Protection of Residential Mortgage Account Holders Bill 2014: Second Stage (Resumed) [Private Members]

Question again proposed: "That the Bill be now read a Second Time."

Ba mhaith liom cuidiú leis an mBille seo, an Bille um Chosaint Sealbhóirí Cuntais Morgáiste Cónaithe. I support this Bill. Last year was the hundredth anniversary of the great 1913 Lock-out, the struggle for workers' rights. The previous year was the hundredth anniversary of the formation by James Connolly and Jim Larkin of an all-Ireland Labour Party. In a few short years, we will remember the sacrifice of James Connolly and his comrades in 1916. It is also 125 years since Michael Davitt initiated his Land League campaign against rack-renting absentee landlords. These were all movements for freedom, for rights, for independence and for self-determination for the Irish people, but now the Government is prepared to sell the roofs from over the heads of 13,000 people to the modern equivalent of rack-renting absentee landlords, namely, foreign vulture capitalists.

Some 13,000 former Irish Nationwide Building Society mortgage holders face the appalling vista of their mortgages being sold to foreign companies which are not subject to Irish regulation. These regulations were put in place to protect distressed mortgage holders. These mortgages are expected to be sold at huge discounts. Without the legislative protection, these companies will be able to squeeze former Irish Nationwide Building Society mortgage holders with increased interest rates, to repossess homes and to make obscene profits. Without this legal protection, these mortgage holders will be thrown to the wolves.

Three things must be done immediately. The Government must reverse its decision to sell these mortgages and instruct the IBRC liquidator to stop the sale. We must immediately pass legislation to protect these mortgage holders and, indeed, other mortgage holders who may face difficulties in the future. To promise legislation in 2015 is completely unacceptable and is simply closing the stable door after the horse has bolted. Mortgage holders must be given the opportunity to bid for their own mortgages. Deputy Peter Mathews asked me to confirm to the House his support for this legislation.

I thank the Leas-Cheann Comhairle for the opportunity to speak on this very important legislation, the Protection of Residential Mortgage Account Holders Bill 2014. I warmly welcome the Bill and strongly support it as it tries to do something sensible to assist mortgage holders and their families. It is essential when dealing with this matter and the broader issues directly connected to the banking crisis to take a humane approach and to deal with the issues in a sensible but a compassionate way. These people were hammered and let down by the financial institutions and they need a leg up in these difficult financial times. Of course, we must deal with the problem in a professional way. We all have a responsibility to the citizens of this State who pay their taxes.

I welcome the fact that the Government will not oppose the Bill, but we need to act soon. The Minister for Finance said he accepted the principle of the Protection of Residential Mortgage Account Holders Bill 2014 and he intends to bring forward legislation. He should do so now and get on with it. Time is running out and this is very important. Thirteen thousand people need his help and support.

The Protection of Residential Mortgage Account Holders Bill 2014 will protect residential mortgage account holders whose loans are owned by financial institutions or entities supervised by the Central Bank of Ireland by making it a precondition of the sale or transfer of residential mortgage loans to persons or entities not supervised by the Central Bank of Ireland that the persons or entities that acquire the personal mortgage loans agree to be bound by codes of practice issued by the Central Bank of Ireland.

Today we saw how Bank of Ireland suffered a major share rip-off following the sale of shares by Wilbur Ross. We need people in the Department of Finance who understand these kinds of issue and the markets and we need to get decent advice. A total of 96,474 mortgages - 12.6% - are in arrears of 90 days, and 1,014 properties have been repossessed, including 503 buy-to-let properties. Some €18.2 billion - 16.9% - is outstanding on mortgage accounts. I urge every Deputy to support this legislation and urge the Minister to act soon for these 13,000 families.

I support this Bill. It is an outrage that this Government, which includes the Labour Party, is allowing vulture capitalists to buy up these mortgages at knock-down prices while the 13,246 mortgage holders will be asked to pay full whack and could face huge increases in interest charges. The fact that almost 50% of these mortgages are in arrears will also be a huge concern to these mortgage holders.

It was somewhat stomach-churning last week to hear Fine Gael and Labour Party Deputies challenge the IBRC representatives at the Joint Committee on Finance, Public Expenditure and Reform. Legislation was voted in by those same Deputies last year to allow this to happen. It is a pity more of them did not listen during that debate and oppose the legislation rather locking the stable door after the horse has bolted.

At a minimum, the Government must secure protection for these mortgage holders under the code of conduct for mortgage arrears and ensure they have access to the Financial Services Ombudsman if they have complaints. However, it would be wrong to overstate the protection mortgage holders have under the code of conduct for mortgage arrears. These are simply guidelines and there is no compulsion on lenders to offer real, sustainable solutions to those struggling to hold onto their family homes. Despite the Minister's repeated statements that he does not consider the threat of repossession a sustainable solution, the reality is 55% of what the banks consider to be offers of sustainable solutions involve voluntary sales or repossessions.

According to information from the banks themselves, one in five properties, or 26,000 mortgages, could be repossessed. That figure only relates to the main lenders operating in Ireland. Obviously, the figure includes buy-to-let properties. The Government must act to ensure that in the case of family homes where there is a genuine inability to meet full payments, repossession should be a non-starter. This could be done by making it compulsory for lenders to offer genuine solutions, such as split mortgages, write-downs and, where suitable, the mortgage-to-rent scheme. I know of several cases in my constituency in which mortgage-to-rent is the only way to keep families in their homes, yet lenders such as Bank of Scotland refuse to investigate the scheme.

The Insolvency Service of Ireland is absolutely useless in protecting the average home owner. This issue of the IBRC sell-off is yet another example of the Government's failure to put the interest of the homeowner first.

I am happy to support this Bill and I welcome the fact that it is not being opposed by the Government, but it needs to go to Committee Stage quickly if there is a genuine desire to do something about this issue. Along with some other members of the Technical Group, I first met a group of Irish Nationwide Building Society mortgage holders last October after they had received their letters. They were very concerned and there was a feeling of powerlessness among them. Through no fault of their own and behind closed doors, decisions were being made on their behalf. They felt their own Government was not protecting them. The talk was that this was being done in the common good to protect the taxpayer. They see a great contrast between the negotiation of very large debts directly and the selling of smaller debts such as mortgages - although they are large debts for the individual - in bundles. They feel moral hazard is something for the little guy only, and one cannot blame them for feeling that.

