I move: "That the Bill be now read a Second Time."
Family Home Mortgage Settlement Arrangement Bill 2014: Second Stage [Private Members]
The Deputy has 20 minutes. I understand he is sharing time with Deputies Calleary and Keaveney.
That is correct.
On behalf of Fianna Fáil, I am delighted to move this important legislation, the Family Home Mortgage Settlement Arrangement Bill 2014, which was formally introduced in December. I am glad we have procured some Private Members' time to have a proper debate on it.
This Bill is all about the family home. For many families, their homes are under serious attack. Every week, hundreds of applications for the repossession of family homes are being made to the Circuit Court throughout the country. There were more than 8,000 such applications last year. Tonight, many families are staring in the face the grim but real prospect of losing the roofs over their heads. We in this House are duty bound to devise solutions to the crisis. We have identified a specific issue in the operation of the Insolvency Service of Ireland that, if addressed, would go some way towards handling the crisis.
The Insolvency Service is not working when it comes to mortgage debt. In fact, it is failing abysmally. Given the fact that some 118,000 family home mortgages are in arrears, one has the sense that the fewer than 200 personal insolvency arrangements approved to the end of December represent just a drop in the ocean.
One reason for the Insolvency Service not working is the veto power that the Government gave to the banks. That issue is at the heart of our legislation. We are seeking to bring about a rebalancing of the power that was given to the banks at the expense of borrowers.
The Acting Chairman might tell me when there are five minutes remaining, as the clock is not counting down.
Of course.
I welcome the opportunity to move Second Stage of this Bill on behalf of Fianna Fáil. We do so at a time when the scale of the mortgage arrears crisis for home owners is unprecedented. The essence of the Bill is to remove the veto that banks possess over restructuring arrangements under the Insolvency Service where a family home mortgage is involved. It is our belief that, unless decisive action is taken, we are facing an unprecedented wave of repossessions in 2015, as evidenced every week by the reality of events in the Circuit Court across the country.
Thankfully, widespread family home repossession is not a phenomenon that Ireland has experienced since Independence. However, we know that it will lead to significant social upheaval. In fact, this is already beginning to be the case. We only need to consider the impact of the laissez-faire approach to mortgage difficulty in the UK in the 1990s to see the devastating social consequences of potentially thousands of families losing their homes.
As it stands, in the absence of a significant legislative initiative, the 37,484 people in arrears for more than two years are at a high risk of losing their homes. That is why we are appealing to the Government to accept the legislation we are proposing to give families a fair chance to put in place a restructuring arrangement that will allow them to stay in their homes. We do this in the genuine belief that, in the majority of mortgage arrears cases, if there is will on all sides, a sustainable solution can be identified and put in place.
At the outset, I will address a couple of points made by the Taoiseach when this issue was raised by the leader of our party, Deputy Martin, in the Dáil this afternoon. The Taoiseach stated: "The solution that has been put forward by Deputy Martin's party is not a solution because it is referring all of these cases to a court of law." It is disappointing, to say the least, that the Taoiseach would engage in such a blatant diversionary tactic. The fact of the matter is that these cases are already appearing before the Circuit Court. Under the insolvency regime, all arrangements put forward by the Insolvency Service of Ireland must be approved by the court. If the Taoiseach does not know this, he should. It beggars belief that he threw in this red herring. We have replicated this model, but minus the veto that the Government gave the banks.
Under current legislation, repossession proceedings must be commenced by means of a civil bill. In 2014, a total of 8,164 civil bills for an order of possession were lodged in the Circuit Court. Our Bill would avoid the need for an adversarial court setting and adapt the structure provided for in the Insolvency Service to deal specifically with the question of distressed mortgages. I stress again that we are discussing family home mortgages, not buy-to-let or investment properties.
The Taoiseach also stated: "Fianna Fáil's intention, in my view, is to impose a solution from its perspective that actually is unconstitutional." It would be useful to ascertain whether the Taoiseach sought the legal advice of the Attorney General, who is the Government's legal adviser in these matters and guardian of the Constitution. I expect that the Minister will confirm whether this is the case. I can only assume that the basis on which the Taoiseach is claiming the Bill to be unconstitutional is Article 43's provisions on protecting property rights. Based on the legal advice we have received, I do not believe this to be the case, as there are already legal provisions that limit property rights, including the established mortgage arrears resolution process. In fact, if property rights are as sacrosanct as the Taoiseach seems to believe, his colleague, the Minister for the Environment, Community and Local Government, Deputy Kelly, will not be in a position to introduce his proposed rent controls.
What we are seeking to do with this Bill is to introduce a bold initiative aimed at going a long way towards resolving a major social and economic crisis. If the banks have a problem with it, they are entitled to challenge it in the courts.
It is my belief that the premise of the Bill is constitutionally robust.
I would like to outline some of the reasons this legislation is necessary. There is a clear strategy on the part of banks to step up legal action for repossession of family homes in cases where people have fallen into arrears on their mortgages. The banks have decisively ramped up repossession actions in recent times. The rapid increase in house prices in 2014, particularly in the greater Dublin region, has given them the opportunity to substantially reduce the losses they would face from selling a home in mortgage arrears. Having kicked the can down the road for a number of years, the banks have become emboldened by the complete lack of legislative protection and by an acquiescent Government that wants to sell the State's holding in them at the first opportunity. Banks are using a variety of tactics, including direct court action as well as selling off parts of their loan books, a method that essentially amounts to outsourcing of repossession.
More than 15% of family home mortgage accounts are in arrears, accounting for more than 20% of the outstanding value of all family home mortgages. Mortgage arrears for family homes are in excess of €2.5 billion, more than three times higher than the figure at the end of December 2010. According to the most recent statistics from the Central Bank, a staggering 118,000 family home mortgage accounts are in arrears with almost half in arrears for one year or more. Since December 2010, the number of accounts more than 180 days in arrears has more than doubled from 31,000 to 74,000 cases, with combined arrears of €2.4 billion. The mortgage arrears crisis is so ingrained that more than 30% of accounts are in excess of 720 days in arrears and are worth €8 billion.
Repossession of a family home is a grim possibility for tens of thousands of families. At the last count, almost 1,400 residential properties were in the possession of banks, well more than double the figure in December 2010 but that is just the beginning, as an avalanche of repossessions is in train as a consequence of the coming into effect of the Land and Conveyancing Law Reform Act 2013.
An eviction Act.
As I highlighted to the House on 4 November last, the numbers involved are simply frightening. By way of example, in the first six months of 2013, there were only 44 ejectment civil bills in Cork Circuit Court. In the second half of 2013, however, there were 246 and this figure increased to 335 for the first six months of 2014. In Cork alone, at least 100 cases per week are being brought before the courts. Such is the increase in activity by the banks in enforcement actions that additional court sittings have had to be organised. That scenario is replicated around the country. Even more worryingly, figures released by the Minister for Finance in November last show that for every home repossessed by court order, another three are voluntarily surrendered or abandoned by the owners under pressure from the banks.
