Mortgage Arrears Proposals: Motion [Private Members]

I move:

“That Dáil Éireann:


— the latest mortgage arrears statistics published by the Central Bank showing a further increase in the number of arrears cases with 142,118 family home mortgages in arrears at 31st March, 2013;

— that, as a result of various initiatives by Government and the Central Bank, the balance of power has shifted firmly in favour of the banks and against the distressed mortgage holder;

— the recent publication by the Central Bank of the Revised Code of Conduct on Mortgage Arrears;

— the imminent enactment of the Land and Conveyancing Law Reform Bill 2013 which, inter alia, nullifies the Dunne judgment;

— the number of family home mortgages in arrears of greater than 12 months has increased significantly and now stands at over 54,000;

— comments from senior officials in the Department of Finance and the Central Bank predicting a significant increase in the level of home repossessions;

— that the banks hold an effective veto on any proposed arrangement involving the mortgage under the new Insolvency Service; and

— that under the Mortgage Arrears Resolution Targets:

— the banks are not yet required to achieve any targets for reaching agreement with borrowers;

— the banks decide on the nature of the sustainable solution to be offered to the borrower; and

— the sustainable solution can involve interest only, putting the borrower into the insolvency process or the repossession of the property by way of a court order;


— the widespread concern among distressed borrowers of imminent legal action by banks to initiate repossession proceedings; and

— the evidence from advocacy groups and from direct contact with mortgage holders that banks are now taking a more hard line approach with those in mortgage arrears;

— calls for the Code of Conduct on Mortgage Arrears to be revised to enshrine the following provisions:

— a clear definition of what constitutes an unsustainable mortgage following a process involving representatives of both borrowers and lenders;

— an entitlement to a minimum protected level of income for a borrower entering an arrangement with their bank;

— reinstatement of a maximum number of successful contacts that a bank is allowed to have with a mortgage holder in any calendar month;

— in recognition of the difficulty with placing a value on a tracker mortgage, where a borrower is faced with an offer which involves surrendering their tracker mortgage, a requirement that a third party verify if the offer from the bank is in their best interests;

— reinstatement of the 12 month moratorium on repossession proceedings for mortgage holders who have entered the Mortgage Arrears Resolution Process;

— the Central Bank to require that banks record all calls with borrowers and that these can be stored so that Central Bank staff can access them randomly to check them for any incidents of harassment or following a specific complaint;

— an obligation on a bank seeking an order for repossession to first obtain written confirmation from the Central Bank that it has exhausted every other course of action available to keep a family in their home; and

— an obligation on any bank seeking to classify a mortgage holder as unco-operative and moving for immediate repossession to obtain confirmation from the Central Bank that they can be properly classified as uncooperative; and

— further calls for regulation of debt collection agencies, in particular, where they are engaged by banks in respect of customers in mortgage arrears.”

I wish to share time with Deputies Ó Cuív, Browne and Calleary if that is agreed.

This is the second time in six months that we have tabled a Private Members' motion relating to the mortgage crisis which is hitting every community across the country. Despite promises at the time from Ministers that decisive action was being taken to confront the problem head on, we now see the situation is actually getting worse.

In the intervening period the numbers of arrears cases has continued to increase while the number of genuinely sustainable solutions put in place by the banks has been little short of abysmal. Borrowers are now being hit by a triple whammy in the form of the Land and Conveyancing Law Reform Bill which will make home repossessions easier, the mortgage arrears resolution targets programme which incredibly allows the banks themselves to define what is a sustainable solution and now the revised code of conduct on mortgage arrears which unravels vital protections for homeowners. Approximately 70,000 families are no longer protected from repossession proceedings being undertaken immediately by the banks. There are over 54,000 family home mortgages in arrears of one year or more. If one looks pro rata at those who are in arrears between six and 12 months approximately 16,000 of those can be assumed to be in arrears of eight months or more. When one adds that to the 54,000 it comes to approximately 70,000 families completely at the mercy of the banks facing possible repossession proceedings.

I listened to the interview with the Governor of the Central Bank, Mr. Honohan, on radio at the weekend. While he did not repeat the language that he used in February when he said that Central Bank officials were tearing their hair out in frustration at the lack of progress being made in tackling the crisis, it was clear from his comments and other media reports that the banks have not stepped up to the plate. In that context it is inexplicable that the Central Bank would sign off on a revised code which strips borrowers of some of the remaining protections they had. As I said previously, the banks have not held off repossessing family homes to date out of any sense of economic altruism, social solidarity, or out of recognition at the costs they have inflicted on the taxpayer but quite simply because their hands have been tied by the Dunne judgment and the terms of the previous code of conduct on mortgage arrears.

On Friday of this week the Seanad is likely to pass the Bill which will remove the loophole which limited repossession actions while the code of conduct will in effect let the banks off the leash to pursue borrowers in cases where the bank deems the mortgage to be unsustainable. It is worth noting what the code itself says in this regard, where a bank writes to a borrower to advise them that their loan is unsustainable "legal proceedings may commence three months from the date the letter is issued or eight months from the date the arrears arose, whichever date is later", and that, "irrespective of how the property is repossessed and disposed of, the borrower will remain liable for the outstanding debt, including any accrued interest, charges, legal, selling and other related costs, if this is the case." This is a significant weakening of the protection which previously existed for borrowers.

Our motion requests that the code be revised to reincorporate the 12 month moratorium before repossession actions are allowed to commence. In addition, it puts forward what I think is a very reasonable suggestion that before a repossession order is granted by the courts the bank be required to obtain from the Central Bank as regulator written confirmation that it has in fact exhausted all viable alternative options to repossession.

Widespread home repossession is an almost unknown phenomenon to us in Ireland but the UK went through a disastrous period of social upheaval in the early 1990s as a consequence of thousands of families being put out of their homes. Despite arrears of greater than six months peaking at 3.5% in 1992 - a level far below what we are experiencing in Ireland - 200,000 homes were repossessed in the period 1990 to 1992. The social and economic effects of the failed policies that led to this situation were still being felt years later.

We have all come across some extraordinary lending decisions where mortgages were granted that should never have seen the light of day. I want to share one with the House. This relates to a buy-to-let mortgage where the lending decision simply beggars belief. This lending decision was made by a main bank in Ireland. It relates to a married couple who, pretty much at the height of the boom, bought an investment property. The husband was then 61 years of age and was retiring as a public servant and was due to receive a lump sum of around €100,000. His wife was a housewife and did not work outside the home. They decided to buy a house as their pension, with a view to selling it on a short few years later. The house cost approximately €300,000. The couple received a 14 year mortgage of €196,000. That was a 14 year mortgage when the sole income earner was retired and aged 61. The mortgage would take the husband up to the age of 75. The couple put the €100,000 lump sum with the mortgage and bought an investment property for €300,000. The original loan agreement provided that the loan would be on interest only for seven years and for the remaining seven years, the couple would pay €2,700 per month, a level of repayment that was never going to be possible.

To grant a 14 year mortgage to a 61 year old man and put it on seven years interest-only on the basis of a modest public sector pension is simply beyond belief. When the loan got into difficulty after the interest-only period expired around 2012, the bank's solution was for the couple to pay €1,000 per month for a 12 month period and for them then to clear the remaining amount of the loan, including arrears, in the six years that were left in the lifetime of the mortgage agreement. That is the degree of lack of realism with which we are dealing. It highlights the level of recklessness in the original lending decision and the complete detachment of the bank when trying to work out a solution to this mortgage.

