I thank the Ceann Comhairle for affording me the opportunity to raise this important matter, namely, the need for the Minister for Finance to establish a mortgage rescue scheme to minimise the number of mortgage repossessions, which is a potentially major cause of homelessness.
The current economic climate and the persistent increases in mortgage possession action have made this an area that needs to be urgently addressed. Financial deregulation and increased sub-prime lending has drawn in more economically vulnerable households, leading to a situation in which, according to Mr. Justice McGovern, mortgage lenders are leaving it to the courts to deal with the social wreckage caused by giving loans to people who cannot afford to repay them.
Many sub-prime lenders have encouraged people to borrow beyond their means and are quick to take action to repossess properties when payment default becomes an issue. Insurance provisions cannot always save people from repossession and such repossession leads to homelessness.
Mortgage rescue schemes — the introduction of such a scheme is what I am seeking — are already in operation in other parts of Europe. These can be in the form of shared ownership, which reduces the amount of mortgage repayments or a complete purchase of a property in which the former owner becomes the assured tenant and is able to remain in his or her home for as long as he or she likes. There is also a number of private companies offering sale lease-back possibilities, but these may involve home owners selling a property for considerably less than its value and offer little in the way of tenure.
I want the Government to introduce proposals to reduce the number of households becoming homeless as a result of mortgage repossessions, which are currently running at a high level. Education must be provided to ensure that people have the necessary financial capabilities to manage their affairs and information must be provided on what services are currently in place to support people with mortgage difficulties. The Government must ensure that comprehensive information and advice is available to all consumers pre-purchase, taking into account affordability and, in particular, the implications of changes in circumstances and also encouraging improved communication between lenders and borrowers where difficulties arise.
Rural homelessness is not an issue that is commonly discussed and is often hidden as people may face stigma in their community if they lose their home. Dwellings are often in remote areas which are removed from services and such households have a greater difficulty in accessing these than those in urban areas. Housing options may be fewer and affordability for home ownership is particularly difficult, as house prices can be disproportionate to incomes.
The threat of homelessness is very real and is rapidly increasing, with a 70% increase in the number of people seeking help to pay their mortgages from the start of this year and some 7,000 people now applying for assistance, a major increase compared to the 4,000 who were applying for it last December.
The urgent development of a mortgage rescue scheme, allied with improvements in regulation and enforcement, to ensure that courts only approve possession action when lenders have explored all other options to prevent possession being taken, must be undertaken by the Government. As Mr. Justice McGovern said recently: "I wonder what is realistically being done by banks and mortgage companies...?" We could certainly add the Government to that question. I welcome a favourable response from the Minister on the issue raised because it is one that is becoming increasingly widespread. We need a scheme to be put in place urgently to protect people from homelessness.
