Friday, 3 February 2012
Dáil Éireann Debate
Deputy Stephen S. Donnelly: I start by thanking the Government for introducing this mechanism. For me and I imagine for all of us, being a Member of Dáil Éireann is an extraordinary honour. This is my first time introducing legislation to the Dáil and it is the most amazing privilege as a citizen of Ireland and a Member of the Dáil to be able to do so. I am sure Deputies present who are not Ministers may have already had a chance to use this facility. While I know there is a long waiting, I hope many do so. On a personal level, as a new Member of the Dáil, it is a great privilege to be here this morning introducing this legislation.
I also thank my fellow Deputies, the Ministers, Ceann Comhairle and the staff for attending. I am quickly learning the multitude of draws on a Deputy’s time and I know everybody here could be doing very important work either here in their offices or in their constituencies this morning. I express my sincere thanks to everybody for coming here today. I look forward to debating the Bill, teasing out some of its imperfections, and considering what is useful in the Bill, what the essence of it is and how that might be progressed.
I am aware that the Bill will be voted down on Tuesday. The Minister for Justice and Equality, Deputy Alan Shatter, was good enough to give me some of his time during the week when he outlined some of his concerns with the Bill and I am sure they will be outlined in some detail today. I present the Bill to the House, not as a technically perfect Bill or as something that I believe should be signed into law tomorrow. I present it as what I hope is a solid starting point for a legislative process and through that legislative process, the Dáil, the relevant committee or committees and the Seanad would get to give input to the Bill, refine it, get it right and then ideally pass it into law.
I am aware that the Bill comes in the context of the personal insolvency Bill the Minister, Deputy Shatter, will bring to the House. I read the 164 pages of the heads of the Bill, which as a non-lawyer took several cups of coffee and some time to do. I was greatly impressed with what is a radical Bill, which will provide extraordinary comfort to many citizens. It is a radical stance and a change on behalf of the citizens which will be of enormous social benefit. While it may not be possible, I would very much like to see the essence of this short Bill to make its way into the personal insolvency Bill if the Minister, the Cabinet and the House believe it contains something that would work well as part of that Bill. While I am not an expert in law or in this area, I believe there is a place, potentially as part of the personal insolvency Bill, for this amending clause to be added.
Deputy Stephen S. Donnelly: I will not try to change the outcome. However, I will use this opportunity to explain the Bill’s objectives, the problems it will address and how it would complement the upcoming personal insolvency Bill.
I have asked for some briefing notes to be passed to the Deputies in the House. In preparing the Bill I did some analysis of the current state of mortgage arrears. The notes that have been circulated show three possible scenarios for what could happen. As of September 2011, according to Central Bank figures, one in 12 mortgages in Ireland was in arrears of more than 90 days. If one adds the mortgages that have been restructured, some of which may be viable but are still causing enormous hardship for the borrowers, the figure goes up to one in ten. If the arrears of less than 90 days are added, it goes up further. It is of serious concern that the rate if increase in mortgage arrears is not happening linearly but exponentially. What I mean is that we are not seeing 5,000 new arrears cases per quarter, but it is increasing by 10%, 11% or 12% per quarter. Very worryingly in the last four quarters for which we have data the rate by which that percentage is increasing is rising. I believe it was approximately 10%, 11%, 12% and then 13%, which is of serious concern. The top line of the graph I have handed out shows what would happen if the rate we have seen during the past four quarters continued for the next two years. It shows a cataclysmic outcome whereby almost one in two mortgages in the country would be in arrears of 90 days or more. The middle line shows what I believe is most probable. This maintains the percentage growth in arrears for the next eight quarters at the average percentage growth we have seen for the past two years, approximately 12% per quarter. If this happens, we will be faced with one in four mortgages in arrears of 90 days or more in only two years. The potential scale of this mortgage arrears problem is absolutely vast. It is no longer a marginal thing.
We thought we capitalised the banks to deal with this. We made €7.5 billion available to them through the BlackRock stress-testing but they are not passing it on. Representatives from Bank of Ireland were before the Joint Committee on Finance, Public Expenditure and Reform and they admitted, after being asked five or six times, including through an intervention from Deputy Alex White, that they had not passed on one single penny. Representatives from Allied Irish Banks, AIB, said they did not know but they got back to the committee and stated that they only passed on €600,000 in full legal surrender in any call on this debt. They have made provisions in their balance sheet but that does not help the borrowers. The banks are not passing on any of this money. I suggest the reason they are not passing on the money is because they do not have to. At the moment, the law is weighted entirely in their favour. The Bill proposed by the Minister, Deputy Shatter, goes a considerable way to correcting that imbalance and I suggest that my rather more humble Bill helps in one particular case and complements the Minister’s Bill.