Of course, I acknowledge the couple in this case made a very unwise, even foolish, investment decision and they have paid an extremely high price for that. The bank's role in this and many thousands of other cases, however, has been truly extraordinary. The couple in question is negotiating with the bank. I am sure the property will be voluntarily surrendered, sold or repossessed. The question in that case is what happens to the shortfall, which I expect to be between €60,000 to €70,000. The couple now fear that their family home may well be vulnerable.

I know every Member has examples of appalling behaviour by banks in relation to original lending decisions and in relation to the efforts to put in place sustainable solutions. It begs the question why we as a State are giving them even more power when they have not demonstrated any willingness or capacity to seek to resolve the mortgage arrears crisis.

When Bill Clinton addressed the Global Irish Network in Dublin Castle in October 2011, he identified the mortgage crisis as the number one economic challenge facing Ireland. He was absolutely correct in his view. Most of the attendees that day would surely not have believed, however, that almost two years on from that event, we would have seen little more than window dressing measures from the Government and banks.

The Taoiseach said this afternoon in the House that house repossessions have to be the last resort. If he truly believes that, he will accept the proposals we are putting forward that the banks be required to obtain verification independently that they were left with no other course of action before they are facilitated by the courts. My experience of dealing with individual cases is that repossession of the family home is no longer the option of last resort but is becoming the preferred solution of many banks. I have dealt with cases where people have not even yet fallen into arrears, for example, but who have anticipated they would be coming into financial difficulty through loss of employment or, in one case, because the wife was going to give birth. They went to the banks and sought to anticipate a problem down the road. The banks' solution to them at the time, when they put all their cards on the table, was that they believed the people in question could continue to repay the mortgage fully and, if not, the banks wanted the keys back or they would initiate legal proceedings. That is what is happening on the ground. Repossession is no longer the last resort for the banks.

My concern is that all the powers that have been given to the banks through the legislation on the Dunne judgment, the mortgage arrears targets programme and the revised code of conduct have all firmly shifted that delicate balance of power between borrowers and lenders, giving the banks a stronger hand to deal with borrowers who are trying to live with the daily reality and the financial distress that having a mortgage in arrears brings with it.

The statistic for the number of houses that are in line for possible repossession is most striking when one considers the latest statistics from the Central Bank. Only 144 split mortgage solutions have been put in place. This represents 0.1% of family home mortgages in arrears and is a shocking indictment of the failure of the banks to face up to the problem. Ministers consistently say that 80,000 mortgages have been restructured. This is a distortion of reality. Looking at the breakdown of that, where 26,000 mortgages were put on interest-only, 17,000 were put on reduced payment that was greater than interest-only, 7,000 were put on payments where the amount was less than interest-only, and 2,500 were moved to payment moratorium arrangements, one gets the sense very quickly that what has been done to date does not represent genuine or sustainable restructuring of mortgages in question.

As far back as the autumn of 2011, we put forward radical solutions which involved giving the power to an independent office within the personal insolvency service to make decisions that would be binding on both the borrower and lender on what would be a fair and equitable outcome in the case of individual mortgage arrears. I have a lot more to say, but I know my colleagues have to contribute and that I will get a chance to wrap up the debate tomorrow evening, so I will leave it at that for now.

I am delighted to have an opportunity to speak on this subject. If there is any subject that is causing more grief to more families, I certainly do not know about it. The whole financial issue is one of the major challenges facing people in our society. I would like to look first at an issue that seems to loom large when people look at possible solutions, namely, the issue of moral hazard. It is the most ridiculous concept when one thinks of the significant number of the 140,000 to 150,000 people who are either in mortgage difficulties or are paying their mortgages and just hanging in there keeping repayments up to date. Using moral hazard as an excuse for doing nothing is just that - an excuse, and nothing more. If one were to carry moral hazard to its logical conclusion, we would have the ridiculous situation where those who contributed to their health problems would be examined before they would be allowed to go into hospital for treatment at a cost to the State.

The majority of people in trouble with their family finances are in trouble because houses were too dear, they borrowed too much money and they had expectations about their salaries which exceeded what is reasonable. I accept there were those who were foolish, but there are people who get assistance from the State all the time who make bad decisions. This idea of moral hazard seems to me to be the latest new fad. It very much reminds me of Victorian attitudes about the deserving and undeserving poor - the more things change, the more things stay the same. I do not and never will buy into that type of thinking.

Let us stand back from this problem and look at how a person could be in trouble today with their mortgage despite having taken very prudent decisions all along. Take the example of two lower end public servants who borrowed money because they had a child and wanted a home. They paid over the odds for a house because that is what one had to pay to get a house in the years from 2004 and 2006. They did it on the expectation that their salaries would have gone up by at least 5% or 6% in the intervening years, which would have been very modest. They did it on the basis that they would follow a career path within the public service and that they would have perhaps got promotions as the years went by. Was it foolish of them that they did not build into that the 17% reduction in their salaries through pension levies, pay reductions and so forth, the ban on recruitment which has meant that promotional opportunities are gone, a range of new taxes such as the household tax which have been introduced, the decrease in child benefit, all of which added together have meant that instead of going up, their income has in fact been coming down in the intervening years, and variable interest rates on mortgages have been going up?

Here we have a very prudent couple who are in trouble because events have taken place which could not have been foreseen by anybody. The reality is that they would be the lucky couple today and would still be in employment. As we know in many cases, people have lost employment and in two income families, one of the incomes has largely disappeared. The reality is that many people are in trouble through no fault of their own.

The Government has created a situation where it has the banks sitting in judgment above all people, having a veto over the arrangements and deciding whether the person is adhering to a proper financial plan or not. It would be more proper if the banks were made to answer for themselves rather than sit in judgment on everybody else. Trying to solve 148,000 cases on a case-by-case basis is ludicrous. The amount of time it takes this State to deal with one social welfare case, which is simple compared to sorting out a person's finances, should be a warning that if we want to go through all those cases on a case-by-case basis, we will strangle this economy and we will be at it forever. It is just not doable. It is time we realised that we need to make decisions for a wide swathe of these people who are in difficulty because their income has dropped and we have to help them in the simplest way.

I was very interested in a proposal made by the Phoenix Project, whose representatives met the Minister for Finance recently. They basically said there is a great number of people in mortgage difficulties who should be helped by an automatic system rather than by a person-by-person solution. They proposed that the tax relief at source, or TRS, would be increased from 30% to 60% for those who bought during the boom years, and this group has already been defined under the law. If a person is paying €1,000 in interest per month, then currently about €300 is paid by the State through the tax system straight to the bank, irrespective of the person's personal income. By increasing it to 60%, the person would only have to pay €400. Once that is done, nobody would have to apply because the reading would be changed by the Revenue Commissioners. Instant relief would immediately be provided to those who are just hanging in. Those just paying interest only could start paying interest and capital. Those paying 80% of the interest could pay the full interest. In other words, everybody would move up a notch. Then we could deal with the people in serious trouble on a case-by-case basis. We would have a small enough number of people who could not be rescued for all sorts of reasons. There were always people with social problems in the mix and we could deal with those on a case-by-case basis.

The cost of this would be about €300 million per year. There is a perfect way of financing this because the Government has claimed that its cash flow has improved by €1 billion per year because of the deal it has done on the debt of Anglo Irish Bank. I call on my colleagues in the House who are members of the Fine Gael Party or the Labour Party to use a portion of this money to help the hard-pressed mortgage holder. The argument against this will be that there might be some people with mortgages who will be helped and who might not need the help. When we give free fees to people, free access to hospital care and so on, we often help people who could pay for these out of their own pockets, so there is nothing new in this. Neither should we forget that until about ten years ago, people got tax relief on the mortgage at the marginal rate of tax, so many people in the past were getting 48% and 60% tax relief on mortgages. Finally, should we spoil the party for the 95% that we would help significantly because maybe 5% would benefit? If we are really worried about that, we could put in a clawback on the high end of the income in case we might accidentally help a few people who do not need it. If 95% would gain genuinely from this simple, effective and non-bureaucratic measure, then we should do it. If a few people were to get a bonus from that, then what the hell.

