"That Dáil Éireann:
notes the continuing difficulties faced by tens of thousands of homeowners in mortgage arrears due to loss of employment and income as a result of the deep recession in the Irish economy from 2008 onwards;
further notes that:
— the existing Code of Conduct on Mortgage Arrears (CCMA), whilst providing comprehensive instructions for creditors dealing with those in arrears, is not fit for purpose and does not provide necessary and important consumer protections; and
— there is no provision within the Code for lenders and mortgage servers to be mandated to provide necessary solutions for those in arrears which would prioritise safeguarding the family home; in fact lenders have the ability to choose which solutions they like and ignore the ones that they do not; and
calls on the Minister for Finance to amend the CCMA to mandate all creditors and mortgage servers operating in the State, including lenders or mortgage servers not registered within the State, to offer one of the following solutions to those in mortgage arrears:
— a split mortgage with no interest payable on the warehoused portion;
— participation in a reformed mortgage-to-rent scheme; or
— certainty for any borrower in negative equity selling or surrendering a property as to how the residual debt will be dealt with prior to the sale or surrender of the property."
The reason behind the motion is very simple. There is a crisis. It may have gone off the radar for the media and the Government but it has not gone away. A total of 95,000 families are struggling to hold on to their homes. This is the number of people with mortgage arrears of over 90 days and excludes buy-to-let properties. I note that the Government amendment makes a point about the reduction in the numbers of those with mortgage arrears of more than 90 days but the long-term arrears figures went up significantly. This category has increased quarter upon quarter every quarter and now contains 37,000 people, each with an average arrears of €49,000. The point the Government is making is just throwing sand in people's eyes to make them think that the situation is being resolved or is moving along.
According to information given to the Oireachtas Committee on Finance, Public Expenditure and Reform by the banks in April 2014, legal processes have begun or were being considered by the various banks in over 22,000 cases. This could mean that over 20,000 people, most of whom have families, could lose their homes over the next year to 18 months. That is the reality. I do not know if the Minister of State heard the point I was making. This could mean that over 20,000 people, most of whom have families, could lose their homes over the next year to 18 months.
When the code of conduct was introduced, the Minister for Finance stated that:
The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) places an onus on the banks, in respect of a co-operating borrower, to explore all the options for an alternative repayment arrangement offered by the lender to address a primary dwelling mortgage difficulty before any legal action is considered.
We should note that the statement says it puts an onus on the banks to explore all the options before legal action is considered. It does nothing of the sort. Lenders are choosing which options they may or may not offer and in thousands of cases, are offering nothing except voluntary surrender or repossession. There is no onus on them and there are no sanctions under the CCMA.
I will cite two examples of people with difficulty out of the many cases my office has dealt with over the past three years. The first concerns a family in Drimnagh composed of a couple in their thirties with two young children. The couple had a small business that went under in the economic crash. They are eligible for the mortgage-to-rent scheme in terms of the value of their house and their level of income. Dublin City Council has confirmed that they are eligible for social housing. The lender has refused to put them forward for the mortgage-to-rent scheme and instead has brought them before the courts seeking repossession. With the assistance of the Irish Mortgage Holders Organisation, it was possible to arrange for a barrister to represent the family. Working pro bono, the barrister has put it to the judge that a repossession should not be granted when there is a viable alternative which the lender chooses not to operate. There is a series of lenders who refused to operate the mortgage-to-rent scheme.
Only 38 applications to the scheme have reached a successful conclusion. It is not fit for purpose. The scheme needs to be reformed. It is too cumbersome, it takes too long to conclude a deal and it needs far more finance from the Department of the Environment, Community and Local Government but above all, it needs to be made legally enforceable on lenders where it is a suitable solution.
The second case I want to bring to the attention of the Government is that of a woman in Walkinstown. Her relationship has ended and her ex-partner lives outside the State and makes no contribution to the mortgage. She lost her job in the crash and is paying €900 to Bank of Ireland. A total of €600 of that amount is paid by the State through mortgage support. One would think that someone paying €900 per month could get some sort of an offer from the bank. All she has received is a demand for voluntary surrender and the threat of repossession. The bank is bringing her to court shortly. The option of a split mortgage with zero interest on a parked amount would give this person a chance of holding on to her home until her situation improved. Again, such an option should be compulsory where it is suitable.
There should be certainty about how residual debt is dealt with for those who decide that it is simply too much of a struggle to keep their home and opt for voluntary surrender or letting the bank repossess. It should not be up to the bank to offer some people write down or write off but not offer it to others.
