I move: "That the Bill be now read a Second Time."
Last July, the President signed into law one of the most shameful measures taken by the Government. The Land and Conveyancing Law Reform Act 2013 was a brutal and cynical move with one purpose - to facilitate the repossession of family homes by lenders. The Dunne judgment was not a sustainable solution; it was a loophole found by those on the front-line dealing with those in mortgage distress. Nevertheless, it was a safeguard at a time of great distress for thousands of families whose homes were likely to be repossessed by their lenders. Last summer Fine Gael and Labour Party Deputies intentionally removed that safeguard, knowing well that they were not replacing it with any real protection for struggling families. This week we learned of the consequences when the Oireachtas Joint Committee on Finance, Public Expenditure and Reform heard from AIB, Bank of Ireland, Permanent TSB and Ulster Bank. Together, these banks have issued 30,034 letters relating to repossessions and the voluntary surrender of homes, including family homes.
The removal of the Dunne judgment was not an isolated action. This is a Government which has overseen the revision of the code of conduct on mortgage arrears to favour banks over borrowers and insisted on a personal insolvency regime which gives the banks a veto in cases in which the main debt is a mortgage on a family home. I hope the Minister for Justice and Equality, Deputy Alan Shatter, is keeping the Personal Insolvency Act under ongoing review. I hope he was listening to the CEOs of Ulster Bank and Bank of Ireland this week at the committee. They told him and anyone else who was listening very clearly that they would veto every single personal insolvency arrangement that required them to write down mortgage debt. He must step up and do what he said he was going to do at the time the legislation was introduced. He said he would remove the veto from the banks if they intended to use it in all instances where write-downs were proposed on mortgage debt. The waiting lists for MABS and civil legal aid are appalling. When one looks at all of the measures in place, one sees that the Government has stacked the cards in favour of the banks at every opportunity.
Sinn Féin consulted and worked with groups working with those in mortgage distress last year when the Act we are seeking to amend was proposed. They were unanimous in expressing alarm. While some positive results were achieved in the original personal insolvency legislation, the Act has let the banks off the hook. The setting of targets for resolution, coupled with the introduction of the Land and Conveyancing Law Reform Act, facilitated repossessions and sent a clear message to the banks and, by God, they took the hint, but it is not too late to wind them back in. By passing the Bill, Members can rebalance the rules to favour the protection of the family home. The Bill consists of two sections, both of which are about making repossession of the family home an option in only the most extreme cases. What it is not is a free ride for anybody. People who can pay their mortgages will still have to do so.
The main section of the Bill contains a number of measures. These are designed respectively to ensure a repossession process would never be rushed, all personal insolvency processes would be exhausted fully and that the initial costs of an insolvency process would be borne by the bank. As we have seen from the scant uptake evident in the figures released by the Insolvency Service of Ireland earlier this week, the Personal Insolvency Act 2012 is by no means perfect. While it is a project in need of major overhaul, it offers a potential means to find a compromise for people in debt to allow them to keep their family homes. By extending the adjournment period in relevant litigation to six months, the Bill would provide greater time for the insolvency process to develop and PIPs to do their jobs. The effect of the proposed provision would be to prevent banks simply ignoring the personal insolvency process. By extending the period of adjournments, the Bill would incentivise banks to conclude and accept arrangements rather than simply to go through the motions.
Sinn Féin has argued and shown how we would fund public insolvency practitioners in order that clients seeking a PIP would not be subject to cherry-picking by PIPs. We have also argued for a greater role for MABS at all stages of the process. It is unfortunate that this has not happened.
The crux of the Bill is about empowering the court to take in a broader understanding of a repossession and, ultimately, put the burden of proof on the lender. Section 3 maps out in a detailed way the hurdles a lender would have to clear in order that a court could be fully sure repossession was the only option. Section 3(1)(a) would put the code of conduct on mortgage arrears, CCMA, on a legal footing. FLAC which works with people in need of legal aid has identified the potential lack of enforceability of the code of conduct as a problem that could cause great difficulties for co-operating borrowers in distress. The Bill would remove some of that doubt and make every bank, not just the regulated entities, subject to the code. I was disappointed last year that, despite submissions from many groups and individuals concerned about the dilution of the CCMA, the Central Bank, with a nod from the Minister, proceeded to weaken it substantially. It remains, however, a code that affords some protection to borrowers and at least sets a threshold of decency by which lenders must abide. All lenders should have to abide by it. The legislation provides that if an institution wants to repossess somebody’s home in the State, it must at least meet this threshold. The court would take into this account when considering any application. This is of significant importance, given the developments of recent weeks where IBRC's mortgage loan books were sold to unregulated entities which might not have to comply with the CCMA. There is no statutory provision for them to do so and this legislation would deal with that issue.