I welcome the opportunity to say a few words. I had not intended to speak on the motion put forward by Deputy McGrath, but yesterday morning a man and his daughter came into my office in a distressed state. They only owed €27,000 on their home and they have been paying interest only for the last year and they have never missed a payment, but between Friday and yesterday morning they received 15 phone calls from their bank inquiring when they were going to make the full payment on a monthly basis. Yesterday morning at 10 a.m., it was suggested to them that they should sell the house and pay back what they owe to the bank. That seems strange given that they owe only €27,000 and they are meeting the interest only repayments. That shows the harassment that people are suffering from the banks at the moment. Many people like that family are being harassed daily by the banks seeking their full payments. The man in my office yesterday is unemployed and his daughter is in college. He is making every effort to make repayments, even though they are interest only. He should not be subject to the harassment that he is getting from the banks.

That brings us to the discussion we are having tonight. The revised code of conduct on mortgage arrears, published at the end of June, takes away an important protection for borrowers. Taken together with the mortgage arrears resolution targets programme and the Land and Conveyancing Law Reform Bill 2013, it forms part of a consistent pattern of placing ever more power and control in the hands the banks. The complete failure of the banks to put sustainable solutions in place to date can be seen from the fact that there are 144,000 mortgage cases in arrears and they have dealt with very few of them in the past 18 months. The back drop for dealing with the crisis is one of cuts to disposable income, jobless economic recovery, rising variable interest rates, declining property prices, further hits to households in the form of reduced wages, reduced social welfare payments, property tax, a possible water tax which the Minister, Deputy Hogan, has spoken about introducing, and so on. All of these problems are building up for people who have large mortgages and who are in negative equity.

Following various initiatives by the Government and the Central Bank, the balance of power has shifted firmly in favour of the banks and against the distressed mortgage holder. Essential safeguards have not been put in place to counteract the possibility of abuse of the increased contact which banks will be permitted to engage in with distressed borrowers. The new code does not enshrine an entitlement to a minimum level of income for a borrower entering an arrangement with the bank, and there is no requirement that borrowers receive independent legal advice.

Many people come into me with these problems, and I am sure they come to every other Deputy as well. We refer many of the cases to MABS. While MABS is doing an excellent job, it is understaffed. I try to accompany people as often as possible when they go to discuss their arrears and loans with their banks. Perhaps it is time that MABS or some other organisation is given an oversight role to ensure the borrower is protected at all times. I have heard first-hand stories about how people are treated by the banks. Usually the bank managers at local level do not have a clue about how to deal with mortgage arrears and they are inclined to harass people if they come alone. It is important that they have legal representation or are represented by MABS or another organisation. Bank personnel at local level are not equipped to deal with mortgage problems. They are not properly trained or given the advice they need. More often than not, deals reached at local level are refused by head office in Dublin.

This is an important motion and the Government should accept it. Over the last several months Deputy Michael McGrath has been putting forward a number of useful initiatives. The time has come for the Government to stand up to the banks and stop them from riding roughshod over people in mortgage arrears.

I thank my colleague, Deputy Michael McGrath, for giving us the opportunity to debate the issue of mortgage arrears. It has been approximately two years since he first raised the issue of mortgage arrears. In the summer of 2011 he, along with Senators MacSharry, Byrne and Darragh O'Brien, pointed out the need for an independent arbitration agency to address a number of issues that had arisen. However, two years later nothing substantial has been done to alleviate the problem for the 142,000 whose mortgages were in arrears at the end of March. As I look around a relatively empty Chamber, it strikes me that tomorrow evening it will be full as the latest instalment of the drama that is this bubble is played out. A drama is playing out in 142,000 homes across this State and politicians and everyone else in society need to wake up and smell the coffee because the situation is serious. I thank Deputy Michael McGrath for his consistent advocacy on behalf of these people.

We are seeing in the Government's response a watering down of the legal and regulatory defences for distressed mortgage holders in their dealings with financial institutions. The Government amendment to our motion welcomes the Land and Conveyancing Reform Bill 2013 for addressing a lacuna in the law which created uncertainty about the exercise by lending institutions of their repossessing rights. Tomorrow night Government Deputies will vote to welcome an explicit statement on the purpose of that Bill. The Government is in danger of cheering on an avalanche of repossessions through such statements.

The code of conduct on mortgage arrears has been watered down. The example outlined by Deputy Browne is a result of that watering down. Over the course of a weekend a person received 15 telephone calls culminating in a threat to repossess the house by the following Monday morning. Luckily this individual had the wit to consult somebody but what if the calls continued over the Monday and Tuesday now that the code of conduct has been watered down? Such behaviour was not permitted previously. We do not have an opportunity to listen to those telephone conversations. We can listen to taped telephone conversations among Anglo Irish Bank executives but we cannot listen to the interaction between whatever bank made those calls and its client. We do not know what sort of threats were made and, most important, the Central Bank and the Department of Finance do not know. Our motion calls for a reversal of this watering down but if we are to accept it, the least we should demand is that the calls be recorded for use in the event of a dispute.

The main issue arising is the lack of an independent mechanism for adjudicating between a distressed borrower and a financial institution on the content of a sustainable solution. Deputy Ó Cuív and others referred to the issue of moral hazard. I do not doubt that some people are exploiting this crisis to evade their responsibilities but we have no way of finding out about that other than by extrapolating figures and making judgments. An independent agency with proper functions could decide what percentage of mortgages holders, whether investment or residential, are deliberately deceiving the system and how many are in genuine distress. The Government appears reluctant to agree to such an approach. When Deputy Michael McGrath and his colleagues made their proposals in 2011, we were told that the personal insolvency service would ride into town to save the day like a hero in an old Western movie. I was my party's justice spokesperson when the heads of the Bill were being debated. I disagree with the Minister for Justice and Equality on many issues but I acknowledge that he engaged on the heads of the Bill. We also heard submissions from a variety of organisations. The central recommendation of the independent organisations which deal with these issues on a daily basis, such as MABS, the Legal Aid Board and the Irish Mortgage Holders Organisation Association, was that an independent element is needed. The Minister resisted that suggestion and, with the Insolvency Service of Ireland, we now have an organisation that is full of good intent but will ultimately hit a wall because the banks are still in control. As long as the banks have a veto over settlements, I do not think people will engage with the service.

All of us deal with MABS on a daily basis. Given the confidence that people have placed in MABS, I would have thought we shared a desire to give it the resources it requires to manage the situation but there appears to be reluctance to do that. Senior people who are retiring from the system should be allowed to get involved. We are not giving MABS the resources it needs.

This problem affects every aspect of society. Approximately 54,000 family homes are more than 12 months in arrears and a total of 142,000 were in arrears at the end of March. These families are paralysed by debt and the fear of what may come. That paralysis extends to their ability to spend. They cannot spend money in their local economy. The Central Bank and the banks cannot even reach agreement on minimum income thresholds. The Government refuses to set out the minimum basic income a family needs to survive. We have given the keys to the banks to define the minimum income. They have the right to go through borrowers for a dose of salts before deciding what they can spend. How can we expect our domestic economy to recover to the point of creating employment or our health service to cope with an avalanche of mental and physical health issues while we have our heads in the sand on mortgage arrears? The figures show that the problem is getting worse because the response is not robust enough to instill confidence.

