Committee on Housing and Homelessness díospóireacht -
Tuesday, 17 May 2016

Irish Mortgage Holders Organisation

Chairman

Before we recommence I remind colleagues to either switch off their mobile telephones or turn them to flight mode.

I must read a note on privilege. I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. The opening statements will be published on the committee website after this meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I welcome the Irish Mortgage Holders Association, which is represented today by Mr. David Hall and Mr. Stephen Curtis. The witnesses' documentation has been received and, as already stated, will be published on the website. I invite Mr. Hall to make an opening statement after which I will allow members to ask a number of questions.

Mr. David Hall

I wish the Chairman and members a good morning. To introduce ourselves, my name is David Hall and I am the chief executive of the Irish Mortgage Holders Association. I am joined by Stephen Curtis, a personal insolvency practitioner who leads our negotiation team. We are a charity and have in place 8,500 resolutions that are keeping people in their homes. We offer a free bankruptcy service. We are regulated, have a personal insolvency practitioner and are regulated to provide all the insolvency service solutions, as they are called. Moreover, we have styled and organised ourselves as a one-stop-shop representing those who are in debt. Over the past four years, we have been to the fore in advocating for people and assisting those who are in mortgage difficulties and are facing repossession.

This morning, I will focus mainly on what I believe is a looming catastrophe that could lead to the current homelessness crisis becoming significantly worse. To give the committee some context, at present, there are 5,241 people in emergency accommodation and 102 rough sleepers. I apologise, as members will be well aware of most of these figures, but it is important to set the scale because our submission today is made on the basis of this being a catastrophe rather than a crisis. The current figures before members regarding those who are facing homelessness or who are homeless will be dwarfed significantly by those who are in mortgage arrears in the event that they come into the system. The scale of the mortgage arrears crisis dwarfs the already chronic crisis. At present, 33,000 family homes are at risk of repossession and are in or are about to enter the court system. At present, 20,000 family homes are before the courts. The aforementioned 33,000 homes represent more than €2 billion in arrears and represent 84% of the entire arrears amount of €2.4 billion that currently is outstanding to all lending institutions. In other words, €2.01 billion of the €2.4 billion in arrears focuses the crisis clearly on this cohort of people who are in arrears of more than two years.

In addition, 15,000 investment properties have been in arrears for more than two years. They are at risk of receivers being appointed daily - they are being appointed daily - which results in tenants being evicted. These figures also include 13,000 mortgages owned by vulture funds that have been in arrears for more than two years. Despite the protestations of vulture lovers and the moral hazard brigade, vulture funds do not offer long-term restructuring to homes in arrears. They do not refinance or restructure investment properties and do not have long-term aspirations to support housing policy or the structure in Ireland in any shape or form. Between family homes and investment properties, 48,000 mortgages are facing either repossession or receivers. At a conservative estimate, this equates to 100,000 people. I stress the numbers I am presenting are conservative, are not exaggerated and err greatly on the side of caution. As big as is the existing crisis with 5,000 people being homeless, the spectre of a further 100,000 people or even a fraction of that number becoming homeless raises the prospect of a human disaster.

Most recently, we have been inundated by home owners and tenants who are in difficulty and who are facing receivers and the threat of being evicted from their homes. Both mortgage holders in difficulty and tenants who face being evicted are presented with a stark reality, namely, a dysfunctional rental market that is increasingly unaffordable. Moreover, in many cases it is not possible for tenants and home owners to rent and they, therefore, face homelessness. I am sure members will agree that were even 10% of the aforementioned 48,000 mortgage cases to result in the occupants becoming homeless, the current crisis would be doubled overnight.

We believe radical thinking and radical action are required. A previous Oireachtas guaranteed the liabilities of insolvent banks and provided €64 billion in funding to them.

We hope the committee will take some radical approach to protecting citizens, as happened in the case of the banks.

As members will see from our document, we outline a number of suggested approaches to take. We are willing to go through those over the course of this session. Homelessness itself is a massive issue. The physical upheaval of losing one's home is horrific. However, along with homelessness, there is a huge mental health issue. Those in debt and facing homelessness suffer silently with significant mental health problems. A recent survey, which we conducted with Dr. Eddie Murphy, showed that 20% of those in debt difficulty and facing homelessness had planned to take their own lives in the four weeks prior to the survey.

The challenge facing this committee in resolving the problem could not be more stark. From our perspective, we will give the committee a full commitment in the context of our co-operation, support and help in any shape or form that can be given in facing that task.

Mr. Lorcan O'Connor and his colleagues from the Insolvency Service of Ireland, ISI, are an excellent team of people. The legislation established the ISI in the context of having over 100,000 properties at risk of repossession. There are four cohorts: those in arrears; those nearly in arrears; those in long-term arrears; and those hanging on by the skin of their teeth. I know that Deputies are aware of this.