Last February the Minister told us it was critically important that deposit holders, mortgage account holders and those indebted to the Irish Bank Resolution Corporation understood that their situation, following the liquidation, should generally remain unchanged. He came back and said their circumstances very much depended on who bought the loan book.

We must look at this from a practical perspective. If people end up encouraged or forced to leave their homes because they have a huge debt, it will become the responsibility of the State to house them while people in the US and elsewhere will be laughing all the way to the bank. They will have won on two counts. First, they will have bought these loans very cheaply and second, they will have secured a return in a market that is on the way up. We will be left in a situation where, in a housing crisis, the State will have to house yet more families, on top of the 90,000 that are on the housing waiting lists at the moment.

I welcome the opportunity to speak on this issue and also welcome the fact that Deputy McGrath has brought this Bill forward for consideration. I agree with the concept of the Bill but unfortunately I do not believe it offers much more than the agreement that was reached last week. Having said that, it is important that we are debating the issue. This issue was brought to my attention for the first time by a constituent who was understandably worried and shocked when she found out that her mortgage with a regulated entity was going to be sold, possibly, to an entity that is not regulated.

A home is the biggest investment that most people will ever make in their lives. Those who are able to buy or build a home without recourse to a mortgage are the lucky ones but for most people that is not the case and a mortgage is the only option. We are all fully aware of the difficulties many people have been facing in regard to their mortgages in recent years. I am still meeting landowners and home owners who feel they are not being helped. They are struggling and feel they have nowhere to go. In those instances, it is up to us as public representatives to stand up and protect them and to make sure that their rights are not being infringed upon. We must work to ensure that they are being given the best possible opportunity to find a solution and losing their home should be the last resort. It is important to note that because of the negotiations that have happened in the past year, we have seen over 50,000 mortgages restructured, the number of mortgages in arrears has dropped and the number of split mortgages has increased. While nobody is saying this is an easy process, this is good news. I believe the banks need to make a greater contribution and I am still meeting people who have had very negative experiences with banks. Unless one goes to meetings with such people or makes a few phone calls on their behalf, they are being walked on. However, I know the Minister is dealing with this issue.

The recent announcement of the sale of the IBRC mortgage book is another twist to the story that we could do without. However, the Government has listed the sale of loan books to unregulated third parties Bill on the legislative programme. This will address concerns surrounding the continued application of the code of conduct on mortgage arrears in the context of mortgages that are sold to unregulated entities. The 13,000 people who are affected in the short term want to know how that will help me them and why we are not bringing that legislation forward now. I understand what the Minister has said and I accept that it is not as easy as that. Were we to attach additional conditions to the mortgages now, we could face legal challenges that would be difficult to win. Extending the protections of the code of conduct to unregulated entities is complex and requires careful consideration. It cannot be rushed and cannot happen overnight. However, that is not much comfort for those who are affected now. I spoke to a woman earlier today who accused me of having my head in the clouds. She said I was living on a different planet if I thought that these vultures would not hike up interest rates and allow the 13,000 people be hung out to dry. Maybe I am on a different planet but I do not think this will happen. Obviously it is an emotive issue and I do not blame her for getting angry. However, we must be reasonable about this. We cannot start screaming and shouting about something that might never happen. There have been two previous examples where groups of mortgages were sold and the treatment of those mortgage holders was consistent with the code of conduct, on the advice of the Central Bank. The loan book of Bank of Scotland (Ireland) was sold to Apollo Global Management which met representatives of the Central Bank and the Department of Finance. The company indicated clearly that it would adopt the code of conduct. Perhaps my head is in the clouds but I do not see why it should be any different in the case of the IBRC loan book. I do not agree with the hype and scaremongering that has been going on. We should not be using this issue for political gain. However, we are dealing with people's lives and the mortgage holders need a bit more certainty than a voluntary agreement affords them. The Minister has said that whoever purchases the loan books will have to agree to adhere to the code and we all know that an agreement was reached between the special liquidators and the second phase bidders. Having said that, it is only a voluntary, verbal agreement and while I feel a verbal agreement carries some weight, a written agreement would help to put the minds of the 13,000 people affected to rest. We are trying to rebuild the reputation of the banking and financial sector and I believe that is the least they could do to assist in this matter.

We are here because the situation of the IBRC mortgage holders has brought this issue to the fore. We heard the assurance given by the special liquidators last week that in the event that these mortgage holders - approximately 11,000 of whom have mortgages on their own principal private residences, with 4,200 in arrears - get into difficulty, the code of conduct on mortgage arrears would be accepted and applied, on a voluntary basis, by non-regulated entities from outside the State. This is a very serious and solemn issue for people, especially those who are in arrears at the moment. It beggars belief that there must be a public outcry before consumer protection for these mortgage holders comes into play or is offered at the eleventh hour. I attended the Oireachtas committee meeting with the special liquidators last week and I must say that an assurance of a voluntary signing-up to the code of conduct on mortgage arrears, with nothing in writing, does not hold water. One only has to read the New York Times or the Wall Street Journal to know that Ireland has been identified as a soft target for hedge funds and venture capitalists. Such entities do not come in and try to have nice relationships with mortgage holders. They come in, strip assets in certain cases and in other cases, they sell the loans on again. Even if they stick to their word, the next purchaser of the loans may not do so.

We need legislation on this issue sooner rather than later. Otherwise we will only store up more problems for ourselves in terms of these mortgage holders. If they fall into arrears, they will look to the State for assistance. The State will have to deal with the problem then but we might have some control over it now, especially in the case of IBRC. It is not impressive to hear the special liquidators peddling the proposition that a voluntary agreement is in some way binding and represents a solution for people. Of course we must consider the taxpayer's position in this but there is fine balance to be struck. Given what has happened in the banking sector here, there is no way that we should allow a situation to develop whereby people in mortgage distress, dealing with IBRC, should be left on their own when their loans are sold to non-regulated financial institutions. We must act sooner rather than later. I welcome the acceptance by the Government of the concept of consumer protection as provided for in this Bill but legislation must be enacted sooner rather than later.