Currently, only two options are available to families struggling to meet their mortgage repayments but who wish to stay in their homes. The first is to reach an agreement with their lenders to restructure their mortgages while the second is to enter a Personal Insolvency Arrangement, PIA, under the Personal Insolvency Act 2012. In both cases, however, the bank has a veto and can refuse to accept the homeowner's proposal. The bank can threaten repossession as a means to force a borrower to accept a restructuring that is not suitable for them because no other realistic option is available to the homeowner in which the bank does not have a veto. If the borrower does not accept the bank's wishes, or cannot comply with the level of repayment the bank demands, he or she faces the possibility of eviction from the family home, but also a lifetime of debt if the home is sold for less than the outstanding mortgage. The power imbalance that exists between mortgage lender and homeowner, which is the direct result of the Government's policies, is extraordinary, deeply unfair and out of place in a modern democracy. The banks hold all the cards as a result of their built-in vetoes and because the consequences for a homeowner are significant if they cannot reach an agreement with their lender.
This legislation would transform the relationship between homeowner and bank, as it would remove a lender's right to an unqualified veto over reasonable solutions proposed on behalf of homeowners who have fallen into arrears on the mortgages for their family homes. Restructuring of mortgage accounts by financial institutions has increased but too many homeowners are falling through the cracks. The Government's solution for those who have been unable to restructure with their mortgage lenders, or who have unsecured debts alongside their mortgage arrears, is a PIA but only tiny numbers have availed of this option. At a time when in excess of 100,000 family home mortgages are in arrears, only 218 people with secured debts were granted protective certificates, the first step towards a PIA, in the final quarter of 2014. An even smaller number had a PIA approved by their creditors, with 119 such arrangements approved that quarter, while almost 30% did not have a successful outcome. Less than 200 PIAs have been approved by the Insolvency Service of Ireland, ISI, since this option became available in 2013. This is based on 16 months of hard data. A total of 199 PIAs involving secured debt were approved by the ISI. This is in the context of 118,000 family home mortgages in arrears. By any measures, this Act is not working. The Government must acknowledge this and face up to the underlying reasons to deal with mortgage debt.
Such low numbers of successful arrangements show the extent of the power of veto given to secured creditors in the Government's personal insolvency legislation. In the fourth quarter of 2014, there were more bankruptcies - 147 - than successful PIAs. To put it in perspective, there were more applications for repossession in Cork Circuit Court alone in 2014 than successful PIAs nationwide.
A banker's charter.
People are being forced into bankruptcy. Is the Government's solution for people in mortgage arrears to end in bankruptcy? That is the coded message it is sending. The banks know they have the option of bankruptcy with a three-year discharge period with another few years of debt hanging over people's heads. People in mortgage arrears should not have to become bankrupt to have their mortgage problem dealt with.
Hear, hear.
That is the overriding message. Bankruptcy is in place for people with more complicated debt arrangements, including business and related debts.
Those who have been able to persuade their secured creditors to approve their PIA proposal have been forced to accept surprisingly small write-offs of secured debts to ensure their proposal is approved by their creditors, with the average write-off of secured debt being only 16%. In some cases, there has been no write-off of secured debt, with the PIA used to reduce unsecured debt only. The extent of the failure of the PIA route to deal with family home mortgage arrears is evidenced by the fact that less than 40% of the debt in cases currently with the ISI relates to family mortgages.
Banks should not be able to act as judge and jury when dealing with homeowners who seek to restructure their mortgages to avoid repossession of their family homes. Where a sustainable solution cannot be agreed between a lender and borrower in respect of a family home, the matter should be dealt with by an independent judge, who can hear from both sides equally and mandate a fair solution that is beneficial to both parties, not just the bank. That is the essence of what we propose. The Bill provides that homeowners who satisfy the eligibility criteria set out in the legislation may propose a family home mortgage settlement arrangement to their lenders in respect of their mortgages. To be eligible to make such a proposal, they must have engaged in the Mortgage Arrears Resolution Process, MARP, under the Central Bank's Code of Conduct on Mortgage Arrears and exhausted the appeals process set out in the code of conduct.
A proposal could be made only by a licensed personal insolvency practitioner, PIP, who would assist the homeowner in completing a prescribed standard financial statement and ensure it is accurate. A proposal for a family home mortgage settlement arrangement would be possible only where the PIP believes there is a reasonable prospect that an arrangement would facilitate the homeowner to pay off the arrears on the mortgage and there would be no prospect of him or her being solvent within five years without such an arrangement. After a thorough review of the homeowner's financial circumstances, the ISI would issue the necessary certificate to the Circuit Court, which could, in turn, issue a protective certificate. The borrower would be protected by the certificate from the lender commencing or progressing legal proceedings or taking any step to repossess his or her home for a period of 180 days.
During that time, the personal insolvency practitioner would prepare a proposal for a family home mortgage settlement arrangement which could include any of a range of 14 options set out in the Bill, including paying interest only for a period, permanently or temporarily reducing the interest rate, extending the term of the mortgage, changing the type of the mortgage, having a split mortgage and reducing the principal sum, etc. They are all laid out in the Bill. The Circuit Court would consider the proposal and all associated documentation at a private hearing at which both sides could be heard.
The Bill contains a number of important safeguards to ensure this legislation is not misused. It provides that a homeowner may enter a family home mortgage settlement arrangement just once. It also provides that when an arrangement is under way, the lender can apply to the court to terminate the arrangement in limited circumstances, for example if the borrower has failed to comply with his or her obligations under the arrangement or has fallen into arrears of 12 months in respect of payments under the arrangement. The court would have the option of terminating or varying the arrangement in those circumstances.
Tens of thousands of families are currently in a position in which they must comply with the demands of their banks or face eviction from their family homes. They potentially face having to take on crippling debt if there is a significant shortfall when their homes are sold for less than the amount of their mortgages. The solutions that are available at present are totally focused on the banks. They give lenders a complete veto over any proposals made by home owners. If this legislation is enacted, it will rebalance the relationship between banks and home owners by allowing the Circuit Court, on the recommendation of the insolvency service, to put in place a fair, equitable and sustainable solution that would allow a family to remain in the family home while paying a sustainable monthly mortgage payment.
If our proposal were adopted, I do not doubt there would be a considerable improvement in the current situation, with a much higher proportion of successful restructuring arrangements being implemented. It would put the interests of the mortgage holder at the centre of the process. It would act to dilute the control that the banks currently have over the process. I honestly believe that if the Government were genuine in its efforts to deal with this ever-growing crisis, it would accept this Bill, imperfect and all as it might be. It should accept the broad principle of this Bill, which is that the bank veto that currently operates in the insolvency service when it comes to family home mortgages should be removed.
Hear, hear.
The Government should allow this Bill to be teased out in much greater detail on Committee and Report Stages. There is a fundamental flaw in the insolvency service as it is constituted. We have to accept that it is not working. The overarching State response to the mortgage crisis was the establishment of an independent statutory insolvency service. That service is not functioning because both of its hands are tied behind its back.
It is a bankers' charter.