Section 3(1)(b) would introduce a reasonableness test. The repossession of a family home resonates because of our history as a people attached to the land but often deprived of any right to it. If an institution wants to remove a family from its home, the laws of the State should not make this something that could be done lightly. This subsection would give the court the power to decide whether the bank or lender had acted reasonably and, if not, deny the application. Members who have worked with constituents to help them to stay in their homes will know that reasonableness and banks can often be separate. The reasonableness test should take into account what the PIP or homeowner has put on the table and what offer he or she has made. Families that believe they are doing their best and have made a reasonable offer would have their day to express that opinion and the court would have to take it into account. The homeowner would also have to be given adequate time and opportunity to appeal a rejection of a proposal by the banks. Crucially, the court would take into account what would happen in the aftermath of any proposed repossession. The residual debt and the bank’s intention to deal with it would also be considered by the court at that time. The bank would have to produce a full solution, not a partial one. Unfortunately, every financial institution, bar one in these cases, currently repossesses homes before dealing with the residual debt at a later stage. Bank of Ireland will chase people for the rest of their lives over that debt, which is not acceptable. There must be an agreement at the time of repossession on what happens to the residual debt. If the worse comes to worst, the vulnerable must be protected. The Bill would provide that families would be given at least six months to prepare to leave their home. If there are children, they would be given at least nine months. Tenants in a repossessed property should have their contracts fully respected. Tenancy agreements would have to be fulfilled by the lender taking possession of the property.
Everyone agrees that we are not living in normal times. The normal market rules and rules of property have been distorted by a reckless few. Families who saved for years to buy their homes witnessed their value plummet in a short period. In addition, a surge in the numbers who cannot find a job and billions of euro worth of cuts and taxes in budget after budget have produced a staggering crisis among people who cannot pay their mortgages. The economic collapse and the dragging of the sovereign into the mess created by banks is a well known story. The banks and other vulture funds cannot be allowed to pick off families in mortgage distress one by one. We must readjust the rules and restore the protection of the family home. We must provide leadership for those demanding it. The Bill would go some of the way to restoring a level playing field; dispelling the arrogance of bankers on obscene wages who only see numbers on a page, not families in homes; and reversing the appalling policy of the Government of permitting the banks do what they want to whom they want.
I have discussed the legislation with the leading groups fighting for the rights of mortgage holders. Mr. David Hall of the Irish Mortgage Holders Organisation stated:
This takes a humane and practical approach by attempting to rebalance the current imbalance that exists when banks move to repossess family homes. The proposed Bill reflects our policies and its adoption would be a significantly positive move to protect homeowners who are facing repossession.
Mr. Ross Maguire of New Beginning stated:
This Bill gives the courts extra power and responsibility in home repossession cases. In particular, it does two things. It mandates the court to be satisfied that all efforts have been made at resolution through the MARP process or the personal insolvency process before agreeing to repossession. This would constitute a substantial safeguard for families struggling with debt. Secondly, it forces the banks before repossession is granted to deal with the negative equity through debt write-off. Again this would constitute a great improvement on the current system and would allow people to move on with their lives free of debt.
I urge all Members to support the Bill as a step in keeping the thousands of families under the threat of the banks a little safer in their homes tonight and tomorrow. I understand the Government parties will vote down this legislation. I reiterate the figure of 30,034. It is not a Sinn Féin figure. It came from the chief executive officers of the four main banks in the State and is not complete because the other institutions that have not appeared before the Joint Committee on Finance, Public Expenditure and Reform are also seeking repossessions and voluntary surrender. However, we also know that 30,000 homes will not be repossessed, but the banks told the committee they expected the number to be in the thousands. Families will be put out of their homes and while the Bill would not prevent repossessions, it would make sure the courts had the power to consider all proposals put forward by a PIP or the mortgage holder and the bank seeking repossession had complied in a humane way with the Central Bank's code of conduct.
If the Minister for Finance has issues with the Bill, I urge that they be dealt with on Committee Stage. People need protection and a rebalancing of the law. Lenders who appeared before the joint committee told us they would torpedo personal insolvency agreements. Ulster Bank and Mr. Richie Boucher, the chief executive officer of Bank of Ireland, said they would veto every proposal that involved a write-down of secured debt held by their banks. This is not in keeping with the spirit of the legislation the Government enacted, nor are the 30,000 letters sent to homeowners in distress. It is time we stepped up to the mark and rebalanced the scales in favour of the citizens we are elected to represent.