This is another consequence of the economic fallout that we have been suffering from over the past six years. The liquidation of IBRC had to be done in haste and, as a result, an issue such as the protection of mortgage holders crops up. What the Minister for Finance said several weeks ago on this matter was important, a point glossed over by the Opposition. Essentially, legislation such as this could have been perceived to affect the value of this bundle of assets. The argument coming from the Fianna Fáil finance spokesperson is that some of these companies would have to pay more for the assets if they had to give a commitment to abide by the code of conduct on mortgage arrears. It does not matter whether it is real or not; if there is a perceived effect on the price of the asset, it is possible then for creditors to sue the State. Considering the Fianna Fáil spokesperson is an accountant, he understands the Minister’s position in this regard. This is just politics being played out with this Bill.

The bidders for these assets, as we have been told by the Department of Finance, will be happy to follow the CCMA if they are successful in their bids. Anyone else who bought similar assets in the past was happy to participate in the CCMA. We are attracting investment into Ireland. When one considers the crisis we went through, it is important that there are still people who believe Ireland is the right place in which to invest. The Opposition, with its cheap shots at the Minister, should be careful they do not have any knock-on effects and damage Ireland’s reputation. We are not only successful in getting foreign direct investment but in changing the image of Ireland that was there when Ajai Chopra crossed from the Merrion Hotel to the Department of Finance three years ago. There was some difficulty in changing that image, considering what had been left behind. The Minister for Finance, Deputy Noonan, is careful how these issues are managed and whom we attract to invest in the country.

We want to avoid the debacle that was the sale of Eircom, as do Fianna Fáil Members. It was State-owned and one of the leading technological companies of its time. After its sale, it went through various ownerships and was asset-stripped by vulture capitalists, leaving it a shadow of its former self. The Minister for Finance does not want something similar to happen when we invite investors into the economy. He is also well aware of the protections required not just by mortgage holders but by citizens, because of the Wild West economic policies that were in place in the past. The great work that has been done in restoring our reputation, attracting investment and looking after those who could be perceived as being very vulnerable must be taken into account. After the sale of these assets, the Minister can move to protect the mortgage holders in question. He has made it quite clear he will. Many of the companies bidding for these loan books have said they will enforce the CCMA too. When one considers how difficult economic conditions are, that is a significant change from the laissez-faire attitude of previous Administrations that I have seen here since I was first elected to the House in 2002.

I commend my Cork colleague, Deputy Michael McGrath, on his Protection of Residential Mortgage Account Holders Bill and welcome the Government’s decision not to oppose the legislation on Second Stage. Mortgage difficulties are the ultimate legacy issue of the economic downturn. It is too big an issue on which to score political points, but it was the result of the bubble economy based on construction and the belief that the upward rise in property values would continue forever. We are now left with problems such as collapsed incomes, unemployment, overvalued properties and people struggling to keep their family homes.

I do not want to dwell at any length on the shortcomings of this legislation, which have been referred to by other Members. It is an important and timely debate considering what is happening with the special liquidator at IBRC. It must also be considered in the overall context of mortgage arrears. I welcome the decline for the first time in the number of home mortgages in arrears of more than 90 days since the Central Bank commenced publishing this data. It is an indicator of a small improvement but we need much more movement in that direction. I also welcome the increase in the number of mortgage restructures, which shows engagement with lenders.

When the special liquidator appeared before the Oireachtas finance committee recently, I was struck by the fact that of the 13,000-plus mortgage holders in IBRC, 900 had not engaged in any way with the special liquidator or the bank previously in respect of their arrears. Every Member knows this is the ultimate recipe for disaster. We must examine ways of enabling financial institutions, regulated or unregulated, to find ways of getting intermediaries to engage with people in arrears. I see people coming into my constituency office with mountains of paper, who are wholly ill-equipped to deal with the problem. One can see the ferocious pressure they are under. I have had people in my office whose physical welfare has concerned me. We need to find a way to reach out in a non-adversarial manner to those intimidated by the process, no matter how much it has been improved. It must be remembered there is a cohort of people who will always be intimidated by any correspondence that falls through the letter-box, whether due to illiteracy or personal inability.

If I were one of the 13,000 mortgage holders in question, I would be very fearful. The ones I would fear for most are those who are in positive equity but are having difficulties with arrears. That is the obvious kill for vulture capitalists. There are some existing protections under law through the Land and Conveyancing Law Reform Act 2013. Current court practice shows that where people engage in a meaningful way, a reasonable amount of protection will be afforded to them.

Deputy Twomey stole my line on Eircom, as I did not think anyone would see the interesting analogy between it and the sale of these loans. Eircom is but a shadow of its former self in service delivery in rural areas, as Deputy Dooley opposite knows. It has been parcelled up and sold off again and again. Everyone has taken their pound of flesh out of it, leaving a service that is a shadow of what it used to be. It is not an admirable legacy for the company’s staff, who were very committed to it, and a public dependent on it. Everyone wants to play on Patrick Street or O’Connell Street. Down in west Cork or west Clare, however, there are few telecommunications companies that want to compete with Eircom.

Vulture capitalists do not change their spots. They are in it for what they can get out of it. We would be far more reassured of the Government’s bona fides on the sale of these mortgages if we had seen the colour of its money. In other words, it is not that we want the taxpayer to bail out these mortgage holders, as the taxpayer has been hit for enough with bank guarantees and so forth. We would have liked to see heads of a Bill sent to the finance committee as a strong approach, as opposed to what might be seen as a deft kick to touch by the Government of an awkward issue, although I hope I am proved wrong about that. Those 13,000 mortgage holders deserve better.

I take voluntary codes of conduct with a grain of salt.

I fear, as happened with Eircom, that when this loan book is wrapped up and packaged on - while the bona fides of the first purchaser with whom the liquidator deals may be reasonable - we will have no reach in this House or elsewhere regarding the next step in the chain of events if the purchaser is not subject to a legally binding framework. I remain to be reassured by the Government and I would be if I had seen some evidence of the colour of its money in respect of the heads of a Bill being sent to the finance committee for further deliberation.