At the end of the day, the Government allows the banks to call all the shots. It is allowing the banks to dress up threatening legal letters as so-called "solutions" under the mortgage arrears targets programme. The banks are sending threatening legal letters in order to claim they have fulfilled their responsibility to offer a sustainable solution. The Government is allowing the banks to use a veto. When Bank of Ireland and Ulster Bank came before the Joint Committee on Finance, Public Expenditure and Reform - a number of Deputies in the Chamber tonight were present for those hearings - they publicly said they would veto any proposal put before the insolvency service that involved a write-down of mortgage debt. That is not acceptable. If the Minister had any sense, he would at least allow this Bill to pass Second Stage and thereby let the threat of its enactment, and the consequent dilution of their power, hang over the banks if they do not cop on and stop thwarting the work of the insolvency service
I commend Deputy Michael McGrath on proposing this Bill. Members of this House are often accused of reacting to problems and being behind the curve when problems develop. It is suggested that too frequently, emergency legislation has to be rushed through to solve such problems. Inevitably, that legislation turns out to be deficient when issues arise. In such circumstances, we are challenged by judges in the courts to come back and do our jobs. Since 2011, it has been a constant refrain of Deputy Michael McGrath that the family home needs greater legal protection. One of the first Bills that was proposed in this Dáil and in the Seanad, the aim of which was to protect the family home, was turned down. During the pre-legislative hearings into the insolvency Bill, all of the organisations that are at the coal face of this problem and deal with it on a day-to-day basis, including the Free Legal Advice Centres and the Money Advice and Budgeting Service, pointed out that the bank veto would present a difficulty. They said it would cause problems and would result in the welcome ambition of the Bill not being fulfilled. They said it would result in the personal insolvency service basically parking up. I think Deputy Michael McGrath has this evening presented an illusion of a service that has so much to offer but is absolutely handcuffed by the banks having this veto.
Last Friday, I had somebody with me who was previously a very successful business person, having done well in the so-called boom times. We all meet many such people. This person made investments that did not work out and is now having to deal with the personal insolvency service, the personal insolvency practitioner and everything else. He was highly complimentary of the service and of the advice and encouragement he got from the personal insolvency practitioner. He got agreement from all the unsecured creditors, one of which was one of the pillar banks, but when it came to the family home debt, which is secured by another pillar bank, the deal was vetoed by that bank. I will name the bank - it was Bank of Ireland. This gentleman and his family are now in limbo land as they await the inevitable calling in of that loan by Bank of Ireland. When he went through the situation with me, he said it is absolutely ridiculous that after he has been pursued for this debt and evicted from his home, Bank of Ireland or any other bank will then be able to offer a mortgage to somebody to buy that house for what is now the market price, which is a lot less than the value of the mortgage. He is in no position to pay the outstanding value of the full mortgage. He could pay a mortgage on the current value of the house. If he were allowed to do so, he could stay in his house and avoid going onto the housing list. That would give him a chance to get on his feet again. That is not going to happen, however. Instead, the bank is going to pursue him. As Deputy Michael McGrath said, bankruptcy is the inevitable consequence of that. I am talking about somebody who did what he was advised by going through the insolvency service. He went through the tiller with the service and made all sorts of commitments with it. The service and the payment schedule that was agreed with the personal insolvency practitioner would have addressed many of these issues, but it was vetoed.
When this man and many others like him see that various companies and corporate entities are coming away from the pillar banks with very significant write-downs on corporate loans, and are still trading at big profits and announcing bigger profits as the years go on, it seems to them that there is one rule in terms of write-downs for corporate Ireland and a separate rule for people's family homes. The rule that applies to such people seems to be much more cruel and cut-throat. It seems to be about the ability of the bank to issue new business, while at the same time pursuing somebody for something he or she cannot have. That will continue, and will get worse, as long as we continue with the circumstances this Bill seeks to address. The continuing increases in house prices are exacerbating the situation because the banks think they will finally be able to get a greater value of the loan. I hope house prices will reach a plateau at some stage soon. As that happens, banks will start using the provisions of the Land and Conveyancing Law Reform Acts to start addressing their problems by putting people on the streets. What will we do with those people? We do not have houses or spare accommodation for them. The irony is that the buy-to-let sector, which we do not include in this legislation because it is confined to the family home, will be called in to respond. That sector will face another kind of situation.
The Government will come in here tomorrow night and vote against this legislation. The Taoiseach's advice to people who are in difficulties with their banks is to engage with and talk to their banks and they will be fine. Many people have done that and they are not fine. There are 118,000 families in arrears on their mortgages tonight. Some 60,000 of them are in arrears of more than a year. As Deputy Michael McGrath has outlined, they are in more serious situations. They have engaged with and talked to their banks. The rising property prices, and the bottom line of the banks' balance sheets in advance of their sale, seem to outweigh the importance of the family home. By any measure, the insolvency service is not working despite the best efforts of its staff. I suggest that the Minister should examine another model that this Government brought in which initially did not work. I refer to Microfinance Ireland, which was given a shake-up and a shake-down and had new management put in. I congratulate Mr. Michael Johnson, the Minister, Deputy Bruton, and the Minister of State, Deputy Nash, on the work they have done in this regard.
While it is beginning to work, tough decisions had to be made about its remit and the expansion and examination of that remit. What was initially intended did not work and the same must be done to the Insolvency Service of Ireland. What was initially intended is not working if only 119 people have managed to go through the service successfully in 16 months. Comparing that to where we are in terms of outstanding liabilities, no one can say the service is fulfilling its remit. We have some time to re-engage it, redesign it and refocus it on family homes to stop the avalanche that is about to happen.
It is extraordinary that the document of the people, the Constitution, Bunreacht na hÉireann, is being used against family home owners and small property owners when in the view of the Attorney General, upward-only rents are protected by the Constitution that is supposed to stand up for people. There are property rights for pension funds but not for small family homeowners or small-business people. That Land and Conveyancing Law Reform Act has made the situation more inevitable and made it easier for banks to foreclose on the family home and take the door, literally, from under people.
When it comes to introducing competition into the banking market, there is no willingness and no encouragement to do so. When we get funding from Europe, we invest it in the two pillar banks in mortgages or the small business finance market. It is extraordinary that we are not seeking to empower the most local and the most democratic of all financial institutions, the credit unions, with an ability to deal with the situation. Those options, including the many options in this Bill, offer a reasonable solution and one that is practicable and does not require extra cost. What the Taoiseach said today was off the ball. We are saying that we should empower the Insolvency Service of Ireland with extra powers and resources to do the job outlined in the Bill, which it was originally intended to do in February 2012 when the pre-legislative stage started. The promise of the service, in terms of the problems that existed, could have been much greater.
Most of the 118,000 family home mortgages will not have RTE outside their doors for the six o'clock news in the evening to protect them if the bank comes after them. One must have a big house in south County Dublin to get that. Tonight, families across the island are not sleeping; they do not know where they will be sleeping and are looking to us as legislators, and coming into our offices every day looking for assistance and a solution to keep them in the family homes. This is not to get a free pass on debt, as 95% want to co-operate with the Insolvency Service of Ireland and come to some arrangement on debt. There is a willingness to do this but the service is not being given the tools to do so. I ask the Minister not to allow another opportunity to protect family homes of the people on this island to pass.