I will outline a quick case study. A couple from Wicklow came to my constituency office. She is a public sector worker whose income has fallen in recent years. He is a local businessman. The family home and the business premises are in arrears and negative equity. The reason they are in arrears is because the bank has raised the variable mortgage interest rate approximately four or five times in the past year and this has doubled their mortgage payments and forced them into arrears. Every Deputy is dealing with the social consequences of what is taking place on a daily basis. In this case, one thing I cannot get out of my mind is that the lady said that they are now watching the amount of toothpaste they put on their toothbrushes because they are left with so little money that they do not have money for toothpaste. This is the situation they are in.
If the bank decided to take possession of their home, it could be stopped for one year because of the moratorium but, ultimately, the judge would have to enforce possession. He or she would be allowed to apply no discretion or make the case that the borrowers had made a reasonable offer and that the bank had essentially forced them into arrears through its actions and that it is not reasonable for the bank to take the house. This is at the nub of what the Bill tries to do.
Deputy Stephen S. Donnelly: Okay. I look forward to the debate. I do not present this as something that should be passed into law tomorrow but I am keen to find a way for the essence of what I am trying to do and what this Bill is trying to do to be realised. It is important. The Bill was drafted in close collaboration with New Beginning. Ross Maguire, a senior counsel, is in the courts dealing with these matters and he is at the negotiating table all the time. He welcomes the Minister, Deputy Shatter’s Bill as well and he believes this extra legislation would help. He said that, ultimately, the banks can take the view that they need not co-operate with or take any offer from borrowers and that, ultimately, they can take the family home and make borrowers homeless and that the borrowers must do whatever they want.
There is now a credible threat of bankruptcy for three years. The people who deal with these matters in the courts every day believe that the essence of what we are trying to do would help and complement the other Bill. There is an open letter in The Irish Times today signed by Professor Gerry Whyte, one of the foremost experts on the Constitution, Dr. Pádraic Kenna, a housing law expert, Constantin Gurdgiev, who examined the economic implications, Noeline Blackwell, director of Free Legal Advice Centres, FLAC, and by several senior counsel, including Bill Shipsey and Ercus Stewart. I accept there are technical problems with the Bill but serious economic and legal people have examined the matter and, in essence, they take the view that they support it and they are keen for something like this to come through.
Deputy Joan Collins: I support the Bill put forward by Deputy Donnelly today as part of the resolution of debt that people face. The proposal is positive because at the moment judges have no discretion when it comes to a couple or family who are in the courts and whose home is being repossessed by the bank. This legislation would permit the judge to allow any offer made by the borrower to be taken into account and it would allow the judge to consider the level of arrears of the loan, the amount of mortgage debt as a proportion of the current market value of the home, the current state of the housing market, the conduct of the lender and other relevant matters to be decided by the judge. It would give the judge discretion to refuse to grant repossession because certain factors have not been taken into account and because the lender is deemed to be too avaricious in its attempt to take the home from the homeowner. This Bill could play a role in any insolvency legislation that comes through.
More deep-rooted legislation is needed to protect people in their family homes. It is generally agreed that banking debt and mortgage debt are the two areas dragging down this country. This morning Mr. McCarthy stated that the economy is flat, stagnant and going nowhere. The predicted growth rate is now down to 0.5%, only one third of the prediction of the Minister, Deputy Noonan, and well below the 8% growth rate need to spur the economy in the near future. We are in a flatline economy at the moment.
Deputy Joan Collins: This is relevant to the Bill because it is a part and parcel of the debt resolution that must be addressed. It is important to note that workers are paying approximately 30% more in income tax compared to last year. Therefore, their ability to pay back debt——
Deputy Joan Collins: The Central Bank report this morning made it clear that there is now more income tax being paid than last January. This is unfolding hand-in-hand with increases in our utility bills and UH1 costs have gone up today etc. People have less income to be able to pay towards their mortgages. Several points were made about family homes including the fact that one in 12 mortgages is in arrears now, an increase from one in 30 mortgages two years ago. This shows the acceleration of mortgage debt and how it has become a more difficult aspect of people’s lives. It is not because people will not pay but because they cannot pay. People seek debt resolution not hand-outs. No one is looking for a hand-out.
The banks have been recapitalised for this purpose and judges are aware of it. Under this Bill they would be able to use discretion in future with regard to mortgage arrears resolution. AIB has only paid out €600,000 in mortgage resolution cases in the recent past. We know of cases before the courts in which banks are willing to make deals with homeowners in respect of their family homes. People must address this question.