As we come to the end of another Dáil session, we are putting these issues back on the table. We will raise them again in the coming sessions. We need to put our energies into resolving this issue if we are to restore the economy. The Minister for Finance indicated again today that he will engage with the troika on exiting from the programme. The troika's departure will be welcome but if this issue remains unresolved we will face a bigger challenge. We must allow these people to live their lives.

We must allow them become full citizens of the country again and allow them spend money, money that will give the Minister the kind of revenue he needs to improve the economy and employment and bring the country back to an even keel. Surely everybody shares that ambition.

The next speaker is the Minister for Finance, Deputy Noonan, who is sharing time with Deputies Joanna Tuffy, Ciarán Lynch and Paul J. Connaughton. Is that agreed? Agreed.

I move amendment No. 1:

To delete all words after "Dail Eireann" and substitute the following:

"- acknowledges that this Government inherited a severe mortgage arrears crisis;

- recognises that the Government has already taken a number of significant steps to address the mortgage arrears problem;

- in particular, acknowledges that the current Government established the Interdepartmental Mortgage Arrears Working Group and subsequently published the group's report in October 2011;

- notes that the group's report indicated the mortgage arrears problem is complex and that a range of measures, such as personal insolvency reform, the development of mortgage-to-rent, the provision of mortgage advice, direct engagement by banks and the development of sustainable options by banks for their customers who are experiencing mortgage difficulty, need to be advanced to address the problem;

- recognises that the Government has moved to implement the main recommendations of the Interdepartmental Mortgage Arrears Working Group report; and that a special Government committee, chaired by an Taoiseach, is overseeing the implementation of the measures across Government;

- acknowledges that significant progress has now been made, including the fact that:

— the Personal Insolvency Act 2012 was signed into law on 26 December 2012;

— the Insolvency Service of Ireland was formally established on 1 March 2013;

— the mortgage-to-rent scheme is now available across the country; and

— a mortgage advisory function is now in place;

- encourages the Government and other authorities to continue this work, in particular to enhance action by mortgage lenders to appropriately address unsustainable mortgage loans;

- notes that the Government has taken steps to address a lacuna in the law arising from the High Court decision in July 2011 which created uncertainty in the law relating to the exercise by lending institutions of their repossession rights;

- notes the targets set by the Central Bank requiring the main mortgage lenders to offer durable solutions to mortgage holders over 90 days in arrears;

- notes that the latest Central Bank mortgage arrears and repossession statistics for end March 2013 show that there was a total stock of 79,689 principal dwelling house mortgage accounts classified as restructured and that 76 per cent of these are deemed to be meeting the terms of their restructured agreement;

- acknowledges the Central Bank's initiative of the Framework for a Pilot Approach to the Co-ordinated Resolution of Multiple Debts owed by a Distressed Borrower;

- notes the revision of the Central Bank's Code of Conduct on Mortgage Arrears; and

- recognises that there are provisions in the Central Bank's Consumer Protection Code for Licensed Moneylenders which provide protections to consumers in relation to the debt collection activities of licensed moneylenders."

I welcome the opportunity to speak on the issues raised by the Deputies and to set out the Government's achievements in this area and our strategy in moving forward. The context for the mortgage arrears and high level of indebtedness is the economic downturn. The Government is deeply committed to addressing the failures of the last Government and to generating economic recovery, growth and jobs. We want to produce an environment where mortgage holders can pay for and stay in their homes and where those who have difficulty in meeting their financial commitments are provided with an opportunity to resolve their problems and begin again to contribute to society. The Government is very much aware of the difficulties some homeowners face in meeting their mortgage obligations and we are committed to advancing appropriate measures to assist mortgage holders who are experiencing real difficulty. I would like to outline to the Deputies the steps we have taken, as well as our continued efforts in assisting citizens who face difficulties with mortgage arrears.

A Cabinet sub-committee on mortgage arrears, chaired by the Taoiseach and with a membership comprising the Tánaiste, myself, the Minister for Public Expenditure and Reform, the Minister for the Environment, Community and Local Government, the Minister for Social Protection, the Minister for Justice and Equality, and the Minister of State with responsibility for housing and planning has been established to provide strong political support for the implementation of policy measures designed to assist households struggling with debt arrears. This Government sub-committee acts to reinforce the co-ordinated response to the mortgage arrears crisis and to drive the development of the personal insolvency legislation and the implementation of the other recommendations to tackle the mortgage arrears problem as set out in the Keane report.

At official level, a high level steering group meets on a fortnightly basis to co-ordinate and drive the implementation of the strategy and to receive and monitor the reports from the relevant Departments and agencies on the implementation of their respective areas of the overall strategy. This group, which is chaired by the Secretary General of the Department of Finance, consists of senior officials from the Department of Finance and from the Departments of the Taoiseach, the Environment, Community and Local Government, Justice and Equality, Social Protection and Public Expenditure and Reform, as well as from the Central Bank of Ireland and the Insolvency Service of Ireland. The work of the steering group is built around the following pillars: personal insolvency law reform and implementation; mortgage to rent schemes; a mortgage advisory function; and engagement with the banks to develop appropriate measures for customers in mortgage arrears.

The establishment of the Government sub-committee and the official high-level steering group clearly signal that the implementation of effective and appropriate measures to tackle the mortgage crisis is a key policy priority for the Government. It also indicates that a co­ordinated national strategy, premised on interdepartmental co-operation, has been adopted to address the critical problem of rising household debt distress.

Personal insolvency reform was identified by the Keane report as a catalyst for addressing the mortgage arrears problem. The report indicated that without an effective insolvency system, the mortgage arrears problem will not be resolved. The introduction of the new Personal Insolvency Act provides new statutory insolvency frameworks to allow debtors and creditors to reach arrangements on unsustainable mortgage and other personal debt. The Personal Insolvency Act 2012 provides for three new debt settlement frameworks. The first is a debt relief notice to allow for the writing off of debt, subject to conditions, up to €20,000 for persons of "no assets or no income", subject to a supervision period of three years; the second is a debt settlement arrangement for the agreed settlement of unsecured debt, normally over a period of five years; and the third is a personal insolvency arrangement for the agreed settlement of both secured debt of up to €3 million and unsecured debt without limit, though the upper limit can be increased with the agreement of creditors, normally over a period of 6 years. The Act also provides for reform of the Bankruptcy Act 1988, which is critical to providing for automatic discharge from bankruptcy, subject to certain conditions, after three years. It also provides for the establishment of the new Insolvency Service of Ireland to operate the new insolvency frameworks.

A number of concerns have been raised about the balance of power between banks and debtors, which has commonly been referred to as a "bank veto". The reality is that it is in the best interest of both debtors and creditors to seek to conclude an acceptable and workable bilateral arrangement under the Personal Insolvency Act, be it a debt settlement arrangement or a personal insolvency arrangement. It should be noted that the framework set out in the Personal Insolvency Act in respect of creditor consent is essentially that as recommended in the Law Reform Commission report from 2010. Both debtors and creditors have rights in a financial contract and these must be respected, having regard to the insolvency of the debtor. Of course, in the event that neither a debt settlement arrangement nor a personal insolvency arrangement can be agreed between debtors and creditors, the ultimate resolution option is and remains judicial bankruptcy.

The Insolvency Service of Ireland, ISI, was formally established on 1 March 2013 following the signing of the establishment order by the Minister for Justice and Equality. An information campaign was subsequently launched last April. The campaign included the publication of guides to the three new arrangements - debt relief notices, debt settlement arrangements, and personal insolvency arrangements; the launch of the ISI website, which contains various scenarios of how the new arrangements may work in practice; the launch of an information line for the public; and, crucially, the publication of guidelines on a reasonable standard of living and reasonable living expenses for debtors.