It was a funny prospect to watch an organisation come in previously and be asked exceptionally knowledgeable and intelligent questions. We joked outside and said that I might do the opening remarks and let Mr. Stephen Curtis do the answers, which would be far more comfortable. Deputy Coppinger asked one of the key questions. Given the scale of this problem, the ISI, with the greatest respect to it, has resolved 0.085% of mortgages in difficulty. It has resolved only 1,000. The other important aspect is that it does not determine which of those are buy-to-let properties or family homes; it is 1,000 combined. In addition, the statistics from the ISI's report, only just published, indicate that 4,000 people applied to the service but that only 2,000 of those got deals. The extra 1,000 are bankruptcies. Thus, there is a 50% success rate in getting through a convoluted and complicated process. It is mentioned in the programme for Government, and I hope it is adhered to, that the process needs to be up-ended.

This is a crisis, a potential catastrophe. I met Fr. Peter McVerry on Friday and respectfully said to him: "You think 5,200 is a problem. It's nothing as to what is coming unless radical steps are taken to prevent that."

Chairman

I thank Mr. Hall, but he is not finished. If he does not object and before he take questions - I am quite serious about this - Mr. Hall said he has a number of recommendations. It might be useful to the committee if he provided a brief summary of those and then we will take the questions. That is, if he does not mind.

Mr. David Hall

Yes, perfect. No problem. The programme for Government states that the family home should not be unnecessarily repossessed and alternative solutions should be provided. This refers specifically to the code of conduct on mortgage arrears. That code should, and must, be put on statutory footing. These combined solutions in and of themselves will only tip off the crisis that exists but the code must be put on a statutory footing. The code of conduct is voluntary, it is not statutory.

In December 2014, Deputy Joan Collins brought before the House a simple piece of legislation. I know the landscape has changed radically and it may be better received now. However, it is absolutely incumbent upon this committee and the House to ensure that vulnerable people who face mortgage arrears and eviction have at least two solutions available to them and that these are compelled to be provided. To be fair, many of the mainstream banks do provide them. It is incumbent, however, that the code of conduct be put on a statutory footing and that mortgage-to-rent and split-mortgage models be the minimum solution offered by every single lender in the State prior to throwing someone out on the street.

If politicians are serious about protecting those facing an uncertain future, they need to draft appropriate legislation for compulsory purchase of properties and lands in order to protect citizens. I know the Master of the High Court was before the committee discussing both vulture funds and the taking over of those properties. There are two State-owned banks. A phone call to both tomorrow morning will give an answer that has yet to be disclosed by the Central Bank. How many customers in mortgage arrears have they got financial information on which they can confirm are going to lose their homes? By our calculations, the figure is approximately 7,500. On top of the cohort mentioned earlier, those lenders also know how many of the restructuring arrangements they have that are vulnerable. Those restructuring arrangements have been pulled out of circulation and removed from an at-risk register. As far as we are concerned, a significant percentage of those are at risk and they need to be dealt with.

Those loans can be taken over. There are two State-owned banks. This will require emergency measures, not crazy ones. This is genuine stuff that needs to be taken on board. Those two banks should be here tomorrow morning to set out how many of their loans they have evaluated cannot be repaid. These are people who have co-operated. In respect of the far more serious question of those before the courts, the perception is these people are "messers" who are trying to pull a stroke. This suits the banking narrative. The question that should be asked of those banks that have brought people before the courts is how many have submitted financial information and how many of those people the banks initiated legal proceedings against in the full knowledge that they are goosed. That is a very serious barometer of those before the courts.

The State pays a form of rent allowance to those who cannot afford to pay rent. This is a significant economic burden on the State and the State gets no return for this money. We proposed and circulated a fair mortgage solution. A major cohort of people simply cannot pay. A further cohort can pay something but not enough to satisfy the criteria set by the Central Bank. The Central Bank is the ultimate court of the banks. It sets the sustainability arrangements relating to mortgages so Mary and Joe who could pay €500 on a €1,000 mortgage may not satisfy the Central Bank's requirements for sustainability. If, bizarrely, Mary and Joe get €200 from Uncle Seán, unless they can prove that this is full-time, permanent income, it does not count. If Mary and Joe were to lose their home, the entire country would pay possibly €650 in rent allowance for them. Why not take €200 or €300 of that, top up the €500 and leave them in their home? If the council wants to wake up one morning and become very clever and take ownership of that home, let it do so but let us have some economic benefit in respect of keeping those families in their homes and communities by using the existing structures. I do not say this very often but the banks have actually propped up this system for the past four years. The banks have de facto paid the rent allowance that should be paid by the local authorities because we have a cumbersome, slow and, thankfully, crap system of repossession. This dysfunctional system is the only grace that has saved us. Citizens own two banks and we should bring them in and identify and start with that cohort of people. They are our citizens and our banks and we need to know what the numbers are.