We must go further in matters relating to court repossession orders. Lenders should not be able to apply to the court for a repossession order where the creditor is engaged with the lender through a State insolvency service. In the case of a family home where a personal insolvency trustee has engaged with a lender or creditors there should be due regard to the lender’s ability to pay beyond reasonable living expenses in any personal insolvency agreement. Such arrangements should be binding on lenders without recourse to the courts. The insolvency Bill introduced by the Minister, Deputy Shatter, allows for this.
Any Bill should allow for a person in negative equity in respect of a mortgage on the family home to apply to a State agency established for such a purpose and for the person to re-evaluate said property at the current market value. These issues must be addressed. We must bring down negative equity around people’s necks to a level which they can afford to repay. Mortgages should be reduced to 120% of any re-evaluation and people should be allowed to engage in a proper way with their banks and lenders. Provision for these aspects of the Bill should be introduced in future. I fully endorse the Bill introduced by Deputy Donnelly dealing with this aspect of judges’ discretion and it should be taken seriously by the Government.
Deputy Dara Calleary: I compliment Deputy Donnelly on bringing forward this Bill and Fianna Fáil will support it when it comes to a vote. The Bill is similar in content and intent to the Bill proposed by my colleagues, Senators Marc MacSharry and Thomas Byrne, in the Seanad in July last year. Looking at this Bill in conjunction with the Minister’s Personal Insolvency Bill, I am hopeful that we are finally reaching a stage where we can bring some kind of resolution to many of the issues affecting our constituents over the past 18 months. Over the course of the debate on both Bills, we may come up with some element of a solution.
The Bill proposed by Deputy Donnelly and that proposed by the two Senators mentioned reflect the importance of the family unit that is still part of Bunreacht na hÉireann. While the make-up of the family unit is very different today, it remains important and we should put the home and housing of that unit on some form of special standing by statute. We are all faced every day with people in situations they never would have imagined being in one, two or three years ago. In many cases, these people are in their current position not because of decisions they have made but because of circumstances such as pay cuts, job losses and various cost increases beyond their control. Many people look at this issue in the context of moral hazard. Many people say they kept their heads down, did not go mad spending and cannot understand why so much attention is being given to those who were not like them. However, many of those in the situation we are attempting to address did the same. They kept their heads down and tried to keep their families going, but through circumstances beyond their control they are now in a difficult situation with regard to the family home.
The Personal Insolvency Bill contains many positive and innovative proposals and is the type of Bill that will be copied throughout the world in three or four years time. However, the difficulty I have with it is that it remains a voluntary code and the banks still have the right to interfere and disagree with the various mechanisms. Deputy Donnelly’s Bill and that of Senators MacSharry and Byrne seek to address this difficulty and to ensure that some protection is given to the family unit’s home and that the Judiciary is given the power to enforce that.
It is important to note the requirements of this Bill. MABS is to be involved and decisions will not just be made between the banks and the borrowers. There will be some kind of independent element involved in assessing the ability of the borrowers to pay. It is not a charter for people to abandon their responsibilities. Borrowers have a role and a responsibility to fulfil in order to present their case. The Bill is not a charter to abandon responsibilities but is a charter of protection for the family home.
I had not realised before now the Minister intended to vote down the legislation but the suggestion put forward by Deputy Donnelly that we should look at the Bill in the context of addressing the Personal Insolvency Bill heads is something we should consider. The Chairman of the Oireachtas Committee on Justice, Defence and Equality is here and he might consider doing this in the context of looking at how we can incorporate the many good elements of this Bill in the Personal Insolvency Bill so that we can produce some super legislation in this area.
I have a concern with regard to debt advisers and people who hawk themselves as know-it-alls in this area and who provide families in difficult situations with their so-called expertise. They suggest they can guide these families through the maze of their debt. This area must be regulated in tandem with the Personal Insolvency Bill and this legislation, before we proceed with the Personal Insolvency Bill. Given the role that these independent mediators have, this area must be fleshed out. We need some regulation for these advisers because there is no doubt that some of them will see a niche. Unless they are regulated, the cowboys who have frequented so many other specialties in this space will move into that niche and use the good intention behind Deputy Donnelly’s Bill and the Personal Insolvency Bill to feather their nests rather than pursue solutions.
We on this side of the House have not had the benefit of seeing Deputy Donnelly’s latest figures on mortgage debt. However, we do not need to see the latest figures because we all know from meeting constituents in our offices that they are particularly challenging and scary. When the Family Home Bill was introduced in the Seanad last July, there were 55,000 mortgages in arrears and in the latest figures we have, up to end-December, these numbers had risen to almost 63,000 in arrears. The average size of arrears is approximately €17,000 and the average loan amount outstanding is just over €196,000. These are not huge mortgages on super houses but are average family home mortgages and it is these families across the country who are taking the pressure in this regard.