Deputies will be aware that last month the ISI published updated guidelines on a reasonable standard of living and reasonable living expenses to reflect consumer price index information to March 2013. This is important to ensure that personal insolvency practitioners will use the most up-to-date information available when formulating proposed arrangements.

Regulations providing for the authorisation of approved intermediaries and personal insolvency practitioners have been signed and the ISI is now receiving and processing applications from those who wish to be authorised to act in that capacity. Once a fully completed application is made, the ISI expects to be in a position to issue an authorisation within ten working days. It is expected that debtors will be able to contact practitioners and begin to receive advice from them in the second half of July, and the ISI expects to begin receiving applications for debt relief notices and protective certificates shortly thereafter. A number of professional bodies have already provided training courses to those interested in applying to become a personal insolvency practitioner, PIP, and it is likely that the number of applications for and the authorisation of PIPs will increase steadily throughout the summer.

Furthermore, the Government has nominated six special judges for appointment to the Circuit Court to deal with personal insolvency matters and these will be in place to provide the necessary judicial oversight when insolvency cases start to be processed. As Deputies will be aware, the Courts Bill 2013, which is currently before the Oireachtas, also contains the legal and practical requirements necessary to transfer the function of official assignee in bankruptcy from the Courts Service to the Insolvency Service of Ireland. The Bill will also include a number of other necessary amendments, mostly of a technical and drafting nature, to ensure the proper functioning of the provisions of the Personal Insolvency Act.

The Deputies' suggestion that senior officials in the Department of Finance and in the Central Bank are predicting a significant number of repossessions is incorrect. Indeed, at the weekend the Governor of the Central Bank publicly indicated that he hopes that very few family homes will be repossessed. The suggestions by Deputies of large-scale repossessions as a matter of course are not helpful and, given the role Fianna Fáil played in the mortgage crisis, they should be more responsible with their statements.

While it must be accepted that, in some cases, mortgage debts are so unsustainable that it will be in the best interest of all the parties to surrender the house, in most cases where this happens the surrender takes place on a voluntary basis. However, in the majority of cases of mortgage difficulty, it will be possible to address the problem, in the best interest of all parties, through a mortgage restructure. Indeed, the code of conduct on mortgage arrears places an onus on the banks, in respect of a co-operating borrower, to explore all the options for an alternative repayment arrangement to address mortgage difficulties. In addition, the Land and Conveyancing Law Reform Bill currently before the Oireachtas provides an important power to the court to adjourn a repossession hearing to allow a personal insolvency arrangement to be proposed and considered as an alternative option.

The mortgage to rent scheme is now available as an option to low income families who wish to remain in their home. The latest information I have is that 37 cases have now been completed and are awaiting closure, while a further 27 cases are at valuation or sale negotiation stage of the process. The mortgage to rent scheme ensures peace of mind for the borrower and their family that they can remain living in their home without disruption to family life, despite being in a difficult financial situation, and they pay a rent they can afford.

A mortgage information and advice service has also been put in place which comprises a detailed website, a mortgage arrears information helpline and a targeted independent advice service provided by accountants to borrowers availing of long-term forbearance from their lender. It is important that this service is kept under consideration and the Department of Social Protection is currently reviewing the one-to-one advice part of the service.

Given that this overall strategy is in place, it is now essential to ensure that banks proactively address the position of their customers in difficulty and that they propose sustainable solutions. Therefore, on 13 March the Central Bank announced new measures to address mortgage arrears, including the publication of performance targets for proposing and concluding sustainable solutions for borrowers in arrears over 90 days for the main mortgage banks. The Central Bank has indicated that, in determining whether a proposal constitutes a sustainable solution, the lender needs to evaluate both current and future affordability for the borrower's affordability and the capital implications for the credit institutions in terms of their prudential responsibility to minimise losses.

While the Central Bank is not mandating any particular model of restructuring and while sustainable solutions will be arrived at on a case-by-case basis, there are some fundamental principles that must be respected, as follows. The affordability assessment of the borrower needs to be based on both their current and prospective future servicing capacity for all borrowings, and assumed prospective future increases in the debt servicing ability of the borrower must be credible and conservative. Lenders need to apply a realistic valuation of the borrower's assets, in particular their property. This also applies to any assumption of potential asset price appreciation, as well as the estimated costs related to a potential foreclosure of property. Lenders need to use an appropriate interest rate when discounting future income flows, which should take account of the lender's cost of funds. Importantly, the Central Bank will assess compliance with these principles in its supervisory audit of compliance with the targets, including through analysis of a sample of modifications.

The Central Bank has now concluded a review of the code of conduct on mortgage arrears, CCMA. A revised CCMA came into effect on 1 July 2013 which provides an integrated and cohesive package of consumer protection measures for borrowers facing or in mortgage arrears. It reflects the current mortgage arrears situation and seeks to ensure appropriate resolution of each borrower's arrears situation; ensure that lenders deal with borrowers in a fair and transparent manner; support and facilitate meaningful engagement between lenders and borrowers; and ensure borrower awareness of the benefits of co-operating with their lender, and the consequences of not co-operating.

There has been much debate about the moratorium period, which was previously 12 months. While this has been modified, it should be noted that the revised CCMA requires a lender to wait at least eight months from the date the arrears arose and to make every attempt to engage actively with the borrower during that time before legal action can commence against a co-operating borrower. As a result, we expect that a more realistic and sustainable set of solutions will be offered to address a mortgage problem in everyone's best interest. This change should also be looked at in the context of the new insolvency resolution options that are going to be available to debtors. This legislation also gives the debtor statutory time protection periods to enable him or her to formulate an insolvency proposal to submit to creditors.

Ultimately, the Government is of the view that it is the regeneration of the economy, the restoration of employment levels and income growth that will address the real social and economic problems associated with high levels of personal indebtedness. That is why Government is focused, through its many new initiatives, on fostering and generating economic growth. The successful achievement of renewed growth in the economy will restore consumer confidence and bring the tangible and sustainable recovery the country requires.

I wish to share time with Deputies Ciarán Lynch and Connaughton.

I recognise that many steps have been put in place by this Government to help people who are in mortgage distress. It is important that all of us, as Deputies, whether we are in Opposition parties or Government parties, acknowledge those steps and get the message out to our constituents so they know where to go and know the measures that are available to them. While I know Deputies would generally do that, some in the Opposition would jump on the bandwagon and give a very misleading impression that help is not available.

Members talk about constituency work. While I am sure it is the same for everybody, a significant amount of my constituency work these days concerns people in mortgage arrears, debt and negative equity, including problems moving from a property that is too small for the family size to a bigger property because the family is in negative equity. This work is very important in that it means we are in touch with how these issues affect our constituents in practice, which is why it is so important to do constituency work and why it is such an important part of our job.

I will not go through all of the measures that are in place but I make the point that other measures are needed. The Department of Social Protection currently deals with mortgage arrears. The issue is that, while the number of people in arrears has increased, the number of people in receipt of mortgage interest supplement has decreased, and I suggest this is largely to do with new rules that were introduced a year ago. A group was set up by the Government a couple of years ago to consider the issue of mortgage arrears and it recommended that the rules for mortgage interest supplement should be changed to allow more people to qualify for it. Currently, a person can only qualify for that social welfare payment if he or she works part-time, whereas the group recommended that it be made available to people who work full-time. This is an issue that needs to be addressed. The group also suggested that the means test should be revised, as did a review from the Department of Social Protection.