The Government parties had an opportunity to address the serious issue of family home repossessions when they introduced the Land and Conveyancing Law Reform Bill in the spring of 2013. They were warned by the Opposition Deputies about what was eventually enacted, which was described as a missed opportunity to rebalance the debt resolution process to provide equality of arms between debtors and creditors. My colleague, Deputy Billy Kelleher, specifically predicted that when families in arrears with their mortgages found their homes appreciating in value to the point where they were out on negative equity, they would then face the full onslaught of the banks seeking to repossess their homes. I will borrow the words of Deputy Kelleher:
My concern is that banks will cherry-pick those houses where there is some equity or value, even though people are in massive mortgage arrears. There are properties whose values have halved and whose owners are in very difficult circumstances and are incapable of making any meaningful repayment. [...] The Minister knows as well as I do that in every banking institution in the State, there are those who were previously flogging mortgages and selling credit cards, personal loans, holiday loans and car loans. They are all members of the nutting squad now, bringing people in to talk to the banks. The bottom line is that they want to get their pound of flesh now and there should be oversight in this area. With the best will in the world, this is flawed legislation from start to finish. Whatever happens between now and the passing of the Bill, the Minister will have to at least listen to our suggestions. The Minister [it was then Deputy Alan Shatter] visited Meath East during the by-election and no doubt met some of the staggering number of people who are shattered and who do not see any light at the end of the tunnel. People in those circumstances have almost written off their own hopes and aspirations, but their main concern is no longer their own hope; it is hope for their children.
This is devastating the lives of people and, as Deputy Kelleher pointed out, the lives of people, their hopes and aspirations are now dependent on banks deciding what was a reasonable offer for a borrower. Deputy Kelleher put his finger on the central problem with the debt resolution process, namely, the failure of the Government to remove the veto power of banks over the process of debt resolution. By doing so, the Government left the banks, the very people who had lent recklessly in the first place, holding the whip hand over families in a distressed situation.
As with much else, this Government did not see families as individuals struggling or suffering, did not see that they could become homeless, that the elderly living with dignity in their community could be lying on a trolley in an accident and emergency unit tonight. It did not see that these people had rights. They were all people in society going through difficult circumstances but they were going to have their homes repossessed. The Government parties could see only pounds, shillings and pence and the cost to individuals was lost in that legislation.
In response to warnings from the Opposition benches that families would face repossessions, the then Minister for Justice and Equality, Deputy Shatter stated:
We cannot sustain an ongoing lack of certainty with regard to the legal position on mortgages. We cannot sustain a situation in which, on the one hand, banks are expected to lend money by way of mortgages and, on the other hand, there is lack of certainty about the exercise of their legal rights when it comes to major default by a borrower. It is simply an unsustainable legal position to maintain.
I have stated on a number of occasions that repossession of family homes is intended to be a last resort.
This is dry legalise stripped of any sense of social good or the necessity to have equality and equity in the right to have a house in this country. Deputy Shatter went on to deny specifically that there would be an opening of the floodgates with respect to family home repossessions. He was not alone. In contributions on the Bill on 1 May 2013, Deputy Joanna Tuffy responded to claims of widespread repossessions when she stated:
There has been considerable scaremongering about the Bill, some of which is opportunist, populist and disingenuous. All of the Opposition speakers I have heard in the past hour and 35 minutes I have been here have been guilty of that.
Deputy Michael McNamara stated, "I do not accept there is a rush by banks to repossess."
We are standing here today debating the reality that more than 15% of mortgage accounts for family homes are now in arrears - that is 117,000 dwelling houses - and almost 60,000 of those are in arrears of more than one year. Since the Government came into office, the number in arrears for more than 180 days has more than doubled to 74,000 in less than four years. The mortgage arrears crisis is now ingrained in our economy, with more than 30% of accounts more than 720 days in arrears. At the last count, almost 1,400 residential properties were repossessed by banks, more than double the figure in December 2010.
The Sunday Independent recently described how repossessions through the Circuit Court were achieving an unstoppable momentum, as the banks moved to seize and get their hands on the positive equity of those properties.
More worryingly, the number of repossession cases before the courts may only be the tip of the iceberg. Recent figures from the Department of Finance show that for every family home repossessed, at least three others were voluntarily surrendered to the banks.
What we are trying to achieve by means of the motion is to encourage the Government to recognise the scale of the problem. The former Minister, Deputy Alan Shatter, was only concerned with attacking Fianna Fáil. When commenting on this matter, he stated the Government, which has now been in power for four years, would not obsess about this issue and that the shape society would take in the future would not be decided in these Houses. The Government has been asleep at the wheel in this matter. There are two crises, namely, the increasing level of homelessness and the growing number of family homes being repossessed. These crises are interlinked and we are now on the cusp of a what can be described as a societal crisis. This will have consequences for the next 30 years in the context of people's mental health, the level of homelessness and childhood deprivation and the consequent poor educational and health outcomes.
I appeal to the Minister and those on the Government benches to listen and pay heed to what we are proposing and listen to struggling families and individuals who need support. Those to whom I refer elected those in government to serve in these Houses and are depending on them to restore some order in how we control the debt resolution process. We must remove the whip from the hands of those in the banks. The Minister can achieve this by accepting the Bill.
I call the Minister who, I understand, is sharing time with Deputy Tom Barry.
I thank Deputy Michael McGrath for raising this important issue. There is not a Member of this House who does not understand how serious the issue of personal indebtedness has been for families throughout the country in recent years. It requires a systemic, multifaceted response. The Government has undertaken to make such a response, which continues to evolve on an ongoing basis. While we are no way near the end point and while we are certainly examining the introduction of further innovations, a matter to which I will return, I am satisfied that we are beginning to see progress. I welcome the tangible evidence to the effect there has been a significant increase in bilateral engagement between banks and customers in debt distress. Figures from the Central Bank show that the number of private dwelling home mortgage accounts in arrears declined by over 25,000 in 2014. In addition, I welcome the figures from the Department of Finance which show that almost 115,000 restructure agreements have been reached between borrowers and lenders. This is an important figure to note. While I acknowledge that there is a huge amount of work still to be done, particularly on the issue of long-term mortgage arrears, it is clear that the mortgage arrears resolution strategy is progressing.
It is no coincidence that there has been a significant increase in bilateral deals between the banks and their customers as the Government has in recent years introduced a suite of measures to assist distressed borrowers to keep their homes, including the establishment of the Insolvency Service of Ireland and the reform of the bankruptcy laws. The Land and Conveyancing Law Reform Act 2013 includes provisions which have been put in place to protect the principal private residences of borrowers in mortgage arrears and the revised code of conduct on mortgage arrears provides a strong protection framework for co-operating borrowers who are in such arrears in respect of their principal primary residence. The Personal Insolvency Act 2012 modernised the State's insolvency laws, established the Insolvency Service of Ireland and put in place new debt resolution mechanisms including a debt relief notice, DRN, which allows for the write-off of debt up to €20,000 subject to a three-year supervision period; a debt settlement arrangement, DSA, for the agreed settlement of unsecured debt, with no limit involved, normally over five years; and a personal insolvency arrangement, PIA, for the agreed settlement of secured debt up to €3 million, although this can be increased, and unsecured debt with no limit involved, normally over six years. A number of other initiatives have been put in place to provide information and guidance for those in mortgage arrears. These include the mortgage information and advice service which was launched by the Minister for Social Protection in September 2012; a website maintained by the Citizens Information Board which offers detailed information to distressed mortgage holders; and a mortgage arrears information helpline which has been operational since July 2012.