The collapse of the banking system and the economy in 2008 has had multiple effects and, as legislators, we have been dealing with various issues that have been thrown up. The sale of the IBRC loan book is the latest issue as the bank's mortgage holders find themselves in a precarious position as the loan book is about to be sold off. It is a matter of great concern, although thanks to the focus on both sides of the House we are agreed in principle that the issue must be addressed in such a way that those who have loans with IBRC are protected. That is good and it is the right thing to do. All of us who have had telephone calls or mail from them will be aware that they find themselves in a nervous and concerning predicament but it is up to us to step up and reassure them and to reach a conclusion that gives them protection.

As previous speakers said, the Central Bank's code of conduct on mortgage arrears is a strong document and these people are seeking protection under it. I was assured by the Minister of State's contribution last night on two fronts. It was made clear at last week's meeting of the Joint Committee on Finance, Public Expenditure and Reform that if a voluntary code cannot be adhered to, the issue will be dealt with the only other way it can be. I was also reassured by the Minister of State's comment that the loss of the family home would be a last resort. There may be exceptions but most Members do not want families to lose their homes and be evicted. Some may hope that happens for short-term political gain but the debate has proven that most of us are concerned that they do not.

References have been made to foreign vulture capitalists in a number of contributions. I was brought up to believe - I still believe - that there is little difference between foreign vulture capitalists and some of those whom we have bred, although I will not refer to ongoing proceedings. The Technical Group ratcheted up the rhetoric earlier about what these foreigners would do. I do not distinguish between vulture capitalists, irrespective of where they are born and I am a little concerned about some of our own.

I am glad we can agree on the principle of the legislation because this addresses a very human issue. It is a position in which none of us or our families would want to be. As legislators, we have to reflect on the emotional damage this is doing to people and get on with doing what is right for them. That is the bottom line and the Minister of State assured us in this regard last night. At the end of the day, all of us would be happy, assuming the sale of the loan book proceeds, with a resolution that meant all the IBRC mortgage holders were protected in full under Irish law.

I wish to share time with Deputy Calleary.

I welcome the opportunity to contribute to the debate. I thank my colleague, Deputy Michael McGrath, for the efforts he has made to frame legislation that deals with this important issue. It speaks volumes about the approach of my party in opposition. For too long, Opposition parties were critical of everything the Government did and they were relatively shy, quite and hamstrung when it came to offering solutions. This issue is a perfect example of a gap in the Government parties' thinking, notwithstanding the platitudes with which they have lauded themselves in resolving various crises, some within and some outside their grasp. Unfortunately, this issue was within their gift to deal with and they failed to do so.

I commend the approach of my party's finance team and, in particular, our spokesperson, Deputy McGrath, to frame legislation that deals with a potential crisis. It has the potential to be a serious crisis for many reasons, but, principally because home ownership in Ireland is among the highest in the OECD. It was the highest at one stage but recent trends, including the lack of availability of mortgages, have changed the statistics. Notwithstanding that, there is a huge cultural attachment in this country to home ownership. Some of this is historic. In other countries that were more industrialised, people had a more secure form of income by way of pensions, etc. and they could plan to rent for the rest of their days without concern. The Irish mentality is much different because it is based on being able to earn an income while one can work and surviving for the rest of one's days in retirement with little or no income. That has been the case for many people and, therefore, the ownership of a home with the mortgage cleared before retirement formed a central plank in their planning.

I am disappointed by Members who criticised Deputy McGrath and said he was playing politics. Deputy Twomey stated that he is an accountant and he should know better. However, Deputy Twomey is a doctor and he should be well aware of the mental strain that many people are experiencing in the current climate regardless of the apportionment of responsibility for how they got there. In many cases, they have a crisis on their hands and they need to see the Government, or at least the Parliament, responding in a way that gives them some security. I thank Deputies Creed, Mulherin and others who genuinely recognise the potential benefit of the legislation for a number of reasons.

It is fine for potential buyers of the loan book to assert that they will sign up to a code of conduct but that is voluntary. They can change their minds about that next week or the week after, next month or the month after and the State will have no capacity to force them to live up to their voluntary acceptance of the code. This is hugely important because many of the venture capital funds involved in this process, as Deputy Creed and others indicated, clearly have a relatively short-term interest in what they see as a product. They will buy the loan book, strip the assets out and sell the better quality loans at a higher price and the lower quality loans at a lesser price. Nobody knows where these mortgages could end up within a relatively short period.

One has only to trace back to what happened in the US with the collapse of Fannie Mae and Freddie Mac. Some would argue that this is where the whole world crisis developed from. It was about house mortgages and people who, under a certain code at the time, were able to gain access to mortgages even without having the basic capacity to repay them. The products were packaged and repackaged and sold around the world. They sat on the balance sheets of financial institutions that did not know what reserves sat behind the loans that had been extended. That is the concern here. While the initial bidders may, with the best possible intentions, sign up to a code of conduct, albeit voluntarily, there is no way that can be passed on to the next unbundling and rebundling that will happen with these mortgages. That is why a couple of the speakers have been rightly concerned at the Government's approach.

The Government has promised legislation in 2015 to deal with the sale of mortgages to unregulated entities. That is too late and some of the Minister's colleagues have identified that. It is too late because at best one might be able somewhat retrospectively to force the people who have already indicated they will sign up in a voluntary capacity to the code of conduct. However, any unbundling or further manipulation of the asset will be well outside the scope of any future legislation. That is why I thought it would have been a far more sensible solution to take the legislation Deputy Michael McGrath has prepared and, if the Minister wishes, strengthen it.

A number of speakers have said this legislation does not cover every eventuality. With the best will in the world, even where Government Departments are behind the scripting and publication of legislation, it is regularly necessary to amend it through Committee Stage and Report Stage. I hoped the Government would find it within its grasp to take this Bill as the principal foundation on which to deal with this crisis and let the parliamentary draftspeople study it and see where it is deficient. Deputy Michael McGrath would not be overly upset or concerned if the Government brought forward a series of amendments that would strengthen or tighten the provisions of the legislation. This needs to happen and the support is there on the Government benches.