Finally, we have the big monstrosity that is NAMA, which seems to prefer a more elite cohort of debtors. This makes those type of debtors appear a bit better than ordinary citizens in debt. Bizarrely, they have a very good skill set. Legislation should be introduced at this late stage to ensure that NAMA uses the skill sets of its debtors before it favours them to keep family homes, pay it any more and write off their debt. All of these measures should only happen when they supervise a successful project involving the building of houses on NAMA-owned land. Then and only then should those people be released from their debts and allowed to get off scot free. Very few of our clients are stuck in €2 million homes, get paid €10,000 per month and have €100 million debt. There is inequality and a major imbalance and it is time to correct that imbalance before we have one of the largest catastrophes of all time.

Chairman

I will take a number of contributions and I remind colleagues to make their questions direct as we have a full committee here this morning.

Deputy Maurice Quinlivan

I thank Mr. Hall for the presentation, which was very interesting. He came up with some simple and practical solutions that should be implemented pretty much straight away. I was taken by his statement that 20% of those who were surveyed recently had mental health problems and a huge number of them had contemplated taking their own lives in the past four weeks. Obviously, we all deal with problems involving people who present themselves at our constituency offices. I have never held a constituency clinic without somebody coming to it with mortgage distress. It is a massive problem.

The head of the Housing Agency appeared before the committee at a previous meeting. He basically urged the committee to get the Government to make addressing this massive issue its highest priority. The Central Bank said that 88,292 people were in mortgage arrears in the first quarter of this year. Homes are being repossessed from or surrendered by four families per day.

The number of people in mortgage arrears doubled under the previous Government while non-bank lenders hold almost 46,000 mortgage accounts for principal dwelling houses and buy-to-let combined, which is a massive problem. What would Mr. Hall's simple solution be to the mortgage-to-rent process given it does not work well? How would he speed up? What would he do to make sure people in mortgage distress can access the scheme as quickly as possible?

Deputy Bernard J. Durkan

I thank Mr. Hall for coming before the committee. He put forward a solution whereby the State should intervene because it owns a number of banks and should subsidise the system by entering the marketplace and writing down mortgages or paying the mortgage in the same way as rent support. What would be the cost to the State? Does he differentiate between those who are paying, trying to pay or making no effort to pay? How many of the mortgagees in arrears that he has dealt with or is aware of are not paying because they cannot pay or are trying to or are paying to the best of their ability within their means while recognising one third of the disposable income of a household is deemed to be eligible for payment of a mortgage? How many people refuse to pay anything? Does Mr. Hall believe they should also be helped in the context of support from the State?

I refer finally to the moral responsibility lending institutions might have towards borrowers to whom they lent in the past seven or eight years and whom they are now pursuing on the basis that their loans are unsustainable. To what extent is there a moral obligation on the lenders to carry some responsibility and some of the burden for their badly advised lending?

Deputy Michael Harty

In his opening remarks, Mr. Hall said his organisations had secured 8,500 resolutions. Have they been arranged between the borrower and the bank without a PIP or were they negotiated via a PIP? Those figures are much higher than the ISI figures. Is the IMHO using a different method? What is the difference in the arrangements used by the IMHO and the ISI?

Mr. David Hall

I will take the easy ones and the hand the more difficult ones over to Mr. Curtis. In response to Deputy Durkan, in our experience, 5% of people are messing. The simple solution to them is they should just be nuked. None of us has the time, effort or inclination to in any shape or form deal with those people. Last Saturday, the Irish Examiner mentioned that MABS had 1,440 clients currently in mortgage arrears. We currently have 1,950 clients in mortgage arrears. Where is everybody else? We have no time for anyone who wants to try to pull a stroke and mess around. They should be nuked and dealt with in a separate forum. However, there needs to be a solution for those in difficulty and distress.

In response to Deputy Quinlivan, the mortgage-to-rent scheme conceptually was a great idea. It had two components under the Keane report in October 2010. Many of us, including ourselves, balked at the idea of a bank becoming a landlord coupled with a bank versus a vulture becoming a landlord. I know which one I would pick today. The scheme was a great idea, which was horrifically constructed. If one wanted to complicate something and find the sickest person in the country to do that, one could not do a better job than with mortgage-to-rent. Hopefully, we have just finished off a mortgage-to-rent deal for one of our clients, Danny, where the lender had refused to participate in the scheme. Unfortunately, his wife has passed away but he has three young kids. He is perfectly eligible for the scheme but the lender decided it did not participate in the scheme. We took a High Court case in February and Mr. Justice White ruled against us saying mortgage-to-rent is a voluntary proposal and solution. Everyone in the country could have seen that Danny was eligible for the scheme and he should have been on it within one hour.

We did an analysis of how long it has taken us to deal with Danny - there were 201 emails, 73 phone calls, and 16 meetings over 80 hours. That is for one person with three young children who has already had a personal tragedy, with his wife dead. Only now, 18 months later, will mortgage-to-rent get across the line. There needs to be a body that can sit and deal with Danny in one hour, which compels the borrower and lender to comply with its decision. It will be in the best interest of the borrower and the State because the numbers are enormous. Danny is coupled, by our calculations, with another 20,000 people. It would take 276 years for the Insolvency Service to get through this, as well intended as it is.