I note the valuable work done by the Joint Committee on Finance, Public Expenditure and Reform in its report on mortgage arrears last July. There are four recommendations contained in the report which relate to personal insolvency and bankruptcy. The recommendation on engagement by financial institutions has been fully taken into account in my Department's review and forms an important part of the issues I am considering.
Deputies will be familiar with the fact that, on the issue of costs, I have taken some immediate measures. On insolvency fees, I have provided for a complete waiver of all fees payable to the Insolvency Service of Ireland and the courts on insolvency applications with effect from last October. That was an important recommendation. It was clear from my discussions with the service and its director that they felt this measure could make a major difference and improve matters for those who wanted to use the service.
As regards bankruptcy costs, I have provided for a waiver of all fees payable to the courts on bankruptcy applications and a substantial reduction in the costs of entering bankruptcy. The effect is that the fees and charges payable to the courts and the official assignee in bankruptcy by a debtor entering bankruptcy have been reduced from nearly €1,400 in early 2013 to in the region of €935 early last year to approximately €275 since 31 December 2014. This compares to an equivalent cost for entering bankruptcy in England and Wales of approximately €900. Further, in response to the joint committee's recommendations, the Insolvency Service of Ireland is providing support of €750 on a temporary basis to defray the expense of a personal insolvency practitioner in any case in which creditors reject a reasonable DSA or PIA proposal. In this context, the word "reasonable" refers to a proposal which offers a better outcome to creditors than bankruptcy. The Insolvency Service of Ireland will be reporting on the outcome of this initiative during the coming year.
In addition, the Insolvency service of Ireland launched the major "Back on Track" information campaign towards the end of last year, which I supported. This campaign is targeted to reach those most in need more effectively and already appears to be delivering results. However, I take the opportunity to add that there may be a need for an even more targeted information campaign focused on those in long-term arrears who have not engaged to date. Part of the problem clearly lies in the fact that some those whose mortgages are in arrears, perhaps out of fear or as a result of wanting to keep their heads down, are not engaging with their lenders. I appeal to them to engage. I can understand how difficult it is for many people who are frightened because of the situation in which they find themselves and who cannot even take the first step.
The banks will not engage with me.
I have met individuals who have discussed with me their fear about beginning the process of engagement. That is why the information campaign being run by the Insolvency Service of Ireland is extremely important. People will be offered hope only if they begin to engage.
Following on from the very practical and immediate measures I have outlined, towards the end of last year there was a marked increase in both the number of applications for personal insolvency deals and the number of such deals agreed. The Insolvency Service of Ireland concluded almost 1,000 solutions for individuals in unsustainable debt last year, with 547 insolvency deals agreed and 448 bankruptcy adjudications. The number of new applications for protective certificates - the first stage in the process - rose by 50% from quarter 3 to quarter 4. The number of personal insolvency arrangements approved during quarter 4 of last year increased by 148% over the number in the third quarter and exceeded the numbers for the previous three quarters of 2014 combined. From the experience in other jurisdictions, we know that it takes time for insolvency services to bed in and begin to work effectively in increasing the numbers of solutions reached.
It shows that the changes recommended by the Insolvency Service to make it easier for people to access it have shown results in the last quarter of last year. These substantial increases should continue into 2015 as the cost reductions package takes effect and the service's Back on Track information campaign continues, with targeted local meetings around the country to inform people about the possibilities open to them.
However, I would like to see a more substantial increase in the overall number of solutions reached under the Personal Insolvency Act 2012. I want to see more people engaging with the ISI and I want to see more financial institutions co-operating with the arrangements. People who are struggling with unsustainable debt must be able to benefit directly from the statutory debt solutions already introduced. Saying that however, I do not exclude taking further measures to ensure that this is the case. I am currently considering the outcomes of the review of the personal insolvency legislation promised under the statement of Government priorities 2014-16, with specific attention to ensuring that the legislation can work as effectively as possible to support families who are willing to work their way through their debt problems. Any necessary legislative changes to the 2012 Act will, subject to the views of the Attorney General and the approval of the Government, be designed to address the problems faced by families in mortgage arrears. I accept there are concerns about financial institutions' approaches to personal insolvency arrangements, PIAs. Securing increased and accelerated engagement by financial institution with PIAs is a priority for me and for the Government. This issue was specifically addressed in the recent meeting which the Taoiseach, the Tánaiste and I held with personal insolvency practitioners. I assure the House this general matter is being examined in the context of the review under way. I am engaging with my colleague, the Minister for Finance, on proposals to ensure the insolvency legislation can work effectively to support people trapped in unsustainable debt in arriving at sustainable solutions. The Government and I hope to make further announcements on proposals in the near future. During our debates on Second and Committee Stages of the Personal Insolvency (Amendment) Bill 2014 I updated Deputies on the review and informed them of my intention to bring forward proposals to address this and other personal insolvency issues.
At the heart of Deputy Michael McGrath's Bill is a concern about whether banks are engaging with the personal insolvency arrangements, given the small numbers of applications and approvals to date relative to the number heavily indebted households. There is a view that banks are refusing to enter into PIAs, even regarding family homes. The banks argue that the personal insolvency is still new and all stakeholders need more time for it to bed down. I accept these are very different views. My view is that it will be necessary for the measures which are brought forward by Government following the review completed under the statement of Government priorities to include actions on this issue.
This Bill essentially proposes to introduce what it terms a family home mortgage settlement arrangement into personal insolvency legislation. I have a number of concerns regarding the proposal for this new type of debt solution arrangement. The Bill proposes a fundamental shift in the manner in which debt solutions are formulated from a position where creditors voluntarily enter into an arrangement with debtors, which is the basis for a personal insolvency arrangement or a debt settlement arrangement under the 2012 Act, to a court imposed arrangement. In approaching the problem in this manner, the Bill ignores the fundamental importance of striking a carefully measured balance between the interests of people who are in arrears of mortgage repayments on their family homes and the property rights of secured creditors. It would require the courts to adjudicate on these issues without providing any criteria to guide their decisions, while at the same time introducing sweeping new powers for the courts to impose debt solutions on secured creditors. In addition, there is no provision setting out a right of appeal. I note that the Bill does not define a "family home". This risks a lack of clarity as to whether the home of a single person, a cohabiting couple or siblings, or a property which is the family home of a person other than the mortgagor, such as a tenant in private rental accommodation, is covered.
Section 4 outlines proposed criteria which the mortgagor must meet to be eligible for a settlement arrangement. I note that a mortgagor can only be considered eligible for a settlement arrangement where he or she has engaged with a mortgagee under the Central Bank's code of conduct on mortgage arrears, CCMA, and has exhausted all avenues under that code, including appeals processes. It is a fact that the majority of those in long-term mortgage arrears, that is arrears of longer than 720 days, are considered by the Central Bank as unco-operative borrowers in that they have not engaged with their lender in any meaningful way under the CCMA. This means that the proportion of family home borrowers in long-term arrears meeting the criteria advanced by Deputy McGrath would be very low.
