Private Member’s Motion – Mortgage Arrears


Thank you for the opportunity to speak on this motion.

At the outset, I wish to state my support for the counter motion in this debate.  This Government took office following an economic crash of unprecedented proportions, which not alone put property and share prices into freefall, but also brought crashing down with it the carefully built up hopes and dreams of many ordinary Irish families all around the country.

The problem with the phrase ‘mortgage arrears’ is that it goes no way towards describing the very real and deep distress that many householders feel when faced with the prospect of losing their family home.   For many house owners, the last five years has been the perfect storm, with plunging property prices, dramatic decreases in take-home pay, significant volumes of job losses and short-time working weeks.

Faced with an extremely significant economic problem and the even more significant social and health problems that arise as a result, this Government has taken action on a number of fronts to tackle the problem.  The Personal Insolvency Act was one element of this very important response and I believe that over time, many thousands of householders will turn to the measures of this act to free themselves from the yoke of economic slavery.  The Act was signed into law in December 2012 and the Insolvency Service was formally established on March 1st and its first information campaign got underway in April.  Given the pent-up demand for such a service, I believe that the workload of this Service will be very heavy for months if not years to come.

Also in March of this year, the Central Bank took significant steps to force mortgage lenders to offer durable solutions to mortgage holders over 90 days in arrears.  While the objectives of this action were praiseworthy, the action of many lenders to date in terms of their minimal engagement is most objectionable.  I believe that many lenders have failed to engage with the phrase ‘durable solutions’ and are continuing to pursue maximum settlements from cases where the money is simply not there and never will be.  For many of these mortgage holders, the ‘durable solution’ they should be seeking is insolvency.

We have heard much this week about ethics in business and particularly in banking and I believe that one of the major problems facing this Government is that while the Government is seeking a durable solution to this problem, the banks’ bottom line remains just that, their bottom line, the profits extracted.  We have seen and heard too much in recent weeks of bankers holding sway over public bodies, but in post-bailout reality, this simply cannot be tolerated.

Every week in clinics across East Galway, I encounter mortgage holders who simply cannot pay their debts.  The mountain of debt they face is crippling them and too often it is exacting a huge toll on family life.  Many people cannot countenance the prospect of their debt being unsustainable, but the prospect of a lifetime spent working for the banks is also unthinkable.

These people need proper assistance and advice and they need a speedy resolution to their problems.  I note the efforts of the Insolvency Service of Ireland to make information available via their website but a faceless website does not often provide all the answers.

Often these people are in such distress that they need assistance negotiating the first steps in the direction that takes them out of the financial abyss and that’s why I welcome the independent advice service for borrowers.  A lack of understanding of financial jargon helped many householders into their present situation and faced with a David and Goliath situation of confused and distressed householder versus a mighty banking corporation, it is clear that an intermediary is needed to ensure fairness towards the individual.

Currently, the Central Bank aims to ensure that banks have a range of options for mortgage holders in arrears, including trade-down mortgages, split mortgages and sale by agreement.

My experience in recent days has shown that rather than offer split mortgages (the preference I believe of many mortgage holders), or trade-down mortgages, the banks are instead focusing on sale by agreement.  However, once again this is a David v Goliath situation where the bank requests the mortgage holder to sell the house, holds out as a carrot a minimal mortgage payment while the sale is being conducted (which is very tempting to many hard-pressed families) and behind their back is the stick stating that if they fail to agree, the bank will move to seek the whole amount to be repaid.

This is not sale by agreement as envisaged by the Central Bank, this is sale by coercion.  I know that many of my colleagues have encountered similar situations and would welcome a mechanism whereby Oireachtas members could raise such particularly obnoxious cases with the Central Bank with a view to having the options presented to the mortgage holder investigated.

It would also provide the Central Bank with a window into the impossible situations facing many families in all corners of Ireland and put names and faces to a problem that is often seen in solely economic terms.