That Dáil Éireann:
— that mortgage arrears in Ireland, at 156,352 mortgages as of December 2014, are significantly higher than in comparable countries;
— the on-going suffering and social cost for those affected by arrears and repossession; and
— the socioeconomic cost for the nation of mortgage arrears and repossessions;
acknowledges policy interventions have been undertaken, including the:— Personal Insolvency Act 2012;— Code of Conduct on Mortgage Arrears; and— Mortgage Arrears Resolution Targets;welcomes:— recent reductions in total mortgages arrears levels; and— initiatives by some lenders to provide borrower-focussed debt restructuring solutions;supports the recommendations of the 2014 cross-party Report on Hearings on Matters Relating to Mortgage Arrears Resolution Processes by the Joint Committee on Finance, Public Expenditure and Reform;asserts that policy objectives pertaining to mortgage arrears include:— minimising socioeconomic harm;— avoiding repossession of the family home where possible;— ensuring the dignity of all parties, in the resolution of unsustainable debts;— ensuring equity in the resolution of unsustainable debts;— ensuring restructures are truly sustainable for all parties;— minimising rehousing needs;— avoiding incentives for strategic default;— ensuring adequate advice and representation for borrowers; and— ensuring adequate insolvency options for borrowers;notes with concern, the:— rising number of repossession cases before the courts;— lack of financial expertise available to many borrowers facing mortgage difficulties and repossession;— lack of legal representation available to many borrowers facing mortgage difficulties and repossession;— inconsistency in approach being taken by different lenders to mortgage restructuring, including repossessions;— lack of transparency in reaching decisions on mortgage debt;— lack of a mechanism to mandate lenders provide reasonable solutions;— absence of stress testing of restructuring proposals;— low levels of insolvency arrangements being agreed, including bankruptcies;— prevalence of five year income attachment orders to bankruptcy orders; and— low take-up of the mortgage-to-rent scheme and onerous eligibility criteria; andcalls on the Government to bring forward proposals for consideration, within 6 weeks, to:
— the provision, at the start of the process, of independent financial expertise to borrowers in arrears, including personal insolvency expertise, where those borrowers cannot afford such expertise; and— the provision of adequate legal representation to borrowers facing repossession threats, where those borrowers cannot afford such representation;
— request the Central Bank of Ireland to:
— define what constitutes a sustainable solution from the borrower’s point of view, including stress-testing and the retirement period for borrowers; and
— strongly incentivise:
— the provision of a suite of solutions, to include split mortgages, mortgage-to-rent and certainty on residual debt when properties are sold / surrendered, across lenders; and— lenders so as to realise consistency, transparency and fairness in proposed solutions, across lenders;
— amend the Personal Insolvency Act 2012 to:
— reduce the bankruptcy period to one year, until resolution of the mortgage arrears issue;— reduce the maximum payment attachment order period to three years, until resolution of the mortgage arrears issue;— simplify / streamline the personal insolvency processes;— empower the Insolvency Service of Ireland (ISI), to provide formal opinion, where solicited by a Personal Insolvency Practitioner (PIP), as to the adequacy of restructuring proposals put forward by the PIP; and— remove the payment of VAT from insolvency disbursements;
— amend the Land and Conveyancing Law Reform (Amendment) Act 2013 to:
— ensure any repossession action includes a sustainable restructuring proposal for all outstanding debts; and— allow consideration of ISI opinion as to the adequacy of restructuring proposals put forward by the PIP, as grounds for refusing an application for possession;
— amend the parameters of the mortgage-to-rent scheme so that a reasonable number of homes qualify for consideration;— provide consideration of a mortgage-to-lease scheme, providing off-balance sheet funding to purchase repossessed homes; and— review the outcomes of repossession hearings to understand the level of consistency with which possession orders are, or are not, being granted.
I am sharing my time. The motion before the House provides a comprehensive policy solution to the mortgage crisis. It was compiled with significant input from a cross-party report by the Joint Committee on Finance, Public Expenditure and Reform and with expert input from people working in the field. If implemented, the motion would immediately and substantially increase the pace at which the mortgage crisis is resolved. It would provide consistency, transparency and fairness in the way borrowers are dealt with by the different banks. It would ensure that every opportunity was explored to keep people in their homes. It would ensure that people were treated with dignity and that they had access to necessary financial expertise and legal representation. It would ensure that so-called sustainable mortgage restructures were truly sustainable for lenders and borrowers. It would minimise the need for the State to house people after possession orders were granted and ensure that those needs were met where required. It would avoid the use of strategic default and ensure that solutions were sought for those who cannot pay rather than for those who will not pay. It would turn the insolvency legislation and bankruptcy into the tools they are meant to be rather than the failures they are. It would turn the mortgage to rent scheme into a viable route for many people. It would leave the State with additional social housing stock at no additional cost to the Exchequer. The motion would do this at minimal cost and maximum gain to the Exchequer. It requires no additional recapitalisation of the banks with public money. The motion is not politically motivated. It recognises positive trends in the mortgage crisis. It recognises policy efforts by the Government and the Central Bank of Ireland. It brings to the Dáil many recommendations included in the report of the Joint Committee on Finance, Public Expenditure and Reform which was published last year. Had the measures in the motion been implemented in 2011, the mortgage crisis would by now be a thing of the past. The economy would be growing faster, public finances would be healthier, unemployment would be lower and untold social harm and distress would have been avoided. The measures in the motion, however, have yet to be implemented. As a result, more than 150,000 mortgages in Ireland were still in arrears in December. Approximately 400,000 men, women and children are living in these homes. What do they face?