Mr. Stephen Curtis will deal with the money - he loves money.

Mr. Stephen Curtis

I will return to Deputy Durkan's point about the people who cannot pay and those who will not pay. Something we have suggested for a number of years is the introduction of some sort of a certificate of affordability for anyone going into court or negotiations with the bank. It could be administered by personal insolvency practitioners or another body. It would say that a person is paying a certain amount, that it is all they can afford to pay, they can afford to pay more or they cannot afford to pay anything as the case may be. Our experience is that the vast majority of people who come to us are either paying as much as they can or more than they can and forgoing other things, for example, not paying their electricity bills or not paying for groceries. That would be one very simple way of determining that. I have been dealing with this for the past three years with Mr. David Hall and for longer elsewhere. The reality is that the vast majority of people pay as much as they can because the consequence is that they will lose their house - people want to co-operate as much as they can.

In terms of our figures versus those of the Insolvency Service, ours are significantly higher so obviously we are not doing them through the Insolvency Service mechanism. The majority of them have been through informal negotiations. I am a personal insolvency practitioner, PIP, registered and licensed with the Insolvency Service so I do not want to insult it too much. The reality is that the operation of the Insolvency Service for the types of people we are dealing with is far too cumbersome. In the last session, Deputy Collins asked how the PIP is paid. The reality is that for an insolvency arrangement to happen there needs to be a pot of money brought to the table by the debtor. That is what the PIP gets paid out of. The debtor does not necessarily write a cheque to the PIP but the PIP is paid out of that pot. It goes through the creditors and back to the PIP. In order for insolvency arrangements to work on a wholesale scale, it requires money. PIPs are private operators; most of them are accountants or solicitors operating in a private practice. Being a PIP is a business, so if insolvency arrangements are to be done on a wholesale basis without a requirement for a profit to be made, there should be public PIPs. There should be PIPs licensed and run by the Insolvency Service who would go to people who cannot fund a PIP and tell them they could probably do a deal and that the Insolvency Service has five, ten or 20 PIPs working for it and that they should go to one of them to implement it.

In terms of the cost of our proposal on rent allowance, in some ways it is quite hard to judge because there are a number of people against whom the banks are taking repossession proceedings. There are about 20,000 of them before the courts at the moment and a lot of those people will be eligible for social housing if and when their houses are repossessed. The cost to the State will range from about €650 a month to about €1,900 or more depending on what county one is in. Our estimate is that there are 20,000 at imminent risk of that happening so €500 by 20,000 is the amount. The reality is that we do not know at the moment because nobody is paying it. They are sitting there not paying the banks because they cannot and are not being subsidised by the housing authority because they are still in their properties. If one wanted to solve the problem with mortgage to rent, one would go to the two State-owned banks, AIB and Permanent TSB, and ask them how many of the people they are currently taking to court who cannot pay anything will be eligible for social housing and will go into that system if and when they repossess their house. The two lenders could put a list together of all those properties and go to the approved housing bodies, the Clúids and Oaklees, and ask them to make an offer on the houses that are available. They could buy them and leave those people in their houses and let them stay there instead of this charade of them going through the court system where their properties will eventually get repossessed unless something happens.

I agree with Mr. Hall that it is a very slow process and thank God for that. There is a need for radical action in this area. We spent two full working weeks on one case before it was resolved. We have been at this now for 18 months. This is not the way to go if this issue, in its totality, is to be resolved.

Mr. David Hall

The cost of being before the courts comes to the debtor eventually but, ultimately, it is the banks that are goosed. The cost associated with entering a legal process and the average cost of repossession varies. At a recent meeting, the Irish Banking Federation told us that 50% of all the people in long-term arrears are paying nothing. In an emergency and a crisis, one needs to get into those numbers very quickly.

I am aware that Mr. Paul Joyce of FLAC will be appearing before the committee later today and I am sure he will provide a lot more documentation than we have. At a FLAC conference I attended a number of years ago a man stood up and said, "Not everyone is going to get equal treatment." This is a crisis. I am sorry but not everybody will get equal treatment.

Deputy Bernard J. Durkan

Why not?

Mr. David Hall

Because the scale and the numbers are so big. From that perspective, it is extremely difficult to resolve matters. The are currently 20,000 cases before the courts. Those 20,000 cases need to be channelled through a new body that has the authority to engage with both parties in a swift and meaningful way. Administration of those cases, without the hundreds of necessary staff required, will take a long time such that some people will, unfortunately, lose out.