The commitment to legislation where mortgages are sold to unregulated entities is meaningless when the Central Bank code has no teeth. We must move to a situation whereby all lenders or mortgage services operating are subject to a code of conduct on arrears which has real teeth. That means legislation to make lenders or mortgage services offer at least the options outlined in this motion before they can move to repossession and bring people to court.
The motion is very specific. It states that while the existing code of conduct on mortgage arrears provides comprehensive instructions for creditors dealing with those in arrears, it is not fit for purpose and does not provide necessary and important consumer protections. There is no provision within the code for lenders and mortgage services to be mandated to provide necessary solutions for those in arrears which would prioritise safeguarding the family home. In fact, lenders have the ability to choose which solutions they like and ignore the ones they do not like. That is a fact and nobody can say anything different. That is the reality for thousands of families who are facing the distressing situation of possibly losing their homes.
I call on the Minister for Finance to amend the CCMA to mandate all creditors and mortgage services operating in the State, including lenders or mortgage services that are not registered within the State, to offer one of the following solutions to those in mortgage arrears: a split mortgage with no interest payable on the warehouse portion, participation in a reformed mortgage-to-rent scheme, or certainty for any borrower in negative equity selling or surrendering a property as to how the residual debt will be dealt with prior to the sale or surrender of the property.
I and many other Deputies have dealt with many families who are facing the threat of losing their homes, who are waiting months and who are hoping that the banks will deal directly with them. We know the Irish Mortgage Holders Organisation has made an agreement with Allied Irish Banks which has worked reasonably successfully. Representatives from the organisation were on the radio today and spoke about 1,300 deals they made with the bank to enable people to remain in their homes. There are a further 170 cases with AIB and the organisation is also dealing with another 150 cases itself. Due to the fact that a structure has been put in place, that AIB is paying for the Irish Mortgage Holders Organisation to deliver this service and that the organisation is able to make a deal directly with AIB, it has been more successful than what has happened in respect of all the other banks. I am talking about the five major banks and other mortgage lenders that were in the market several years ago and have sold most of their loans to the banks.
It is important that the Government grasps this issue. There was a revision in 2013 but it was not robust enough and it failed to force the banks to offer these three options to mortgage holders. I have outlined two cases with which I am involved but I am sure many Deputies can provide similar examples. The intention of the motion is to ensure people are not left in limbo while they attempt to deal with banks. Many people are afraid to admit they are in arrears. By failing to make the banks offer these options, this country and the Government are letting these people down. The banks are being left off the hook and they are able to dictate the pace or tell a family it is going to repossess their home without offering an alternative. In the case of the woman from Walkinstown, it is no accident that her house is no longer in negative equity. The banks have moved quickly to take her home because they can make money on it. The woman is left without a roof over her head even though she could make provisions to keep her home and continue to live with her family and all the amenities to which she has become used.
When it comes to the mortgage arrears resolution process, MARP, the banks are taking the proverbial. MARP was supposed to achieve two key objectives, namely, allow people in arrears to nominate a third party to help them deal with the banks and get the banks to train dedicated staff who could deal with people in huge distress due to mortgage arrears. Instead we have glorified call centres staffed by young people whose training consists of filling out standard financial statements and little else. All of the banks and lenders operate a conscious policy that the people who make decisions on mortgage arrears should under no circumstances come face to face with the people and families who will be affected by these hard nosed decisions. We have observed this in our dealings with the banks. Several years ago we were able to meet the people who made the decisions but it has now become impossible to do more than contact a call centre. The staff of these centres are not properly trained, despite the agreement under MARP that banks would invest in training their staff to deal with mortgage holders face to face. Third party nominees increasingly find themselves dealing with call centres and speaking to a different person every time they call. It is unacceptable that three years into the process the banks have not yet trained their staff or put the right people in place. This is leaving people in a vulnerable position.
I ask the Government to take this motion on board. It has been discussed in the Joint Committee on Finance, Public Expenditure and Reform. The Irish Mortgage Holders Association has also encountered the issues I have outlined and, other than AIB, it is finding it increasingly difficult to deal with banks. People are being forced into the courts unnecessarily. They should not have to go to court when there are viable solutions. This motion has not been tabled for the sake of it or as an airy fairy idea. It is a reality for the many people who have been affected by the mortgage crisis. The crisis has not gone away. Thousands of families are affected by it. We should revisit the issues every couple of months to assess how they have progressed.