There is an obsession with numbers in the House today and we have all been getting telephone calls asking where we are today and whether we are in the House. It is a pity the obsession does not relate to the content of the legislation and the debate and on what is going on outside the House.
Deputy Dara Calleary: We have an opportunity with regard to the content of this legislation and that of the Personal Insolvency Bill to make a difference to those who elected us less than a year ago. Many people, and perhaps some of those who voted for us last year, did not realise then they would be in the situation they are in today. We must think of those people and get away from the obsession with headlines and numbers. I notice the numbers are not too high on the other side of the Chamber here today. Perhaps the Members are too busy making telephone calls.
It is a shame that we will divide on this legislation on Tuesday. However, we have an opportunity, through the Personal Insolvency Bill, to incorporate many of the elements of Deputy Donnelly’s Bill. I suspect the words “constitutional”, “constitutional blockages” and “Bunreacht na hÉireann” will be used to provide a reason for having a division. I respectfully suggest that Gerry Whyte knows his way around the Constitution and one should look at his letter today. Ultimately, Bunreacht na hÉireann puts the family at its heart and that is the constitutional obligation we have as parliamentarians to families in this country. What we are trying to do through Deputy Donnelly’s Bill and that of Senators MacSharry and Byrne and through the Personal Insolvency Bill is to protect families. Surely we can get around the difficulties and come up with legislation that will help us address them.
The Bill is a conservative measure in terms of the overall package of mechanisms that are needed to address the problem of not only home repossessions, but arrears in general, and negative equity. If enacted, it would allow a judge the authority to consider a range of factors when a lender is seeking repossession of a family home. Under the current legal framework, where a person is in any arrears and the lender seeks repossession, the court must comply with the request, regardless of any other factors it may wish to consider. It does not matter whether this loan was given irresponsibly in the first place, whether any reasonable person or institution would have looked at the borrower’s financial circumstance and realised he or she would never be able to repay that loan. It does not matter whether the lender complied with the code of conduct on mortgage arrears or whether the lender has had any interaction whatsoever with borrowers in terms of trying to help keep them in their home, how much they owe on their home loan or whether they would sometime in the future be able to pay this off.
Not all lenders take that attitude but I am sure there are members of the Judiciary who preside over repossession cases who only wish they could turn back the clock and ensure that the likes of Start Mortgages, notorious for issuing repossession proceedings, never existed. While not all lenders are out to get the borrowers — one cannot help but think that this is because the banks cannot sell repossessed properties even if they want to — we should all take careful note of the actions of banks which lead to people not being able to keep up their mortgage repayments due to repeated increases in interest rates of variable rate mortgages.
I want to take this opportunity to place this Bill within the broader issue of the right to housing in the context of over-indebtedness. This State never incorporated the right to housing in its domestic legislative framework. Not alone that, it also opted out of Article 31 of the European Social Charter which affords the right to housing. We have an out-of-date legal system that is not fit to deal with or provide adequate solutions to the problems of our time. While some people went crazy borrowing, the Government down through the years allowed a culture of consumer borrowing to develop on a property market built on sand.
This over-borrowing, in tandem with banks throwing money at people like there was no tomorrow, brought us to the catastrophic level of mortgage arrears and insolvency, voluntary surrendering of homes and house repossessions.
A total of 170,000 people are in mortgage arrears of 90 days or more. That is 8.1% of every mortgage and represents an almost 60% increase in two years. It is a scandal that the Government parties fought an election campaign telling people that they would help them, and then almost a year later have done very little, aside from publishing a long overdue scheme of a personal insolvency Bill.
Deputy Dessie Ellis: Even some of the moderate proposals of the expert group on mortgage arrears remain to be implemented, despite the growing numbers of arrears cases. One simple initiative, which could be introduced tomorrow if the Government had the political will to do it, would be to ensure that assessment of housing need should not have to wait for legal proceedings for repossession to be brought against the borrower where a mortgage is clearly unsustainable. Furthermore, a mortgage to rent scheme could be introduced.