Section 7 proposes that a protective certificate issued under the proposed settlement arrangement would subsist for 180 days. This is much longer than the time period provided for under a PIA, which is currently 90 days. No reason for the proposed extension of the time period is advanced and the Bill also provides for a further extension of unspecified duration. Section 9 of the proposed Bill relates to the formulation of a settlement arrangement by the PIP and its subsequent consideration by the mortgagee. It differs quite starkly from the current provisions under a PIA. Under a PIA, the debt solution is voluntary in nature. A PIA must be agreed by both the debtors and creditors and provisions have been put in place in the 2012 Act to enable this process. The Bill as drafted does not provide that the settlement arrangement should be agreed by the mortgagee and would allow the property rights of a secured creditor to be impaired without consent. While this would require a court order, it also places the Circuit Court in the difficult position of performing a highly delicate and sensitive adjudication which may engage constitutionally protected rights without indicating any criteria to guide its decision. The risk also arises that introducing such provisions could incentivise delinquent behaviour by some mortgagors and reduce the numbers of mortgagors engaging with their lenders on mortgage arrears.
It is my belief that the approach proposed in the Bill would discourage lending for house purchase purposes and risks exerting a negative impact on a recovering housing market. I believe further that the Bill would result in legal uncertainty and lead to a high risk of legal challenge. Existing personal insolvency legislation already provides a mechanism whereby mortgage arrears on family homes can be taken into account when formulating a proposal for personal insolvency. A personal insolvency arrangement can include secured debts, such as a mortgage on a family home, as well as unsecured debts. Any of the options proposed for a settlement arrangement under this Bill are already possible under a PIA. The distinction is that a PIA has to be approved by a majority of creditors, while a the proposed settlement arrangement would allow the Circuit Court to impose the arrangement on the mortgagee. I have already outlined my concern that the Bill takes this substantial step without satisfactory definitions of which homes would be protected or of who can apply, without any criteria to guide the court, without hearing other parties or other creditors who might be affected by such a measure and without providing for any right of appeal. Such an approach would, I believe, be open to legal challenge.
The Bill as presented risks creating a range of serious negative effects for borrowers struggling with mortgage arrears, mortgage lending institutions, the courts, the continuing operation of the personal insolvency system and quite possibly for new applicants for mortgages, especially mortgages on a principal private residence. The drafting of the Bill is such that it would not be possible to accept it as it is currently configured. It is in that context that the Government is declining to accept the Bill. However, I appreciate the spirit in which the Bill has been put forward. In that context I propose to refer the matters raised by Deputy Michael McGrath to the Joint Committee on Justice, Equality and Defence for further consideration. I accept that engagement with the insolvency system by some lending institutions needs to be accelerated. I intend to bring proposals to Government in early course which will address the issue in a more appropriate and effective manner.
I welcome the opportunity to speak on the Bill. It is a very emotive and serious issue. The dreadful fear and worry of being in a position where one may lose the family home is very hard to define. One almost has to be there to understand how serious it is. We must be careful, however, about any solutions we reach relating to very different times. A unique situation occurred in this country that caused this problem to occur on such a large scale. Any solution we put in place must be one that works for the future, not just the specific problems we have at the moment. We could create an uneven playing field in the future if we get this wrong. The cost of future mortgages could increase as banks or other lending institutions sought to protect themselves against the risk of default and court-defined settlements.
It is important to define what is a family home. Some people believe that what is necessary in a family home is a palatial mansion while others consider a standard house to be adequate to meet their needs. When we refer to keeping a person in a family home, we must look at what we are asking for and what is the definition of that. For most reasonable people, that should not be an issue, but there are cases with which we are all familiar where it is contended otherwise.
As Deputy Michael McGrath said, there must be a commitment from both parties to a loan. As the Minister has said, some institutions need to move a little further than others. Others have done quite well. There was a lack of expertise in the early days and as banks were trying to sort out their own messes, they were not in a position to sort out everyone else's. That has moved swiftly. I have dealt with many cases and can say that certain institutions have done very well, which needs to be recognised.
Shortfalls in repayments were mentioned. If a repayment is €1,500 per month and there is a shortfall of €1,400 per month, it is quite a shortfall. Practicality needs to come into play here. We need to define what constitutes a shortfall in payment and what people can afford. Rebalancing the arrangement was mentioned by Deputy Michael McGrath and the Minister put her finger on it when she said it needs to be a measured balance. We cannot rebalance it so that the scales tilt completely to one side. We need to be very careful here as we do not want property rights in other sectors to be affected by a precedent in this area. It is very easy to say something populist but this is a serious situation where we need to be careful.
I am all for sustainable mortgage arrangements. It is only this week that three separate people arrived into my constituency office who wanted sustainable mortgage arrangements. Other Deputies will have seen the same at their offices. Section 9(2) of the Bill refers to principal write-off as one of the solutions. That is not something we should do.
It is the correct thing to do.
I am all for some of the other items listed and would even discuss the split mortgage option. I have put forward many recommendations in the past and the Keane report has referred to it. If a person is in debt to the extent of €300,000 and can afford interest and principal on €150,000 while the balance is parked, inflation means that whoever inherits that house will have a property with a mortgage of only 30% to 40%. He or she will have received a very valuable asset. Perhaps we need to discuss that, but writing off the debt means the money is gone from the State forever. While we might discuss whether interest can be written off or other arrangements entered into, we owe it to our society to ensure that we have a situation that is sustainable. Crystallising debt losses at the expense of the taxpayer is something we must look at seriously.
That can happen already.
All I am saying is that if one wants to put something into legislation, one must be careful. I agree that there are banks which have written down while others have not. That variablility is causing frustration. I saw one bank this week which handed out an annual statement to one of its customers with the debit and credit sides but which gave no total for a full year. The person asked me a simple question about whether he was making an impact on his debt. We had to write back to the bank to find out what was the balance at the start of the year and what it was at the end of the year. As such, some banks are not engaging properly. Non-pillar banks which are not our mainstay are hell bent on going the route of causing most trouble, which is a concern.
We cannot forget that huge work has been done here. For all its wrongs, the Personal Insolvency Act is in place. Debt relief notices, debt settlement arrangements and personal insolvency arrangements are all available and they are good things that have happened. I welcomed the Minister's openness in saying she was not excluding further measures. That is important as this is an evolving situation. We have learned a great deal since the financial meltdown occurred. It has been difficult for everybody. I doubt there is anyone in this country who has not got an iron in the fire. Everybody made some small mistake during the so-called "boom times" which he or she wishes he or she had not made. Hindsight is great sight.