It is very important that we do not let this happen again. In my constituency, I have noticed new developments for sale where property is back to prices from some years ago, say, over €300,000 for a family home, which is expensive. The whole issue with the price of property was that it had become so far removed from people's salaries. It is not just that we need prices to go up. It is that we cannot allow a situation to arise again where there is a massive gap between what people earn and the price of housing. We have to keep an eye on this issue and put in place steps to address it. I would still be in favour of the implementation of the Kenny report.

On an issue I raised in a parliamentary question to the Minister last week, life loans were sold by Bank of Ireland which I do not believe were appropriate to sell to older people with social welfare pensions. I have a constituent who now has a massive loan hanging over her. I do not believe this kind of product, which is basically an equity release product, should be offered on the market by our banks again.

The opening paragraph of the Fianna Fáil motion states there were 142,118 family home mortgages in arrears on 31 March 2013. That is a fact; the question is why.

The answer, of course, is that it is the legacy of the wait and see approach adopted by the previous Administration to this issue. In short, it did nothing. The Fianna Fáil Party has raised this issue more times during this Administration than it ever did during its time in government. The initial Cooney report was published on the day the Dáil began a summer recess. In November that year the final Cooney report was published, but the Government never facilitated a debate on the issues it raised. In fact, the only debates that took place under the previous Administration on the issue of mortgage arrears were those held in Private Members' time by the Opposition. The idea that there is any consistency in approach on the part of Fianna Fáil to this matter simply beggars belief.

The reason for the current pent-up situation in respect of mortgage arrears is, as I have outlined, the wait and see stance taken by the previous Administration. Fianna Fáil in government essentially broke the housing market. Deputy Michael McGrath recounted the case of a very distressed elderly person who was given a mortgage in circumstances in which it should never have been given. On the other hand, there were many people who could not obtain a mortgage during the period in question. I recall a weekend in April 2006 when I went knocking on doors in Donnybrook Hill, an area Deputy Michael McGrath knows well. I spoke to a young couple there, one of whom was working in a pharmaceutical company in Cork Harbour, a company which was known for paying good wages, while the other was a public servant. This couple were not earning enough to buy a house on the open market, but they were earning too much to be eligible for Cork County Council's affordable housing scheme, under which the average house price at the time was some €250,000. This was the same weekend that the former Taoiseach, Bertie Ahern, made his famous comment that people should commit suicide instead of continuing to complain about the property market. It was as plain as day to me as I left that couple's home that the property market was bust. If first-time buyers cannot come into the market, the market is a fraud and will inevitably collapse. All markets are the same. If one buys a new car in the expectation of selling it in two years, there must be somebody who can buy it.

The Deputy should have revealed this insight at the time.

I wrote about it. The Deputy and I were both writing for Douglas Weekly at the time, but we had different things to say. The market was bust; there was no doubt about it. The craziest aspect of the whole situation is that mortgages worth ten times people's incomes were being given out, with repayment periods of 30 to 35 years. It was nothing but a Ponzi scheme, which was sustained by the Government simply because the money coming in was feeding the interests they wished to serve.

The question we must ask ourselves in attempting to deal with the mortgage crisis is what precisely we wish to achieve. In talking of recovery do we mean a return to housing inflation of 8% to 10%, or are we talking about a realistic inflation level of 2.5% to 3% per annum? A sustainable market that is designed to prefer home owners over investors and which sees property as a home, not a commodity, is what can properly be described as a normalised housing market. We did not have such a market during that time. On the other hand, the measures the Government has taken since coming to office have begun the normalisation process.

The Fianna Fáil motion suggests the Dunne judgment should continue to hold and that a mortgage cannot be dealt with if it falls into default or where there is a belligerent lender. That is nonsense. The mortgage market cannot be normalised if banks do not have security on the loans they give out, as per normal lending practice. If lenders cannot make a call on the security on a loan, the whole system is complete and utter nonsense.

The motion's reference to the veto suggests Fianna Fáil does not understand how it works. The veto has an impact on unsecured lending because where there is a write-down on the property, that debt is transferred to the unsecured side of the loan. This means that the credit union loan, holiday loan, credit card debt and so on are gazumped because the transfer accounts for a large proportion of what is coming in. In other words, the veto is a mechanism that will help people in distressed circumstances to secure a write-down on both their secured and unsecured debt. The Fianna Fáil position on this issue in its motion is either reflective of a complete misunderstanding of how the veto works or is merely populist posturing. Deputy Michael McGrath knows very well that for the insolvency legislation to come into law, it had to respect the property rights of loans. The idea that a loan could be taken over without any recognition of property rights is populist nonsense and another example of the Punch and Judy politics Fianna Fáil promised to abandon.

The reinstatement of the 12 month moratorium is a worrying proposal. What people need is a resolution at last of their situation. There are mortgage holders who have been making interest-only payments for the past four years. That money has been going into the banks week after week, subsidised by the State, without reducing borrowers' capital debt by a single cent. The proposal that we return to the wait and see approach adopted by Fianna Fáil in government is a very regressive one. It is only one of the many shortcomings of the motion. I urge the House to oppose it.

I welcome the opportunity to contribute to this debate and state my support for the Government's amendment. This Administration took office following an economic crash of unprecedented proportions, which not alone put property and share prices into free-fall but also brought crashing down the carefully constructed hopes and dreams of many ordinary families throughout the country. The problem with the phrase "mortgage arrears" is that it goes no way towards describing the very real and deep distress householders feel when faced with the prospect of losing their family home. For many of them, the past five years have been the perfect storm, with plunging property prices, dramatic decreases in take-home pay, significant volumes of job losses and short-time working weeks.

Faced with great economic difficulties and the even more significant social and health problems arising as a consequence, the Government has taken action on a number of fronts. The Personal Insolvency Act was one element of this response. Over time, many thousands of householders will turn to its provisions to free themselves from the yoke of economic slavery. The Act was signed into law in December 2012, the Insolvency Service of Ireland was formally established on 1 March and its first information campaign got under way in April. Given the pent-up demand for the service, its workload is sure to be very heavy for months, if not years, to come.

Also in March this year the Central Bank took significant steps to force mortgage lenders to offer durable solutions to mortgage holders over 90 days in arrears. While the bank's objectives were praiseworthy, the action of many lenders to date has shown only minimal engagement. That is most objectionable. They have failed to engage with the notion of a durable solution and are continuing to pursue maximum settlements where the money is simply not there and never will be. For many of these mortgage holders, the durable solution they should be seeking is insolvency.

We have heard a great deal this week about ethics in business, particularly in banking. While the Government is seeking a durable solution to the problem of mortgage arrears, the banks' bottom line remains just that. It is all about the profits extracted. We have seen and heard too much in recent weeks about bankers holding sway over public bodies, but that can no longer be tolerated in the post-bailout reality. Every week in clinics across east Galway I encounter mortgage holders who simply cannot pay their debts. The mountain of debt they face is crippling them and too often exacting a huge toll on family life. Many people cannot countenance the prospect of their debt being unsustainable, but the prospect of a lifetime spent working for the banks is also unthinkable. The people concerned need proper assistance and advice and a speedy resolution to their problems. I note the efforts of the Insolvency Service of Ireland to make information available via the Internet, but a faceless website does not often provide all the answers. People are often in such distress that they need assistance in negotiating the first steps out of the financial abyss in which they find themselves. An independent advice service for borrowers is vital, given that a lack of understanding of financial jargon helped many householders into their present situation. Faced with a David and Goliath situation of confused and distressed householder versus a mighty banking corporation, it is clear that an intermediary is needed to ensure fairness towards the individual.