The Government's refusal to enact legislation in the short term to protect the IBRC mortgage holders whose mortgages are being sold leaves the mortgage holders extremely vulnerable and having to rely on the kindness of strangers. That is a very dangerous precedent to set. A number of speakers sought to look back and try to ascertain why we are in this crisis. One speaker traced the root of the problem back to when Mr. Ajai Chopra had to come here. That may be the case, but this legislation seeks to create a level of equity for all mortgage holders. The people who in the first instance took a mortgage with the Irish Nationwide Building Society did so in the full knowledge that it was regulated by the Central Bank, like AIB and Bank of Ireland. As a result of the Government's decision to liquidate IBRC we find ourselves in a situation where those people who started out equivalent to their neighbours who happened to have mortgages with Bank of Ireland or AIB find themselves in a potentially perilous state, depending on the goodwill and kindness of strangers. That should be within the grip and capacity of the Irish Government to regulate. We are assisting in providing it with the capacity to do that.

We welcome the fact the Government supports the Bill here on Second Stage, however it is deeply disappointing that the Government will not legislate on the issue until 2015, which is too late for the 13,000 IBRC mortgage holders and, possibly, thousands of others whose banks may decide to sell their loan books. I welcome the fact that in the past two days both Bank of Ireland and AIB have posted much more favourable results. While both have posted losses for the current cycle, they are considerably reduced and the banks seem to be dealing with the crisis that has enveloped them. Notwithstanding that, asset disposal and reduction is an integral part of their plan for the future and becoming leaner and fitter for purpose. That may see the disposal of mortgages into an unregulated environment.

We need the legislation and I hope the Government, having taken the views of some of their backbenchers on board will bring forward amendments to the legislation, which remains on the Order Paper and provides the appropriate vehicle to deal with the issue. The Minister should clarify if it is the Government's intention to provide time for a Committee Stage debate on the subject before the summer recess or if we will have to wait for it to publish its own Bill to address this serious issue. It is all very well to say it is not opposing an Opposition Bill but if it does not allow this to proceed it has the same effect as voting it down. It is very clear that many of the Minister's colleagues on the backbenches want legislation to be enacted. We are not playing politics. If the Government decides to bring forward a Bill within the next week or two we will stand back, let the Government's Bill proceed, support it and work with the Government to try to ensure it meets the concerns of all.

The Minister of State, Deputy O'Dowd, in his speech last night gave considerable detail on the consideration that must be taken into account when legislating to protect borrowers. The Government's representative who closes the debate tonight may be able to clarify a point as to whether the 5,000 mortgage holders at Bank of Scotland and GE Capital as well as the 12,000 IBRC mortgage holders whose loans are being sold will benefit from any future legislation or will be left in limbo. This is a complex issue but this is the same Government that had no problem passing emergency legislation overnight to appoint a liquidator to a bank with assets worth €12 billion. We know the negative impact of the appointment of that liquidator in the way it happened. It has put local authorities which retained bonds on behalf of developers in a very serious situation. The council with which I am most familiar has approximately €8 million worth of bonds that are now useless and it will not be able to draw down the kind of moneys necessary to bring some of the uncompleted housing estates up to the standard one would expect, particularly for those homeowners who are left having to pay the property tax.

It was politically motivated at the time to get rid of the legacy Anglo Irish Bank was creating and which was causing a problem for the Government. It has created some unintended consequences which have a negative effect on so many. We all know this is a complex issue but, as I said, this is the same Government that had no problem passing that legislation overnight to appoint that liquidator. Fianna Fáil does not believe it is beyond the capacity of the Legislature to deal with the plight mortgage holders face. The sad truth is that the political will is not there on the part of the Government to deal with this. It seems to be taking a rather lethargic approach in seeking to get the maximum return for the assets of IBRC to help shore up the notion that the Government took the right decision to liquidate at the time while ignoring the plight of private citizens and individuals who will be impacted so negatively.

In deciding not to address this issue before the sale of the mortgage book by the special liquidators, the Government has completely abandoned the IBRC mortgage holders. Once the sale of the mortgage book is finalised in the coming weeks, the mortgage holders will stand alone against a multi-billion dollar US fund which is answerable to nobody. From what the special liquidator told us last week we know there will not even be an agreement written down. Borrowers will be left with little more than a gentlemen's understanding which will have no legal standing in the event of a dispute, not having any means of enforcement. While I do not suggest for one minute that any of the people involved in these venture funds are anything other than gentlemen, they are driven by greed and profit.

I would be greatly concerned at the capacity for these agreements to be enforced voluntarily in the event the products are packaged and sold on to new owners. We have only to see the approach of the people who came in and bought Bank of Ireland shares at rock bottom level - the Wilbur Ross group - to see it is now selling those shares because there is a profit to be made. The nature of the activity of these companies is to turn over the asset and sell them on relatively quickly. I am deeply concerned and hope the Minister will be able to give some solace to these mortgage holders and to mortgage holders in other financial institutions who expect their loans will be sold on at a future date. I hope the Minister is prepared to bring forward legislation quickly, or if not that he will assure us the provision will be applicable retrospectively.

I thank Deputy Michael McGrath for bringing forward this Bill, which gives us a chance to provide protection and to have a debate not just on the IBRC mortgage holders, but on the issue of mortgage arrears generally. The debate is timely given the latest publication from the Central Bank.

Like all my colleagues, I would prefer if we had a timescale for Committee and Report Stages of this Bill and for its implementation. The Government has a habit of accepting Second Stage Bills, but then they go to the great cupboard in the Cabinet sky where they await Committee Stage. This issue is urgent because we have the proposed sale of the IBRC book on 14 March. It is clear from the comments of the special liquidator last week that there is currently no legal protection for mortgage holders. It is clear also that the proposal of some sort of informal guarantee from those who may buy the loan book has no legal standing. It is clear too that those seeking the protection of this legislation are currently not protected and will not be unless the legislation is passed.

We do not claim this legislation is perfect. We do not have the resources the Government draftsmen would have. Given the urgency and need for protection, I would like an indication of publication of Government legislation. In a week where we have had no legislation in the House and when, I understand, no legislation is planned for next week - we will have another week of statements on how good the Government believes it is and on Teanga na Gaeilge for Seachtain na Gaeilge - there is no pressure on the legislative system. Therefore, the Government could, if it wished, pursue this legislation next week ahead of the final sale so as to provide protection. Whatever happens, what Deputy McGrath has done in introducing this Bill is beneficial and we should now be given a timescale for when the Government will see through this legislation.