Deputy Bernard J. Durkan

It does not take a long time if a general principle is established and adopted. What about the moral responsibility on the lenders who gave so freely and readily - almost unconditionally - to so many? I am differentiating in respect of those people who refuse to pay anything at all on the basis that everybody can pay a small amount, including those on social welfare benefits, all of whom have to pay local authority rent and so on. I would welcome a response to my question on whether the lender has a moral responsibility to look backwards and forwards at the same time in regard to whether the loans which they approved were approved in good faith or whether they were approved in the clear knowledge that the property would be repossessed at a later stage.

Mr. David Hall

I smile when I hear the words "moral" and "lender" in the same sentence.

Deputy Bernard J. Durkan

I do not.

Mr. David Hall

There has been much talk about vulture funds. Vultures feed on carcasses that are dead. There are lenders and vulture funds here that are currently eating on people who are alive. I am aware that Deputy Durkan has dealt with the banks on behalf of many people in his constituency.

Deputy Bernard J. Durkan

I have been in the courts as well many times.

Mr. David Hall

I am aware of that. I have been working in this area for the past five years and I have met face to face with every lender in this State, often in coffee shops because I was not allowed into the banks. Morality does not come into it. This is a production line. The banks have moved on. The time to hit them with the moral argument was in 2008, 2009, 2010 and 2011. They have moved on in terms of staff, ethos and so on. I am not agreeing with that. What I am saying is that the current situation is horrific. Dealing with the banks and getting them to show compassion is like walking through a swamp in a pair of wellies. Under the system currently operating within the banks, Johnny can be contacted by phone today by Mary and by John tomorrow. The code of conduct on mortgage arrears introduced in July 2013 was evaporated in order to allow bank staff to ring people any number of times and for site visits to be carried out by what are known as "field officers", many of whom think they are FBI agents. These officers are knocking on people's doors saying, "Hello, you owe us €200,000. How are you fixed?"

The entire consumer protection component has been - I say this respectfully - abandoned by the entire establishment, including the Central Bank, which is the greatest joke in terms of consumer protection in the history of this State. Consumer protection should never be dealt with within the walls of the Central Bank. Respectfully, I believe this committee has an opportunity to change all that. There needs to be a legislative basis for consumer protection such that every bank and lender in this State, and those sitting in armchairs in America, understands that they cannot throw people out of a house here if they are being reasonable and can contribute towards their mortgage. That is where we need to move to in a fast, industrial-scale way.

Deputy Ruth Coppinger

The unfairness with which people in mortgage distress in this country have been treated in the past eight years since the crash is mind-boggling.

If anything shows how this system cares nothing for the majority in society, it is the fact that so little was done by the previous Government to help people. This was one of the key issues, as I am sure people remember, in elections a few years ago. The personal insolvency practitioner service we heard about is not being taken up by many people.

I have a question about the vulture funds. It is interesting that it was mentioned that despite the protestations of the vulture lovers, vulture funds do not have a long-term interest in settling with people in distress. Is it fair to say the witness is in disagreement with the Minister for Finance who, when he came before us two weeks ago, made an analogy with vulture funds? He stated that vultures provide a very good service in ecology through cleaning up dead animals littered across the landscape. He has met representatives of those funds on several occasions, as have his departmental officials. Does the witness agree it was wrong to sell so many mortgages to vulture funds and the Government should not have allowed that to happen? We can only assume from the Minister's comments that he is likening mortgage holders and people in distress to dead animals that need to be cleared off the landscape. As has been noted, unfortunately, people are very much alive and it is a bit of an insult to vultures because they perform an important function in ecology.

The other point made by the witness is that radical action was taken by the Oireachtas in dealing with the banking crisis and €64 billion was passed over for that. Where did that €64 billion go? Did any of it go to releasing the debt on mortgage holders or did it all go to releasing debts on developers and the banks? Does the witness have any figures on that? For example, AIB wrote off €5.4 billion in construction and property loans in the past two years, compared with only €1.1 billion on residential mortgages. That relates to owner-occupier and buy-to-let loans.

I am glad the witness raised the issue of compulsory purchase orders, CPOs, as legislation is required in that regard. Does the witness advocate that the State should pursue this for mortgages in distress? Could the process be used by State-owned banks where possible to write down people's mortgage debt? At the end of 2015, AIB had €5.7 billion in impaired residential mortgages but it wrote down €5.4 billion in construction and property loans. What would have happened if the company used that money to write down debts on the mortgage holder rather than the developer?

I have many examples of statements from the Government indicating how there is a conscious policy to allow property prices rise in order to reduce negative equity for people so they will feel better about their debt. Does the witness agree that this has also led to the housing crisis as well? If a person is waiting for prices to rise, houses and land would be held back, contributing to the housing and homeless crisis.