The Central Bank has sought to ensure banks have a range of options for mortgage holders in arrears, including trade-down mortgages, split mortgages and sale by agreement. My experience in recent days, however, is that rather than offering split mortgages which is the preference of many mortgage holders or trade-down mortgages, the banks are instead focusing on sale by agreement. Once again, this is a David versus Goliath situation where the bank requests the mortgage holder to sell his or her home by holding out as a carrot a minimal mortgage payment while the sale is being conducted. That is a very tempting prospect for many hard-pressed families, but, at the same time, the bank is shaking the stick which says that if they fail to agree, it will move to seek repayment of the full amount.

This is not sale by agreement as envisaged by the Central Bank, it is sale by coercion. Many of my colleagues have encountered similar situations and would welcome a mechanism whereby Oireachtas Members could raise such particularly obnoxious cases with the Central Bank with a view to having the options presented to the mortgage holder investigated. It would also provide the Central Bank with a window into the impossible situations facing many families in all corners of Ireland and put names and faces to a problem that is often seen in solely economic terms.

I propose to share time with Deputy McLellan. We have heard much about mortgages and I welcome the fact that we are debating the topic, which is one of the issues most frequently debated in Private Members' time in this Dáil. Sinn Féin tabled a Private Members' motion on the issue earlier in the year.

We have heard much about the figures. I will never forget sitting in the Seanad Chamber on 10 April 2008 when the Leader of the Seanad, Donie Cassidy, who is a former distinguished Fianna Fáil politician, rose to his feet and used his opportunity as Leader to say:

Now is the right time to buy ... We have a duty to tell first-time house buyers, young couples with no previous experience, that there is unbelievable value in the marketplace today. It will not last forever. It is never the wrong time to do the right thing. I offer the House the benefit of my experience and my opinion which is all any Member can do. I will remind the House, perhaps in 12 or 18 months, when prices have again increased by 25% or 30%, that they were told this by the Leader of the House on this historic day.

That was the Fianna Fáil Leader of the Seanad in 2008, as property prices started to go down, telling inexperienced young couples to buy houses. If one of those gullible people who listened to Donie Cassidy that day, speaking on behalf of Fianna Fáil, bought a house, the value of the house today would have dropped by 55%. That was the mantra at the time. I raise it because it is important to put a debate such as this in context. A couple of months previously, the then Taoiseach, Bertie Ahern, came to my home county, Donegal, and told the public in comments aired on national television that those who moan and give out about the economy and the dangers in terms of house prices should go away and commit suicide. A few months later, in 2009, when we could not ignore the fact that house prices were falling drastically, Brian Cowen went to the largest selling newspaper in the State and said that prospective buyers should not be discouraged by those who seem to portray the easing in house prices in a negative way. People were sucked in by Fianna Fáil for a simple reason - the party was up to its neck with property developers in the past decade. We can see some of the judgments made in the courts today on people who were in these Houses and involved in the same kind of speculation as those who got us into this crisis.

We are in this crisis and we need to deal with the consequences of what happened over the past decade. Since the Government took office, we have seen mortgage arrears continuing to increase. The issue continues to spiral out of control. The figures for the first quarter in 2013 were very disappointing. People genuinely believed there would be some easing off or scaling back of those falling into arrears. Once more, we are rehearsing numbers that exceed 180,000 households in mortgage distress. That means one in four mortgage holders are in mortgage distress and the number in long-term arrears, of over 180 days and over 720 days, is still increasing two and a half years into the lifetime of this Government.

We heard tonight and we will hear more tomorrow about how the Government is acting. I accept the Government is taking action but I disagree these actions will solve the crisis or that they are in any way in the interests of struggling homeowners. This is a Government that justifies all actions by targets set by international capital. It is a Government terrified by the banks in the same way as the previous Government. These are the same banks the taxpayers saved and pumped billions of euro into them under Fianna Fáil when it was in government.

AIB is more or less fully owned by the people of the State but recently it increased its interest rate on variable mortgages and there was not a peep out of the Government. The Minister owns 15% of Bank of Ireland on behalf of the people but he did not raise a finger when the bank approved its CEO's take-home salary of €843,000 for a year's work. Let us not forget the Government has committed to repaying every last cent of Anglo Irish Bank debt as formal sovereign debt. It is no wonder the banks are getting their own way when they deal with mortgages. They asked to be let off the leash, the troika rode in behind them and the Government did what it always did, it crumbled and caved into the banks once again.

The Central Bank targets only force the banks to offer arrangements. The problem is that the banks can tick the boxes by offering arrangements while ramping up the tools for repossession at the same time. The troika is back in town and in its most recent report the IMF and the EU Commission focused on the issue of mortgages. They said they expected to see the three contact rule and the 12-month moratorium reviewed. As usual, they got what they wanted. There was consultation but there was always a set outcome to the big questions. The outcomes were well worked out in advance with the banks, the troika and the Government.

We must ask where the need to review the code of conduct came from. Were citizens lining up to have less protection from the banks? Who was barging down to Government Buildings asking the Government to give the banks more power? The code of conduct was changed at the request of the banks and changed to suit the needs of the banks. It certainly was not changed because of any mandate Fine Gael or the Labour Party received in the last general election. On the contrary, the programme for Government is explicit on this issue. It is bad enough if I have to tell the Government to read its programme for Government, which states: "Both parties believe that more protection is needed for homeowners with distressed mortgages" and the Government committed to "introducing a two year moratorium on repossessions of modest family homes where a family makes an honest effort to pay their mortgage". Another commitment in the programme for Government was to convert the Money Advice and Budgeting Service into a strengthened personal debt management agency with strong legal powers. That, again, was ignored.

This was before the banks started dictating policy to Fine Gael and Labour. Now those commitments are out the window, the banks rule and society must pick up the tab. In line with the submissions made by many others, Sinn Féin said there needed to be an independent body outside of banking to rule on what is fair and what is not. We simply do not trust the banks. The programme for Government referred to more protection for distressed mortgage holders but today the Seanad is rushing through the Land and Conveyancing Law Reform Bill, which will be enacted next month.

I welcome the aspect of the motion that deals with the Land and Conveyancing Law Reform Bill. However, let us call a spade a spade. The Land and Conveyancing Law Reform Bill was introduced in 2009 and allowed for repossessions of family homes. Deputies Michael McGrath, Micheál Martin and Éamon Ó Cuív and every other Fianna Fáil Member at the time voted for it. It was only because of clever lawyers and a couple of individuals taking on Start Mortgages that they found a loophole in the Fianna Fáil legislation that prevented repossessions taking place. Let us be under no illusions. In 2009, when property prices were crashing, the Bill was introduced by Fianna Fáil and allowed for family home repossessions. The jury is out on whether Fianna Fáil is serious and whether it would scrap the Land and Conveyancing Law Reform Bill if in government but the words have not yet been echoed by Fianna Fáil. The Bill will remove the Dunne judgment which, although not an ideal means of guarding the family home for borrowers, meant that some sort of protection has existed for borrowers in distress. Sinn Féin tabled many amendments to the Bill, which could have given a level playing field. We could have given the court the power to decide whether the banks were being reasonable or just playing the game but the Government said "No". The Government has no time for fairness for homeowners and has made up its mind. The Government is with the banks, regardless of the social consequences.

Taken together, the new code of conduct and the Land and Conveyancing Law Reform Bill constitute a co-ordinated attack on struggling homeowners. They are part of a plan to make it easier to repossess family homes. In the amendment tabled by Sinn Féin to the motion, we focus on the here and now and what needs to be done to protect the one in four mortgage holders who are in distress. The Minister can and should direct the Central Bank to suspend the revised elements of the code of conduct. The Minister for Justice and Equality must allow cool heads to prevail and let the Land and Conveyancing Law Reform Bill wait in the shadows for the time being. In short, the Government must take a step back and consider once more what it is doing. This should be done immediately to ease the pressure on those who are struggling. Does the Government want to be remembered as the one which made evictions from the family home a fact of modern life? It is a question all Government Members must consider.