There are many issues in regard to mortgage arrears. Today's publication from the Central Bank provides some good headlines in regard to mortgage accounts arrears falling for the second quarter. However, when we dig into the detail on that, the situation is not quite as rosy as it seems. Considerable challenges remain and we still had 136,564 - 17.9% - mortgage accounts in arrears at the end of quarter 3 of 2013. More importantly, the number of accounts in arrears for more than 720 days has increased by 1,755. This presents a long-term problem. David Hall, who has given so much time, effort and energy to this issue in recent years, stated in today's Irish Examiner that the mortgage arrears crisis is coming to a head. For people who are more than two years in arrears - some 33,500 mortgage accounts, including the extra 1,755 - this is coming to a head. Many of the mortgages in this group are on principal private homes. We cannot support a situation where there is ongoing acceptance of arrears that go over two years. To provide protection to these people and to give them some sort of guarantee about their homes, the Government must act. It must work with the Central Bank on the issue.

Deputy Dooley referred briefly to the pressure on these people. We all know people with mortgage arrears on their principal private residence, as they have come to our offices and clinics. We are aware of the pressure they are under to try to reach an accommodation and that they have few options if they decide to sell their houses. If they decide to go the route proposed by the Central Bank and sell their houses, they face particularly high council waiting lists. Also, the restrictions on rent supplement and allowances that have been introduced in the past few years have excluded many from those provisions. The latest restrictions involve people having to negotiate with their landlords to reduce their rents. This is happening at a time when in Dublin and other big population centres landlords are leaving rent levels to the market and people are being thrown out of their houses. The lack of new capital investment in social housing and in the voluntary housing organisations also exacerbates the situation. We need to focus on a resolution of the housing crisis generally. The mortgage arrears issue, the lack of social housing and the lack of opportunity for people who are looking to get on the housing ladder must all be taken into account.

The Central Bank seems to present slightly conflicting views in its surveys and results. On the one hand, it welcomes the fact the number of mortgage accounts for principal dwellings in arrears has fallen, but it acknowledges that many of those have gone into a resolution process. It goes on to say that of the total stock of restructured accounts at the end of December, some 54% were not in arrears. This suggests that 46% were in arrears and there is still an issue there. Some of these may refer to accounts that were in arrears prior to restructuring, where the arrears balance has not been eliminated and others to accounts that are still in arrears on a current restructuring arrangement. If the restructuring has not worked out, where does one go then? We cannot restructure a restructured account.

If we are to be honest about the state of our banks as the economy begins to grow again, we need to address this issue. It must not be given the kind of arms length treatment it is being given currently by the Government and the Central Bank. Such treatment is evident in the way this Bill had to be introduced to focus on this issue. We were being told everything would be fine and would be all right on the night and that whoever bought the loan book from IBRC would give guarantees. However, in an exchange at the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, Deputy McGrath found out from Kieran Wallace, the special liquidator, that these guarantees do not have any legal standing.

Deputy McGrath asked what status the guarantees had and whether Mr. Wallace could advise where it would be written into the sale process. Mr. Wallace responded that it was just a voluntary agreement and would not be written into a particular agreement. Deputy McGrath went on to ask whether it would be written down anywhere, and Mr. Wallace answered "No". When Deputy McGrath suggested it had zero legal standing, Mr. Wallace said that was correct.

This is not fair and is not good enough for those who, through no fault of their own, find their homes and lives are tied up in this process - in particular the 13,000 mortgage holders who had mortgages with Irish Nationwide, tied up with Anglo, who are being thrown into this mix. They entered into mortgages in good faith and made the same commitments the rest of us made with our mortgage holders. They are entitled to the same protection, but they have no protection at the moment. Perhaps the Minister will clarify in his response what is planned for these mortgage holders post 14 March.

These 13,000 people look at what is happening in the commercial sector and the work NAMA is doing in selling off the old Anglo loan book in that sector. There, they see that the State, through various banking organisations, is assisting some people to buy assets from NAMA, yet they are left without any protection at all. They see this inconsistency and ask what they have done to deserve this. Many other mortgage holders are also watching what is happening and wondering what protection is available to them legally once their mortgage arrears have gone beyond two years. They want to know what protection is available to them and whether the Central Bank is interested in getting a resolution that is fair to them.

We still have protests at auctions when family homes and principal private dwellings are being sold off because people are unprotected.

That is wrong in a country in which people have a strong relationship with their homes. That relationship is very unusual in the European context and difficult to explain to people outside the country, but it is real. People like to own their home and we have to get behind this.

Many in difficulty with their mortgage seek advice from organisations such as the Money Advice and Budgeting Service, MABS, which is struggling because of the pressure exerted by the financial disaster that has befallen many. We could get more resources for MABS to employ people to deal with its case load. In that way, some of the 13,000 who are on the books of Anglo Irish Bank or the restructured banks would have a forum in which professionals would not fleece them for advice and use their crisis to line their own pockets. MABS gives an honest service and assistance, but waiting lists around the country are so extensive that many will not use it. That is the first practical step to get people affected by this legislation back on the road.

When and if the Oireachtas Joint Committee on Finance, Public Expenditure and Reform holds the banking inquiry, it should consider protection for mortgage holders in the future. It should ensure that when the restructuring of the banking sector is complete and the banks are back in business, the situations that arose in the so-called boom will not occur again such as bidding wars between banks to get people in by offering 100% mortgages and another loan to cover stamp duty fees or clean out the house. That is what brought many people to the situation we are discussing. The role of the financial regulator during that time and what it did to try to stop the race to the bottom should be examined too. I hope the inquiry will have the opportunity and resources to consider how banks began to sell unsuitable products to many clients.

