tightened in this area in order to deal with unsustainable legacy debts. I believe that in most cases arrangements will be put in place. In a few cases, as we all will be aware from cases we come across in clinic work, it would be better for the individual where his or her mortgage is so distressed and where the circumstances are so difficult and in such an unmanageable condition that, from a psychological, family welfare, basic needs and children's education point of view, holistic consideration would suggest the logical course of action would be for the person to take rented accommodation or that the local authority purchase the property. The latter is the ideal outcome where, if the person was due to come back into social housing, the option to purchase the property would be taken by the local authority and the person would become the tenant.

In an absolutely distressed position that is the correct solution. There are no magic solutions to this. Nobody can sustain individual malpractices, including favouritism to certain people as alluded to by Deputy Boyd Barrett. Nobody would support that in any circumstances. Having said that, one cannot extrapolate from a few bad situations and a few wrong calls that it is right to create mayhem with the generality of cases. We need legal parameters, structures and a methodology for the good of all concerned. It is illogical and disingenuous to suggest the contrary.

Repossessions are seen as a last resort. The Governor of the Central Bank, Professor Honohan, shares the view that repossessions should only be exercised in extreme cases. There are many cases where people who through no fault of their own - unemployment, illness, etc. - fall into arrears in their mortgage repayments. There were many cases where people were lulled into making, or were allowed to make, poor decisions. While everyone has personal responsibility for his or her actions, some people were in a weaker or disadvantageous position in evaluating the loans and options presented to them. There are many people - young and not so young - who have inappropriate mortgages simply because they had wrong information or because wrong lending principles were applied. One has to be cognisant of that in any evaluation of and response to the situation. I believe Professor Honohan is also saying that clearly.

Many people in such situations are trying their best to meet their repayments. In these cases repossessions should be avoided and a practical yet humane approach should be taken instead. Professor Honohan argues that "a debt modification [system] that enables them to stay in their home will often be the best solution all around". From a practical point of view, if a borrower and lender can work out a sustainable revised repayment system, then the borrower is paying back an affordable loan, which will undoubtedly be of greater value than the value of the property.

I had the privilege of speaking at a meeting of the Oireachtas Joint Committee on European Union Affairs today when Professor Honohan and his team were giving evidence on the proposed banking union that is in the process of construction as well as the implications of economic and monetary union for the Irish economy. I made a point to Professor Honohan which he received very well. I believe we should consider intergenerational loans. We should turn a number of the distressed mortgages into much longer-term loans - what is called a split mortgage or a mortgage over a period longer, by 20 or 30 years, if necessary. Why not have a house passed from one generation to another with a level of debt on the house that is sustainable and realistic? It is not an unreasonable proposition that a child or another generation would acquire a family home with a level of indebtedness but yet the person inheriting the family home would have significant equity in the home. The banks would get a constant amount of money from the repayments and it is a much better option from a humane and societal point of view than repossession and sale. We should consider that.

As I said to Professor Honohan today, we should consider the Japanese model where mortgages continue for 25 or 50 years as the case may be. The mortgage fits the individual and is intergenerational. There is no reason that should not be the case here. Given the level of subsidisation and support the banks have received and the fact they are effectively nationalised, we should persist with the banks to ensure we get intergenerational mortgages, split mortgages and a sensible and humane solution. That is different from some of the poppycock suggested that banks should basically write off everything, which is not sustainable. We cannot have fantasy economics applied to this. The solutions need to be gradual, realistic and involve responsibility on the part of the borrower and lender. They need to be tapered in such a way that the normal economy can return to the country.

The lender will recoup more money under this arrangement than if it was to seek repossession. Borrowers will also get to benefit in that they will get to keep their homes and make reasonable repayments on their loans, thereby having more money to spend in the wider economy.

We can no longer turn a blind eye to the mortgage arrears crisis. We need to face it head on in a real and practical way and I believe this Bill seeks to do so. It is great that the Central Bank, in conjunction with Government, has set mortgage arrears resolution targets for 2013. By the end of June, banks should have proposed sustainable mortgage solutions for 20% of distressed borrowers. The effect of that over the coming six or eight months will be enormous. By September 2013, this will have been achieved for 30% of distressed borrowers and, by the end of 2013, for 50%, and so on.

The dealing with individual debt at a micro level will be matched with the major achievement of the promissory note deal, which will save the country having to pay €3.6 billion each year, putting the payment out to 2038, which is effectively almost a write-off of that debt in real terms. The reductions in interest rates achieved since the bailout, which are very considerable, come on top of the recent achievement - another in a sequence of achievements - of the Minister for Finance, Deputy Noonan, in getting a seven-year extension of the period to pay off the bailout debt. That is a very significant achievement. Those macro achievements will match the micro achievement of dealing with individual loans.

When a bank deals with an individual person's distressed mortgage, a number of simple objectives are achieved. I again call on the banks to act properly to do this. I also call on Government to be vigilant in the area. When a long-term solution to an individual distressed mortgage is reached, a number of things are achieved. The quality of life and well-being of the borrower and his or her family are enhanced. Such people come back into the real economy because they are fit to conduct normal business in society and are not handcuffed financially in the sense that they can build a normal extension to their house, educate their children, have holidays and do the things normal people do. That gets a normal economy returning.

We have had an abnormal, ill economy for a number of years. We need to return reality to the economy and matching that, as we are doing, with structural achievements and investment from abroad. The people with savings - we should remember there is some €100 million in savings in this country - will then begin to get confident about reinvesting those savings in initiatives locally in local businesses, in their own businesses and in the economy generally, and then we return to a normal economy again.

Dealing with distressed debt and mortgage arrears with personal indebtedness, which is a unique dimension with this recession here, is a critical part of the reparation of the economy and our society. Debt is inherent in this legislation in that under the second part of the legislation, the courts have the power to intervene in a repossession and insist that an arrangement be worked out between the lender and the borrower. Courts will have that prerogative and discretion. The courts will exercise that discretion and the existence of that discretion will bring the banks to work on that as the insolvency legislation does prior to that point.

I thank the Leas-Cheann Comhairle for his indulgence and I welcome the legislation as another brick and important milestone on the road to recovery.

Debate adjourned.