There is much more I could say on the issue. We need a serious solution for those in arrears. Part of a solution must be write-downs of unsustainable mortgages on a case-by-case basis and part of it must be an economic policy which seeks to grow the economy, not to shrink it. It is time to row back. The Government has had two and a half years and its approach is not working. Things are getting worse.

The phrases "mortgage arrears" and "mortgage distress" have been heard often during the debate on the motion. While these terms may be technically correct, I am not sure they do the issue justice and paint the fullest picture. When we talk of mortgage arrears, we should remember the people we are discussing and the suffering and hardship they are undergoing. My constituency office has dealt with numerous people who are at their wits' end trying to juggle bills, put petrol in their cars, provide food for their children and make mortgage payments they simply cannot afford. Many work countless hours - any hours that are available - to keep their heads above water and stretch their money as far as they can. Many more are searching desperately for any work to help them to keep paying bills and make repayments. Many people are trying their best to do without some of the basics, much less the luxuries that keep one going from week to week.

I cannot imagine the worry, concerns and fears that go through people's heads as they wonder if they can hold on to the family home they dreamed of and worked so hard to acquire on the property ladder. Think of the mental strain of constantly looking at bills coming in and wages going out while ensuring the balance is manageable, struggling, perhaps in vain, to meet mortgage payments on homes which are often not worth the price they paid. Many families in my constituency are struggling in Rathcormac, Midleton, Carrigtwohill, Cobh and Youghal. These are people who could not be further from those at the heart of the crash. They are a million miles from the David Drumms and Seanie FitzPatricks of this world. They did not cause the economic crisis. They are ordinary, decent people who work and struggle every day and keep the country running. They are the people who will help to lift us out of recession if they are given half a chance. To do that, they need help. They need space to breathe and they need a chance to make a new start. They deserve better than they are getting from the Government.

The Government has now been in office for over two years and failed so far to deal with this issue. There are 180,000 households in mortgage distress, representing one in four mortgage holders. The numbers in long-term arrears of more than 180 days and 720 days, respectively, continue to increase. While I recognise that they inherited a shambles from Fianna Fáil, which created the boom, the Government parties were willing cheerleaders. The Government has had adequate time to make an impact on the issue. Instead, it has patiently and meekly waited on some act of benevolence from the banks which was never going to come. The Government has shown it is entirely in thrall to the banks notwithstanding that it is at the considerable expense of the Irish public that the banks are still functioning. The Government refused to object to the €843,000 salary paid to Bank of Ireland's CEO and shrugs its shoulders at any increase in interest rates at State-owned banks.

My colleague, Deputy Doherty, has illustrated that the Government has options if it is willing to adopt an approach focused on the needs of homeowners rather than banks. There is a need for a more realistic and socially responsible stance which prioritises in law the protection of the family home. The adequate resourcing of MABS and other non-profit groups working with people in mortgage difficulty is essential. People need access to information and advice rather than to be at the mercy of the banks. Crucially, as the Sinn Féin amendment highlights, there is a need to get rid of the veto provided to banks in the Personal Insolvency Act and to remove the final say that is given to banks in any arrangement as part of the mortgage arrears resolution targets. Many families are crying out for a break and helping hand. It is within the Government's power to provide that if it decides to stand up to the banks rather than to allow them the final call. I urge the Government to do so.

I welcome the opportunity to contribute to the debate on the mortgage crisis. The Technical Group raised the mortgage crisis on Private Members' business in April 2011. At that stage, it was obvious to everybody on this side of the House that there was a crisis. It has only deepened since. Today, 142,000 family home mortgages are in arrears, of which 54,000 are in arrears of 12 months or more. It is a sure sign of the Government's inaction over the last two years. It has failed to ensure that banks deal with their customers in a fair and reasonable manner and to prevent the crisis getting to the stage it is at now.

The Government has said it is demanding action from the banks, yet it has done nothing to ensure they act to protect their customers and look after the people to whom they sold mortgages. It is clear the banks are calling all the shots. In all its dealings with the banks, the Government has asked them what they wanted done and then gone ahead and done it. It has introduced a Land and Conveyancing Law Reform Bill to remove a legal loophole which prevented the banks from repossessing homes. It has removed the 12 month embargo on the banks taking action where someone enters a mortgage arrears resolution process. The Government has removed the bar on more than three contacts by a bank with a customer within a month and provided a veto to banks on insolvency arrangements where such arrangements do not match a bank's wishes. The Government has provided the banks with a power to extend the period in which a person remains in an insolvency process for a further five years. If people are lucky enough to turn their lives around and see some light at the end of the tunnel, the banks can step in to ensure they stay in the process for a further period.

That is all the Government has done to address the crisis. It must begin to look at the people who are struggling, look after their interests and stop looking after the interests of the banks.

I rise to support the motion and compliment the proposers on it. Both Fine Gael and the Labour Party said in the programme for Government that they would get tough with the banks. It is another broken promise. MABS is at the coalface in this work. It should be provided with more powers. We know the figures, which have been trotted out by everybody tonight. I will not repeat them. I will talk about the people at the coalface, who the Minister of State, Deputy John Perry, must know. He is a businessman and I have often complimented him in that regard. He has his own troubles on which I will not dwell tonight.

The Government did not like Ms Justice Dunne's report and had to find a way around it. What did it do to the ordinary people who are struggling to put food on the table and clothes on their children, meet school costs and pay for vital medicines and hospital charges? What did we get from a Government that promised to get tough on the banks? We got the Personal Insolvency Bill, which provided a veto to banks. It is an insult to the public. Last week in the Dáil and this week in the Seanad, we have been given the Land and Conveyancing Law Reform Bill. What a nice name that is. My goodness. Why did the Government not call it what it is - the eviction Bill? It is nothing short of that. It is outrageous that it is being rammed through the House.

The Government talks about a code of practice for the banks. I have been in meetings in the Central Bank and saw what banks are doing to ordinary farm contractors and other business people nationally. They are sending out third force militia - a power above and beyond the Garda Síochána and the Army - to act at the behest of the bankers who know the Government, like the last one, allows them to act with impunity. We used to have an old saying that there was one law for the banks and one law for ordinary people. Now, there is law for ordinary people and no law for the banks. They are operating with impunity while the Government passes law after law to give them a veto and impunity from prosecution. Why would they not treat the people with disdain when they know they can get a nod and wink? Who is the Government hiding? What greater power is being hidden in this country? All it can offer is a harum-scarum Oireachtas inquiry to blame Fianna Fáil or someone else when the public knows the Government is hiding and running.

There is no place that the Government can hide or run to because the people know that the Government betrayed the promises it made them. The Government betrayed the mandate they gave it and wants to hold a six-month Oireachtas inquiry of name-calling and name-blaming to let off the bankers, some of whom, Messrs. Dukes and company, are from the Minister's party.

What about the public interest directors in the banks? I asked the Minister, Deputy Noonan, if they would do something and he told me in plain language they were there to serve the banks, not the public. It was a bit of a spoof the way he came back but that was the message. The banks must be protected, and the Government has done so. How much time have I?

Unfortunately, my time is up.

This is complete fraud what the Minister is portraying to the people. He is allowing the banks to do what they like. Why would they not do so when the Minister is going off with his petty statements or whatever? As I stated previously, what the Minister is doing to the banks is like rubbing Vaseline into a fat sow's belly. He is allowing them do what they like, when they like and where they like, and to hell with the people.

Debate adjourned.