In the interest of people knowing where Mr. Hall is coming from, I must ask him about his relationship with AIB. The Irish Mortgage Holders Association, IMHO, has had a connection with AIB since 2013. Will the witness outline the nature of that relationship so that people can be aware of it? In AIB's annual report last year, it indicated that to year-end 2015, some 2,370 people achieved a resolution with the bank through the IMHO, with 779 resolutions achieved during 2015. The IMHO website indicates it is funded by grant aid from AIB. How much does it get paid by AIB and is it essentially a contractor for the bank? The IMHO has been able to take on staff as a result of that arrangement. Does that compromise the IMHO in dealing with AIB, as it is one of the biggest mortgage providers in the country?

Chairman

I will take one or two other speakers, although I know there have been some specific questions.

Deputy Joan Collins

I have had dealings with the Irish Mortgage Holders Organisation, as have many other Deputies in this room under previous Governments, in relation both to themselves and to constituents who come in to them regarding this issue. I want to register again that I fully endorse the fact that we are in a housing emergency and we still have a tsunami coming down the road in respect of repossessions and evictions if we do not deal with the issues that have been raised here today. I would take cognisance of many of the points made by Mr. Hall and the Irish Mortgage Holders Organisation because every single day they are dealing with the issues that have confronted them. They are very complicated issues and I know some of the cases in which the organisation has tried to deal with and to resolve the issues with the banks. The Irish Mortgage Holders Organisation has been at the coalface of trying to understand the workings of the banks and how they process these matters.

The code of conduct is still voluntary. One of the first things this committee can do is to ensure it becomes a legal requirement, that the banks are forced to address split mortgages and mortgage to rent as part of the resolution, because they still have the opportunity to reject them. It is not going to solve the problem but it is an important part of the issue.

In respect of PTSB and AIB and the proposal to look at exactly where the banks have their distressed mortgages, looking at each case and then putting forward that idea to the voluntary organisations and local authorities and having a practical way of doing it, Edmund Honohan said the other day that we need a----- What was it he said? Can any members remember? The point he was making was that we need to deal with it very quickly - it cannot wait. We need a blanket intervention to deal with the issue. This would be part of the process that would help in respect of dealing with those banks.

Deputy Seán Canney

I thank the Irish Mortgage Holders Organisation for coming before the committee. Mr. Hall has described the charade around trying to get things going in respect of distressed mortgages, and how complicated everything is. He mentioned the idea of an agency or a court that would make a quick bullet point decision on such matters that would be binding. He talks about AIB and whether Bank of Ireland and the vulture funds can be made accountable to that agency or that court as well, so that we do not end up solving some of the problems but not others.

Deputy Coppinger raised this issue earlier, and I feel that what is happening at the moment is that the banks are waiting for the value of these houses to go up. That may be why the process of repossession is slow - they are waiting to repossess at a time when they will get most of their money back, so rather than doing it this year they will wait until next year, or whatever. Would that be Mr. Hall's view, that they are just stringing it out and letting the mortgage holder who is in distress suffer the mental strain of all these letters coming at them every couple of weeks but still leaving it until the value of the property gets to a level where they can sell it off, get the money back and hump off with the mortgage arrears? It is just an observation I have and I have a concern about it as well.

Mr. David Hall

I will deal with the last point made by Deputy Seán Canney, which was made by Deputy Coppinger as well. The Central Bank's quarterly report gives details of how many properties it takes possession of or sells on each quarter. Every single quarter since 2009, the figures have shown that there are 1,000 properties available that are being held by the banks. In response to Deputy Canney's question, I would 100% agree that there is nothing surer in the world than that the system has preferred the banks and has preferred the increase in property prices. It has undoubtedly been an intended project. Why else, in a housing crisis where mortgage brokers are looking for properties on behalf of customers, would one intentionally hold, every quarter, 1,000 properties that one has on the books? Why would one do it?

Chairman

Are they vacant?

Mr. David Hall

Yes, they are all in the possession of the banks. They have either been given voluntarily or have been repossessed. Every quarter if one looks, the line is the same, it fluctuates between 920 and 1,020. It is exactly the same every time.

They have no purpose other than controlling the market and they have always held those properties on their books. The number is the same each time. They repossess 179 or 240 per quarter. They sell 230 but they always keep 1,000 houses on the books. In any rational environment, those 1,000 houses would be gone. They would be given to or sold to a local authority and offered up as housing. They would be made good in the event that some of them were not up to standard. They would be dealt with instantly but that is not being done. I share Deputy Canney's concern on that issue.

Many people have buy-to-let properties as well as family homes. If someone's financial circumstances are evaluated and it is determined that they are in grave financial difficulty, the only reason for doing a deal with the person to hold on to the buy-to-let is for one to take rent while the price of the property increases. For an individual who owns a buy-to-let property, it is unclear what the bank intends to do with them in 12 or 24 months or at any time. I must inform Deputy Durkan that we say to people that there should be no surrendering of a property until such time as the residual debt is dealt with even if that means not paying the €300 someone may be able to afford to pay. If a bank takes someone to court and requires them to pay €1,300 and they can pay only €300, questions must be asked as to why they would pay the €300.