I welcome the work that has been done to date and I certainly welcome the discussion on this important topic. I hope people will deal with this in a sensible, measured and constructive fashion. Scaremongering here, which politically at times we might be accused of, can cause undue distress and hardship to people. The message that should go out is that work is being done in this area to try to bring about sustainable solutions for people. I encourage people who find themselves not only in arrears but in pre-arrears to engage. If they can see that some financial impediment is coming down the tracks, they should go to the bank, which cannot read their minds, and state it early. Go in early. I have been in business for 20 years and we have had many ups and downs. One thing I have learned is that one must go in early and define the problem. One cannot expect a bank to read one's mind. A problem shared is a problem halved in some respects. I believe that firmly whatever the views of others. I will not be deviated from that point.
As we have seen, the numbers entering into sustainable arrangements have increased, which is a sign that things are starting to work. In all of these issues, the most important thing is that both parties enter into and commit to the spirit of the scheme. If they do not enter into the true spirit of arrangements that are sustainable for both parties, it will not work. I welcome the Bill and congratulate Deputy Michael McGrath on the work he has put into it. It is something about which I feel strongly and I look forward to seeing the reviews in the future and how this plays out.
It was very interesting to listen to the Minister and to Deputy Barry's words of wisdom to the rest of us that we need to learn for the future. His suggestion that everyone had an iron in the fire and that there is no one who did not make a mistake during the crisis period, is untrue. It is part of the narrative that we all partied but the reality is very different; many people are suffering the consequences of austerity brought to them by Deputy Barry and his allies in Fine Gael and the Labour Party, who did not-----
He never used the word, "party".
Deputy Murphy should have a bit of respect.
Deputy Doherty should quote him accurately.
Deputy Doherty has the floor, please.
I did not quote him as using the word, "party". I am saying it comes from the same gene pool as the phrase, "We all partied". It seems to be touching a raw nerve because this is the reality of what he said, the suggestion that we all partied. Indeed, the Minister of State's party leader made those comments when he was in green fields in Davos-----
In Davos.
The Minister of State should not try to lecture me from the Government benches.
Deputy Barry wanted to lecture the rest of us. He said we have to be careful in terms of the long-term consequences because of the misery that this could cause. What about the misery that people are enduring at the moment? I refer to the misery that tens of thousands of families are enduring. They are waiting for this Government which is not in its first, second or third week in office but which has been in office for its fifth year, and it has still left so many tens of thousands of families in mortgage distress which is not only harming them and their mental health but also harming the economy and the community. Deputy Barry said that at all costs we should not agree with Deputy Michael McGrath's proposal along with others in these benches, which is that one of the solutions should be a debt write-down.
Hear, hear.
Deputy Barry suggested this should not happen. Does he not understand what he was talking about when he referred to the Personal Insolvency Act? What does he think happens in these arrangements put forward by the personal insolvency practitioners, PIPs? Does he think that no debt is written down as part of these arrangements? Does he think that no debts are written down in cases of bankruptcy? Honest to God, it is very difficult to listen to a Government Deputy coming in here to strike down a Bill. Deputy McGrath is to be commended because the Bill is a genuine effort to deal with a crisis in Irish society. It is important that Members bring forward initiatives to deal with this systemic issue. The figures for long-term arrears speak for themselves. We are not even talking about the 90-day category; we are now talking about the two-year category and 37,000 families are in that situation with each of them wondering when the letter will drop through the letter box.
That is 150,000 people.
They wonder if they will have a home in a year's time or in two year's time. For many of those 37,000 people in arrears of two years or more, the letters have already arrived. When this Government took office, repossessions were not happening because of the Gunn judgment. However, one of the first actions of the Government was to bow down to the banks and unleash them to move on repossessions. The Central Bank figures show that as of last September, the accounts in arrears of more than 720 days constitute 31.8% of all accounts in arrears and 73% of all outstanding arrears. As we sit here and decide to do a bit more marketing, as the Minister says, 37,484 family homes are in the most serious of arrears and each is potentially facing legal action. When these figures were first published in September 2012, a total of 20,000 were in that category. That is the record of this Government. The Minister and Deputy Barry tell us that we should not be scare-mongering but rather we should give the message that we are doing something about it. The Government is adding to the number of people who are in long-term arrears of two years and more.
Last April I brought forward the Land and Conveyancing Reform (Amendment) Bill on behalf of Sinn Féin. Like tonight and tomorrow, at that time we heard the Government's reasons for rejecting the Bill. Then, like tonight, there was no logic as to the reason it was rejected and then, like now, I was told that the problem was under control and firm action was being taken. The truth is that the Government does not want to rock the boat. The repossession agenda of the banks is part of a deal made with this Government. The banks are being allowed to unwind the mortgages any way they like and the Government will not intervene.
Shame on them.
It is as simple as that. They own the banks but they will not tell the banks that they cannot repossess family homes at will. That is what is happening and it should be admitted by the Government.
The Minister gave a critique of Deputy McGrath's Bill. I have studied the Bill and I, too, have some doubts about aspects of it and how it will work in practice. However, unlike the Government, Sinn Féin recognises the Bill as a genuine effort and all these issues can be dealt with on Committee Stage. We can deal with the issues raised by the Government, such as the constitutional red herring or any of the other issues such as the definition of a family home. From the point of view of Sinn Féin, the process outlined in the legislation has a couple of weaknesses. For example, there is the question of at what point and on what grounds other than correctly filed paperwork, can the Insolvency Service of Ireland or the courts refuse an application even in justified circumstances. This question is not adequately answered. The other question is how can the Insolvency Service of Ireland not find that an application is an attempt to frustrate the efforts of a mortgagee to recover debts due to him or her. In my view, the whole point of the process is to frustrate that effort to stop the repossession of the family home. This can be further debated on Committee Stage. One should not throw out the baby with the bath water.
The Bill I brought forward last April was similar to this Bill but it was stronger legislation because it also dealt with issues such as residual debt and it placed the cost of the process on the banks. Nevertheless, I recognise that this Bill is a genuine attempt to make the Government face this issue and that is very welcome.
We know that this Government will not face the issue. We know the Government has its own narrative agenda; it wants to focus on headline economic growth figures, despite the debatable nature of that growth. It does not wish to engage with issues such as people losing their family home or the banks bullying or intimidating the very people who bailed them out. The stories of families across the State who are waking up every morning in fear of losing their homes does not fit in with the Fine Gael narrative but it is a reality for far too many families.
It is the reality that this Government has created. It came to power four years ago and promised to deal with the mortgage crisis. Just like its attempt to deal with the banking debt, it has failed miserably. Today the Greek Parliament has passed a similar Bill even the Greek Government is not in power for four weeks, never mind four years. That Bill is designed to protect family homes from repossession. This has shown us that there are choices. By contrast, this Government removed the block on repossession of family homes. The Labour Party and Fine Gael have sided with the banks in this crisis, and that was the deal they struck.
Since March 2011, there has been a definite pattern of facilitating the banks to do whatever they wanted, including repossession of family homes. We have seen revision of the code of conduct on mortgage arrears after a so-called consultation period, when civic society and those who worked with those in mortgage debt called for greater protections. They have seen so many people under pressure and they can foresee what will happen when the protections are relaxed. The Central Bank, without a whimper of protest from the Labour Party, stripped down the protections given to struggling homeowners. It was a cold and calculated decision to let the banks off the leash. To complement this decision, the Government had to go further. It needed a legal move in the form of the Land and Conveyancing Law Reform Act, the most shameful of a long list of shameful actions taken by this Government. The Gunn judgment was the one legal stop holding back the banks and it was removed. The inevitable results are now before us in the hundreds and thousands of repossessions each week in the courts.