The Joint Committee on Finance, Public Expenditure and Reform published a report last year which was supported by every member of that committee bar one. The member was not a Government Deputy. The committee met with the chief executives of the four main banks and with organisations working with borrowers on a daily basis. We met with the Insolvency Service of Ireland and the official assignee in bankruptcy. We met with the Governor of the Central Bank and received submissions from professional bodies including those representing personal insolvency practitioners. What did we find? We found that those in mortgage arrears face a system that is neither transparent nor consistent. We found that while some lenders are making efforts, others are not, particularly in my view Bank of Ireland. We found that the personal insolvency process was clearly not delivering personal insolvency or bankruptcy arrangements at any scale. We found that sustainability was narrowly defined from the point of view of the lender and not the borrower. We found that many mortgage restructures did not have a plan for when borrowers retired other than to sell their homes. We found that some lenders were far too keen to initiate legal proceedings. We found a lack of transparency for borrowers including, for example, in explaining why particular restructuring options were being offered but not others. We found the mortgage to rent scheme was next to useless. We found that there were potential solutions available which were not being offered or developed by all of the lenders, including debt for equity solutions. In short, we found that while genuine efforts were being made by some lenders, across the country borrowers faced a mortgage arrears environment that was not transparent, that did not ensure sustainable solutions, that did not provide equity, that did not sufficiently protect people's dignity, that did not sufficiently protect Exchequer funds and that unnecessarily hindered economic growth and job creation.
The joint committee's report called for changes to address all of these issues. Nearly one year later and an incredible seven years into the mortgage crisis, however, these changes have not been implemented. They were not implemented by the last Government and they have yet to be implemented by this one. The problems identified, which will be familiar to every Deputy, are being played out in every Circuit Court in the country. I encourage every Deputy to take a morning to sit through the repossession hearings that are occurring in the Circuit Court in their constituencies. Played out before their eyes, they will see the issues many Deputies, including myself, have raised and the issues that were raised in the report of the joint committee. I will give the House an example from Bray Circuit Court which I attended two weeks ago. In total, ten orders for possession were granted. In eight of these, the borrowers, or defendants as they are called, did not appear. Neither of the two who appeared had legal representation. When the order for possession was granted, one of them turned around and asked people seated in the court "What does all that mean?". He did not understand that he had just lost his home and been given a few months to find alternative accommodation. In this case, no payments had been made since 2011 so it may be that there was no option other than to grant possession. However, we do not know if he would have qualified for mortgage to rent. Might a restructuring have been possible before the arrears started to pile up? We do not know.
What penalties was the Bank adding to the original mortgage payments? We do not know. Was he to be pursued for the residual debts? We do not know. What was the cost of rehousing to the State and could it have been used to keep him in his house with the State taking an equity in the house in lieu of payments? We do not know but, based on what I saw, it is unlikely he had access to financial expertise. It is unlikely that he had a professional negotiate on his behalf with the lender and it is unlikely that he had access to legal representation but chose not to have it in court.
The motion before the House addresses the concerns raised by the finance committee. It addresses the failures seen in repossessions occurring around the country. If this motion is voted through the Dáil this evening and implemented, it will change the case outlined above. The man in question, when falling into arrears, will have access to financial and insolvency expertise. Every possible solution to keep him in his home, including the option of a functioning mortgage-to-rent system, will be pursued. The solutions would be defined as sustainable from his perspective and not just the lender's perspective. The solutions will be available regardless of who is his lender. The insolvency option will be real and available. If court proceedings commence, he will have legal representation in court. If the lender refuses to accept a workable solution, a formal opinion can be provided to the registrar or judge to that effect and the registrar or judge can then refuse to grant possession. If, having explored every option, there is still no viable solution other than to sell his home this will have been spotted early in the process to avoid the build-up of arrears and maximise the residual money left over to find another home.
The changes called for by the finance committee have not been implemented. I have tabled this motion to give the Dáil the opportunity to debate those changes, and others, and to consider adding its voice to the voice of the finance committee. The changes called for would immediately and substantially improve the situation currently faced by hundreds of thousands of men, women and children living in homes that are in mortgage arrears. They have waited far too long for this crisis to be resolved. There is no need for them to wait any longer. All that is needed is for the Dáil to vote through this motion tonight.