We have until 14 March. The Government intended to bring forward this legislation in 2015. It would be good if a legislative path were laid out for when the Minister intends to take the legislation on Committee and Report Stages and when the protection will be offered to the 13,000 people mentioned. Many speakers have suggested extra protections and this is the time to include them. Deputy Michael McGrath is not precious. If we can make improvements, let us make them, but let us aim to do it this side of the recess and not let it drag through the summer waiting on the voluntary code. There is no suggestion organisations that buy loan books to make a profit have a good nature. They are out to make a profit and serve a shareholder - there is nothing wrong with this, contrary to what some on this side of the House think - but our duty, as legislators, is to protect the legal interests of homeowners tied to this loan book and we have an opportunity to do so. I hope the Minister will outline some framework for legislation.

I thank all Deputies for their contributions to what has been a constructive debate. I am fully aware of the concern among mortgage account holders that they could lose the protection of the Central Bank's code of conduct on mortgage arrears. The Sale of Loan Books to Unregulated Third Parties Bill which is listed in the Government legislative programme was always intended to address concerns surrounding the continued applicability of the code after the sale of loan books to unregulated entities. My officials have examined the complexities of this issue with their colleagues in the Central Bank and the Attorney General's office. This is a complex issue. Therefore, I am not in a position to say when the draft legislation will be ready for submission to the Government. I do not want to bring forward unworkable legislation or legislation that will have unintended consequences for mortgage holders.

The proposed Bill that we have discussed tonight and last night would create an unenforceable obligation on the purchaser in respect of the CCMA and the Central Bank and the Financial Services Ombudsman would lack the power to impose sanctions. Depending on the outcome of the examination of the issue, it may be that we can amend Deputy Michael McGrath's Bill or it may be more appropriate to introduce a new Bill. I will not prejudge the outcome of the detailed examination of the issue, as that would not be helpful to the consumers concerned. I do not accept that legislation must be in place before the IBRC loan books are sold. Following the meeting of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform last week, the remaining bidders for the IBRC loan books have committed to abide by the Central Bank's code of conduct on mortgage arrears on a voluntary basis. This is similar to the commitment given by Apollo which is not regulated. No specific difficulties have been raised about the ongoing operations of Apollo.

As I have stated on numerous occasions, it is better for legislation to cover all mortgage loan books owned by unregulated entities than to interfere with ongoing or other particular sales processes. Even the perceived interference with a sales process opens up the taxpayer to significant financial risk. The Government's approach of legislating on the basis of protecting consumers has the same outcome for the consumer and lower risk to the taxpayer.

I wish to address some of the concerns raised by Deputies in last night's debate about mortgage holders not being able to bid for loans and clarify the matter. The special liquidator has said no IBRC borrowers are being provided with an exclusive opportunity to buy back their loans at a discount. All loan sales processes have been undertaken as competitive bidding processes where any qualifying bidder may make a bid for the loans. Anyone buying back loans did so after such a competitive process where the full details of the loans were available to all potential buyers. Such a process raises considerable data protection issues in respect of individual mortgage customers.

I fully understand the frustration of some customers owing to not being in a position to bid for their loans. The special liquidators, however, must decide what process is most likely to achieve best value on an aggregate basis. To this end, the special liquidators have received independent professional advice that states the maximum value will be obtained for the residential mortgage books by selling them as portfolios of loans. I also understand mortgage holders may be concerned that their variable interest rate will be affected by the sale of a loan book to an unregulated entity. The terms and conditions of a mortgage continue to apply on the sale of the mortgage and the lender must have discretion with regard to the interest rate charged in line with these terms and conditions. As Minister for Finance, I do not regulate interest rates and this situation applies to both regulated entities such as the banks and unregulated entities.

The Government is committed to bringing forward legislation to protect mortgage holders and I look forward to working with Deputy Michael McGrath and the other members of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform to achieve the best solution for consumers. I feel obliged to caution that it is not helpful to generate unwarranted fears among persons who hold mortgages which may or may not be sold, either with IBRC or other banks. That serves no purpose.

This Bill is an example of a party in opposition contributing positively to political debate by putting forward positive, sensible and viable proposals. Most importantly, it proposes to deal urgently with a major potential problem and avoid putting many hard-pressed families and individuals across the country in a more vulnerable position in dealing with mortgage forbearance and resolution issues.

They also face possible increases on the interest rates they pay when their loans are sold. As a responsible society, we need to act speedily and decisively in advance of the sale of the former Irish Nationwide mortgage book. As the law currently stands, customer mortgages can be sold to a third party which is not regulated by the Central Bank. This is far from a niche problem. In the case of IBRC, 10,633 residential mortgage holders could find themselves in this situation. Some 4,175 of these accounts are in arrears and 38% have been restructured. The problem extends beyond the IBRC, however. Residential mortgage holders with Danske Bank, ACC and Bank of Scotland face a similarly uncertain fate because these institutions are in the process of closing their personal banking businesses in Ireland. We regularly receive representations from people with mortgages for these institutions. These mortgages could be sold to unregulated third parties who are not subject to Central Bank supervision. Even AIB and Bank of Ireland could decide to sell a portion of their home loan books.

David Hall and his colleagues in the Irish Mortgage Holders' Organisation have been helpful to individuals and families throughout the country but the Government is maintaining a hands-off approach on the issue. Hoping is not good enough. We cannot wait until the sale has been completed. Asking a purchaser of the loans to voluntarily comply with existing protections is not sufficient. The special liquidators have indicated that an agreement with phase two bidders would result in the purchasers servicing the mortgages in accordance with the Central Bank's code of conduct on mortgage arrears. Resolving this issue is a responsibility for the Government but unfortunately it has decided to leave it in the hands of the liquidators. Deputy Calleary referred to the recent exchange with the liquidators at the Joint Committee on Finance, Public Expenditure and Reform. When my party colleague, Deputy Michael McGrath, asked one of the liquidators the status these voluntary agreements would have, he replied that it would be a voluntary agreement that would not be on any particular piece of paper. When it was suggested that the agreement would have no legal standing, the liquidator agreed. This is why Deputy Michael McGrath produced this Private Members' Bill and we urge the Minister for Finance to use it as a spur to action.