On RTE radio today, Mr. Ross Maguire of New Beginning indicated that there are 218 cases in Limerick, 131 in Ennis, 58 in Naas and 100 in Dublin every week. In my county of Donegal, there are 271 cases. So extreme is the situation that the courts have had to create their own lists and sittings to deal with it.
If this crisis is not addressed, we will have seen nothing yet. The problem is only going to get greater, the banks will get bolder and the repossessions will continue. Yet we are told not to worry, that the troika, Government and Central Bank are happy, and the banks are meeting their targets and back making a profit. What we are not told is that those targets are being met because the Central Bank, with the Government's full support no matter how much it claims otherwise, has allowed repossessions and legal actions to count as solutions under those targets. The European Commissions has indicated that half of the arrangements involve legal proceedings and the courts are straining under the pressure.
We are told the recession is over and we should stop being negative. That is the mantra from Government. I apologise for delivering a dose of reality to the Minister by showing that the repossession crisis is real and escalating. Moreover, the Government has facilitated that crisis and ignored those who warned it was coming. Only one month ago, at a meeting of the justice committee where the Personal Insolvency (Amendment) Bill 2014 was being examined on Committee Stage, our party spokesperson on justice, Deputy Pádraig Mac Lochlainn, was the only member to put forward an amendment to remove the banks' veto. That proposal was rejected by the Government. We have an Administration in denial about this issue. I attended meetings of the finance committee with other Members who are here today where bank CEOs told us they would use their veto in every single circumstance over an insolvency arrangement if it involved the writing down of mortgage debt held by them.
Shame.
The Taoiseach says he wishes the banks would do more. If only he were Head of Government, perhaps it would all be sorted. The banks only wish for the Taoiseach to leave them alone. It is likely, given the Government's response tonight, that this is exactly what will happen until such time as a new Administration is elected. Unfortunately for hundreds of families, that will be too late.
The insolvency service has had a miserable take-up, as is clear from its own figures. That is not down to poor marketing or lack of public awareness; it is because people are not fools. The public knows the banks hold all the cards in this game. When the insolvency legislation was being debated, this point was made by Sinn Féin and those who work with people in debt. However, removing the banks' veto would inconvenience those institutions, and this Government was never going to do that.
All members of the finance committee signed off on a report outlining good, sensible suggestions on how to tackle this crisis. No sooner was that report launched than Government Members started to run for cover. They washed their hands of it and the Government carried on facilitating the banks in whatever way they could.
Shameful.
I have met with far too many families whose mortgages were sold to vulture funds by this Government. The legislation to protect those families is still meandering through the process while the vultures move swiftly to cash in.
I commend Deputy Michael McGrath's Bill as a genuine effort to deal with the crisis, just as we put forward our Bill last April. I condemn the Government for its inaction and the approach it has taken. Mr. Ross Maguire raised the question today of how Irish society will deal with those in long-term mortgage arrears. Some 37,000 people have not been in a position to pay their mortgage in full for more than two years. Are we to evict them all? Should we evict half of them or some other fraction? The Minister has no answer to that question. The Government is in office for four years and it still has not given a pathway to families out of the debt under which they are suffering.
Deputies Finian McGrath and Thomas Pringle have agreed to share time.
I am pleased to have an opportunity to speak on this legislation. The bottom line is that we all have a duty to assist families in mortgage arrears. Turning our backs on these people is not an option. Throwing families out of their homes is not a realistic solution to the problem. The Government must up its game and take on board the solutions put forward during this debate. We need to tackle the bank veto and limit home repossessions. Only today I heard about a family with a child with autism who were turfed out of their home by a bank. Now they are forced to live in a hotel room. Do the members of this Government know what it is like, first, for a family with a child with autism and, second, for a family to have to live in a hotel bedroom with a child with a disability? The Government must get real. When sensible legislation like this comes before the House, we all should support it.
Families throughout this country are in pain and they need our support. Let there be common sense and compassion. Most people want to repay their debts, but we must help them to do so rather than letting the banks throw them onto the streets. In tonight's debate, I am focusing on family homes and those who have lost their jobs or suffered huge reductions in pay in the past eight years. They are the people I am concerned about, not the fat cats in our society. Many of the latter played a part in wrecking our country, along with senior banks and other greedy individuals. What planet are Ministers living on when they oversee an insolvency service under which only 199 cases were approved by personal insolvency practitioners? There are 118,000 families in need of support immediately. We must assist those who wish to avail of the mortgage to rent option. Some 3,500 families need that assistance now and the banks must get involved.
Let us deal in sensible solutions and support this Bill. The Irish people bailed out the banks; now it is time to assist families with major mortgage difficulties. That is what this Bill is about and I commend Deputy Michael McGrath on bringing it forward. We have to listen constantly to Ministers claiming the Opposition has no policies and no solutions. This proposal offers a solution that will help people. I urge all Deputies to support these sensible provisions at 9 p.m. tomorrow.
I welcome the opportunity to contribute to the debate and commend Deputy Michael McGrath on bringing forward the legislation. It is important to keep this issue on the agenda. It seems Private Members' business is the only means by which that can be done, because it does not seem to be on the Government's agenda. This is a crisis that was foreseen. In May 2011, the Technical Group presented a Private Members' motion which, for the first time in the life of this Dáil, raised the mortgage crisis. Like all other such motions, and as will happen tomorrow night, it was voted down by the Government.
When that motion was defeated, I thought perhaps the crisis had not fully materialised and the Government was holding off to see the extent of the problem. Four years later, the problem keeps getting bigger and the Government is doing less and less. Any action it has taken was in favour of lenders. Even the changes made by the Central Bank recently in regard to the deposits required for first-time buyers place the onus on them to be prudent and not to get into difficulty. This reinforces the idea that the crisis is all our own fault and we partied too much. Why is the onus not being put on lenders to act responsibly? Why is no onus being placed on banks to ensure customers do not overextend themselves? Why do we not consider allowing people to avail of non-recourse mortgages?
That would put the full onus on banks to ensure the money they lent was dealt with sensibly. That would do more to prevent a property bubble than putting false onerous deposit and other requirements on people who simply will find ways to get around them. In addition, an entire insurance market will be created in which people will be able to insure the level of deposits above the 10% required. That relates to a future issue with which Members probably will be obliged to deal in years to come.
As mentioned in the House, on 16 February there were 271 repossession cases before the Circuit Court in County Donegal. In one case involving a family with six children facing repossession the husband had been obliged to emigrate to find work to try to keep the family in their home. These are the people who are coming before the courts. There is already a housing crisis and one simply will add to it by making sure people will lose their homes and end up on the social housing list. Unless this issue is dealt with once and for all, it will continue to spiral out of control.
Debate adjourned.
The Dáil adjourned at 9.30 p.m. until 9.30 a.m. on Wednesday, 4 March 2015.