Deputy Bernard J. Durkan

I disagree. If one is refusing to pay anything until all is solved, that puts one in a weak position going to court.

Mr. David Hall

We may differ but the reality is that the law states categorically that is the case. In only a handful of cases has there been a failure to get repossession orders. Over time, a repossession order will be granted. In light of the current housing crisis, somebody may be better served holding on to the €300 for a deposit in this mad rental stage we are in. Ultimately, where someone has buy-to-let properties, a family home mortgage and one or two investment properties, only the rent is being taken. Many of the banks have a formula whereby they will tell people minus what percentage of rent they will accept but there is no certainty or long-term plan for those individuals. That is the great danger.

Deputy Coppinger asked about vulture funds. I agree with her 100% on that issue. I had a face-to-face conversation with the Minister for Finance, Deputy Noonan, on bank holiday Monday in which I gave views on mortgage arrears and solutions with the Independent Alliance. We had a very robust exchange and it is very clear that the Minister falls into the "vulture lover" category. He was very clear on his love for vulture funds, on which we had a robust exchange. Some would argue there is a place for vulture funds. If someone in business is goosed and is about to lose his or her property, it is likely that a vulture fund will write off the debt but in return it will want the keys to that property. At the moment, one of them is offering €5,000 if the person gets out of the house within six weeks. That is their intent. It is very clear. They are self-confessed predators. They circulate for five years. They suck an asset dry and then move on. My big concern is that we will end up with a situation where the current vulture funds will suck what they can and sell on to a super-vulture fund. I agree with the Deputy's comments. I think the Minister, Deputy Noonan, is badly advised. I think his preference to have met - I said this to him - vulture funds versus debtor advocates over the past five years was deeply concerning. However, I will say in his defence, I met a man a fortnight ago who clearly knew the that system does not work and was exceptionally engaged for a number of days in trying to bring something about. I strongly recommend - Deputy Joan Collins referred to this - the use of mortgage-to-rent arrangements and split mortgages as part of the code of conduct. I also strongly recommend that the court should be centralised but it should also have an arm that could push through deals. As already stated, I saw a different reaction in respect of this matter. The vulture part was there but I did see a different reaction.

In regard to our own arrangement with AIB, people who are in debt either afford services themselves or, as is the process throughout Europe, the polluter pays. For 18 months. all our staff tried to deal with banks on behalf of debtors on a voluntary basis. It was impossible to deal with people like Danny over a two-year period, taking two full weeks to get one case across the line in the absence of having staff. We were doing those people an injustice. We approached AIB and asked it to fund a number of staff who would engage on doing deals. AIB did that for the first year. It was a huge success and there were 3,500 deals made with those customers in recent years. In the past year, they paid us approximately €680,000 and we hired staff. This is done on a grant basis. We are a charity so it is not done under service level agreements or on a contract basis.

In answer to the question and to give the committee some comfort - the same question was asked by their colleagues on the finance committee and they received a very robust response - I would safely say that since October last year, we reported all of the banks, including AIB, to the Central Bank. This was supported by the Oireachtas finance committee in relation to tracker mortgage issues and we probably cost AIB €200 million because of that letter. Our issues with regard to our debtor advocacy is 100% clear and 100% solid. I know that when I go to bed tonight, there are thousands of people who have been kept in their own beds with help from members of my team.

We also got €120,000 off KBC and I make no apologies for taking money from it because it should be paying for it. This goes back to Deputy Durkan's perspective regarding the morality of this. Those banks should be funding this and paying for these services. It is their obligation to fund these services, not to pursue people but to make sure the best protections are in place. I guarantee Deputy Coppinger that if she were to ask AIB whether I would be a friend or a foe, I believe she would get a very clear message. However, I respect the question and it is the right question to ask.

Deputy Bernard J. Durkan

Chairman, a reference was made to the fact the Minister for Finance was a vulture fund lover. I object to that and I want it corrected. The Minister has not given any indication to that effect at all-----

Deputy Ruth Coppinger

He has.

Deputy Bernard J. Durkan

The Minister said initially and more recently that so-called vulture or venture capitalists have been of benefit at a time when there was little money circulating in the system here and it was for that purpose only. It should be recognised by everybody, now and as time passes, that we should not come to a conclusion that in any way besmirches the reputation of someone who is not here but who can defend himself and quite clearly has done so in the past.

Chairman

I thank Deputy Durkan. The committee is not making any decision on that issue. At this point in time we are taking submissions and we are questioning witnesses. I am conscious-----

Deputy Ruth Coppinger

Chairman, can I just-----

Chairman

Please, Deputy Coppinger. Deputy Byrne had indicated to speak.

Deputy Ruth Coppinger

I know but Deputy Durkan made a point and-----

Chairman

Please-----

Deputy Ruth Coppinger

-----there is a lot of evidence that the Minister has a very positive attitude to vultures.

Chairman

That is a matter the committee can deal with separately. At the moment-----

Deputy Ruth Coppinger

Yes but I am just giving the corollary of what he said. He met them eight times.