A number of speakers on the Government benches have described the Bill as flawed. Yesterday the Taoiseach went so far as to call it grossly flawed. How can it be grossly flawed for the Oireachtas to act speedily to protect those who hold mortgages that are being sold by IBRC? It is in the remit of the Oireachtas to amend the legislation if needs be so that it fulfils its purpose. I contend that it is grossly flawed for the Government to wait until 2015 to deal with the sale of unregulated mortgages to unregulated entities. It is grossly flawed for the Government to fail to legislate in advance of the deadline. If Government Deputies sincerely believe there are flaws in the Bill, let us address them on Committee Stage at the earliest opportunity. We could show that our politics and parliamentary process can be operated to the benefit of our citizens. Thirteen thousand families are very concerned about the imminent sale of this loan book and they want to hear from this House that their difficulties will be dealt with speedily and properly.

I am glad the Minister for Finance is taking an interest in this debate. Deputies on all sides of the House have expressed concern about this issue. Nobody on this side is intentionally trying to scaremonger. We are expressing genuine concerns which are reflected in the fact that the Minister will be introducing legislation to address this issue in 2015. This House passed legislation late at night to establish the special liquidator for the IBRC and there is an onus on us to embrace this Bill. It has been described as flawed by the Minister and the Taoiseach but the principle behind it has been embraced by most Deputies. The purpose of Second Stage is to establish the principles of a Bill so that the details can be finalised on Committee and Report Stages. It will be too late to legislate if we wait until the mortgage loans of 13,000 families are sold to an unregulated entity. The families concerned are already stressed by mortgage arrears and impairments.

We should learn from history. Commitments made without legislative support have tended to ring hollow. The purchasers may agree to the code of conduct but the mortgage book may subsequently be split up and sold on in a short space of time. Every loan book contains good and bad assets. As sure as night follows day, the loan book will be divided so that the impaired assets can be sold on. This has already happened in the subprime market in the United States with Fannie Mae and Freddie Mac, which has had a major impact in a global context. However, we should also consider the individual context. The families concerned deserve the protection of this House. They have been through a lot and we should stand in solidarity with them. The most recent data on mortgage arrears from the Central Bank indicates that while the figures have stabilised, a considerable number of mortgages are two or more years in arrears. These people have no chance or hope. Deputy Creed made a valid point in this regard. We see these people in our clinics week in, week out. They are already vulnerable and lacking hope but now they face the prospect of their mortgages being sold to unregulated entities.

The Minister should accept the principle of this Bill and work with the Parliamentary Counsel and the Attorney General to fine-tune it. That would be the sensible approach in light of the views that have been consistently expressed by speakers on both sides of the House. In general the tone of the debate has been co-operative in seeking to identify a solution to this problem.

With the best will in the world, venture capital funds want to make a profit. There is nothing wrong with that in the capitalist world in which we live, but we cannot expect them to have in mind the best interest of a mortgage holder in some part of this country who is in considerable distress.

Their interest is profit. In doing that, there may be a difficulty with regard to a move to repossess some homes by subsequent purchasers of these loan books, and that is the issue of concern.

If there was no concern at all, the Minister would not even be talking about publishing legislation in 2015 to protect mortgage holders in general. I believe the Minister accepts that is an issue of concern.

The special liquidator was established by the Houses of the Oireachtas on a late night on the Minister's advice - when a Minister for Finance walks into the Parliament and says that this has to be done for the obvious reasons, Members take that on board - but the quid pro quo should be where the vast majority of Members in this House expresses a strong view, not only to ensure that families are protected but in solidarity with families who are under significant stress and pressure, that the Members are not willing to sacrifice them and throw them to the wolves. That is something that can be interpreted by the flat refusal to embrace this legislation and move it to Committee and Report Stages and, through the Houses of the Oireachtas, to pass it in time.

Reference has been made to the possibility that the Bill may impact on the special liquidator's ability to realise the full potential of the loans, and that is the obvious reason it should be passed. By saying that, they admit that these purchasers will try to maximise the profits in the loan book and that will potentially mean threats of eviction and repossession, and repossessions. If there was no difficulty, there would be no cost to the State or to the special liquidator in trying to realise the full potential of the loan book if this legislation was in place. The statement of the special liquidator, and the Minister, that the Bill could diminish the special liquidator's ability to maximise the full potential is an indication that such inherent danger lurks there for every family who is on this loan book that may be sold to unregulated entities outside the State.

I am not definite whether the Minister agrees that these loan books will move repeatedly and become further removed from the CCMA. In my view, that will happen. Many of these purchasers will try to shorten their exposure and quickly sell off a certain proportion. Such purchasers normally like to limit their exposure and then over a period of time sell off the various tranches within a loan book. As for the idea that the Minister could come in here, or that the special liquidator could go into the Joint Committee on Finance, Public Expenditure and Reform, and state that there is an agreement in principle, I cannot believe that these funds will abide by that. Even if the original purchasers do, there will not be a perpetual covenant with regard to compliance with the CCMA for those who purchase thereafter, and that is the issue of concern.

If we, as a people, are trying to express solidarity with families who have been hurt by the downturn and the difficulties that the economy is still facing, this would be a powerful signal, not only to those who are on the IRBC loan book under the special liquidator but in general. The CCMA is working reasonably well. Banks are making an effort. Some banks could make more of an effort in trying to deal with the impaired mortgages on their loan books. It would be a welcome powerful signal, from the Government and from us collectively, that we are there to assist in what is a challenging time for families all over this country.

In view of the fact that there are other banking institutions which are winding down their loan books here as well, this issue could arise repeatedly. The other concern I would have, and this is not to scaremonger either, is that AIB, for example, does not have to refer to the Minister for Finance to sell less than €100 million of its loan book and we could easily have a situation, if there was a jolt in the international markets or the bank's viability was threatened again, whereby it might decide to wrap up some of its loan books and sell them off. It is not only in the context of the IRBC. It is also in the context of our own banks whereby they could sell loans in the market to capital funds and mortgage holders could quickly find themselves losing the protection of the CCMA as well once they are so at once remove. That is an issue that has to be addressed.

I urge the Minister to embrace this legislation, bring forward his own views in terms of Bill that he will publish in 2015, expedite the process and ensure that there is a protection on a legislative basis for borrowers on the IRBC loan books that are being sold and for others who may find that they are in a similar position in the time ahead. A stitch in time saves nine. In this case, a piece of legislation in time could save 13,000 borrowers from the stress and concerns under which they are currently living, night after night.

Question put and agreed to.