Chairman

I call Deputy Catherine Byrne.

Deputy Catherine Byrne

I support what Deputy Durkan said. I believe it is wrong for anybody to come to the committee and make accusations about an individual, a Minister or a Deputy. In the Chairman's opening statement at all committees, it is clearly indicated that when people are not here to defend themselves, their names should not be used. I am disappointed that Mr. Hall has decided to use this opportunity - on live television - to make a statement about the Minister. It is wrong and it should be withdrawn.

Deputy Ruth Coppinger

Mr. Hall did not make a statement. I asked him a question about whether he agreed. Deputy Byrne is obviously political because she is in Fine Gael. The Minister himself made such a statement while before this committee so this is pathetic.

Deputy Bernard J. Durkan

Chairman, all the protests are directed at Fine Gael.

Chairman

I remind Deputy Coppinger and Deputy Durkan that Mr. Hall and Mr. Curtis are here to answer questions. The committee has made no findings. In due course, we will go through our own deliberations-----

Deputy Bernard J. Durkan

This cannot be left hanging in the ether and I want to state categorically that I reserve the right to object to any such intervention.

Deputy Ruth Coppinger

Deputy Durkan can object but-----

Deputy Bernard J. Durkan

I can object to Deputy Coppinger also.

Chairman

Deputy Coppinger, I will move on.

Deputy Ruth Coppinger

Chairman, we should not be trying to gag people when they come in to the committee.

Chairman

I am not trying to gag anybody. I am trying to move forward.

Deputy Bernard J. Durkan

I wish to make it quite clear that it is my right to challenge any issues that arise here, whether for political purposes or otherwise.

Chairman

Which you have now done.

Deputy Bernard J. Durkan

Good, and I want it recorded.

Chairman

I wish now to conclude the meeting because we have a session again this afternoon. I call Deputy Cowen.

Deputy Barry Cowen

I thank Mr. Hall for his contributions. I know he has said, and many people agree, that the mortgage-to-rent scheme had the potential to be a reasonable and good scheme to address the difficulties which existed for many people. Unfortunately, however, the way in which it has been administered leaves a lot to be desired. I hear what Mr. Hall is saying with regard to the contributions he has made towards the provision of a programme for Government and that he hopes to see improvements in that regard. Notwithstanding the time it may take for that to bear fruit, does Mr Hall believe emergency legislation could be brought to the House with a view to protecting those tenants caught in the middle of the mortgage-to-rent situation? Those properties are being repossessed and there is a new swathe of those now being brought to the courts. Many people find that their rights are null and void. They are completely at the behest of the courts and, unfortunately, the legislation does not protect them. Does Mr. Hall believe, or has it been suggested by anyone he has dealt with recently, that there could be protective legislation brought forward to allow them to remain in those homes for a period until the mortgage-to-rent situation has been rectified?

Chairman

As that concludes the questions, I invite Mr. Hall to respond.

Mr. David Hall

On that point, courage and leadership are two words that are bandied around regularly but we have 100,000 citizens who are in fear of what will happen in the future. It is incumbent upon the Dáil to draft legislation. We have a mechanism through the President, the Council of State and the Supreme Court if we want to stress-test legislation so why do we not stress-test legislation that starts to rebalance the imbalance that has existed for seven years? That is the courageous move that is required. It need not be something off the wall but something reasonable that protects those tenants, those who are most vulnerable and those who are on social welfare, having lost both incomes or the one income within the family and who may or may not have children in the household. These people will end up homeless. In parallel with the various homelessness crises we deal with at the moment, these people have dramatic mental health challenges as time goes on. That will come at a cost to the State.

Deputy Durkan asked about it earlier on, and he is right. There is a cost to the State relating to this but there are no free houses. No one is advocating a free house. We are advocating someone has a safe home and that requires courage, leadership and a massive rebalancing of a dramatic imbalance in favour of financial institutions. We guaranteed, without any legal instrument, €500 billion. We pumped €64 billion into banks. We had multiple late-night sittings of the Dáil to protect financial institutions. While we gave money to some banks, 56% of them, the others' existence is because the State stepped in. The entire system would not have been existing. There needs to be payback for those vulnerable customers and citizens who are now facing the abyss. Many organisations, including ours, have done and are doing their best but unfortunately the numbers are now in an emergency situation, require emergency legislation and this has to be grabbed firmly. As I said, with any major disaster, people who may be missing from this side of the fence when it comes to giving the committee evidence are major disaster planners. International major disaster planners who could tell the committee how to deal step by step with what is coming are what the committee needs.

Chairman

That more or less concludes this session. I thank Mr. Hall and Mr. Curtis of the Irish Mortgage Holders Association for their attendance today and for the submission, which, as I said earlier on, will be put on the committee's website.

Sitting suspended at 12.30 p.m. and resumed at 2 p.m.