My colleagues in Sinn Féin and I have been saying for years that the State’s social housing policy was completely flawed. Former Deputy Arthur Morgan, who was then TD for Louth, spoke in 2006 about how the State needed to address issues within housing policy and have a plan to address negative equity, despite the fact that house prices were still rocketing at that time. The establishment parties said we were mad, but look where we are now. People have been left in terrible situations without access to appropriate housing supports, due to difficulties of over-indebtedness and unemployment, which sometimes leads to family breakdown. Families are caught in a horrible situation where they may be in arrears but possibly have a chance in the future to repay their mortgage, but the court is compelled to repossess their homes. They then cannot become eligible for housing supports until their home is ordered as repossessed by the courts. However, the Government still cut the budget available for social housing support on an annual basis.
It is clear that the State must put in place appropriate policies and supports to ensure that those at risk of homelessness, due to over-indebtedness or unsustainable mortgages, have access to supports which would allow them to remain in their homes or access suitable alternative accommodation. This Bill may be a fairly conventional mechanism, but it is merely one of a range of options that should be introduced. It would have some small impact on rebalancing the law where borrowers have no right to appeal to the court to be allowed retain their home.
I do not subscribe to the view that absolutely everyone needs to own their own home. Housing policy in general should be reoriented towards the public provision of social housing; I do not mean the ghetto council housing of the past, but a new and better form of social housing. It is clear that this does not exist at the moment, and Fine Gael and the Labour Party, given their apparent hatred of the State providing any kind of service to people — let alone go so far as to say something like housing is a right — are ideologically prevented from ever bringing in a newer, better, housing policy.
Deputy Dessie Ellis: We must be real and acknowledge this, so where the State is unwilling to provide social housing for people, they must be enabled to retain their homes where possible. The State facilitated their entry into over-indebtedness and unemployment. The State now has a responsibility to facilitate their exit from it. This Bill would have the effect of allowing the court to consider all of these factors when a repossession application is being heard. This will not have any impact on the personal insolvency legislation once it is introduced. Publishing the scheme of the Bill was an important step in the move towards publishing legislation on personal insolvency, which is long overdue. The large personal debt of many is due to not being able to service the mortgage on the family home, so we hope that this will be one part of a range of measures designed to address these issues.
I call upon the Minister to take on board the concerns of members of the public and civil society bodies working in this area. It is absolutely essential that we adhere to the timeframe indicated by the Minister. We cannot continue to put off addressing the problems of those who cannot meet their mortgage commitments and who are facing mountains of debt.
Minister for Justice and Equality (Deputy Alan Shatter): I would like to start by thanking Deputy Donnelly for publishing his Bill. I gave very serious consideration to its content. I want to encourage Members on both sides of the House to use the Friday facilities for Private Members’ Bills and I look forward to the time during the lifetime of this Government when a Private Members’ Bill is enacted.
I am also conscious that I have limited time. We are distributing a script which I have little chance of completing within the time allotted to me, but I would like to set out very clearly some important issues relating to the Bill. In respect of the work done by Deputy Donnelly and by other Members of the House, I thought it was important that they have the fullest consideration of the provisions presented to us.
The Government shares the concern expressed by Deputy Donnelly in his Bill with regard to individuals and families struggling to discharge repayments on unsustainable mortgages secured on family homes. The Government has put in place some measures to assist distressed home owners, while an interdepartmental working group will shortly complete its deliberations on the Keane report and relevant announcements will be made by my ministerial colleagues. Very detailed heads of the insolvency Bill were published last week and it contains specific measures of relevance to assisting those in genuine mortgage difficulties. The Bill in its final legislative form will be published by 30 April. In the intervening period, Members of both Houses have the opportunity, through the deliberations of the Joint Committee on Justice, Defence and Women’s Rights, to contribute to the development of this Bill regarding the issue of insolvency generally and in particular, the issue of unsustainable mortgage debt in respect of family homes.
The motivation behind the Deputy Donnelly’s Bill to seek to offer further elements of protection to home owners in arrears and who may be facing repossession proceedings is well intentioned and laudable. He is seeking to require the courts to have regard to certain matters or specified factors detailed in his Bill when an application for possession of a family home has to be determined by the courts. Unfortunately, the Bill is poorly drafted and is both somewhat confused in its approach and lacking in essential detail. Its provisions give rise to serious constitutional and legal difficulties and could impose time consuming and costly procedures both on the court and the parties engaged in repossession proceedings. It also gives rise to a serious constitutional problem. Essentially, the Bill as presented is completely unworkable.
The explanatory memorandum accompanying the Bill seeks, wrongly in my view, to link the normal contractual requirement to repay one’s home loan with the article of the Constitution which refers to the rights of the family in Article 41. It is not appropriate to make this linkage, nor would the linkage, if appropriate, extend any relevant protection in possession proceedings to any unmarried individual with mortgage arrears, or to any unmarried cohabiting couple or to any gay couple who are parties to a civil partnership.
The explanatory memorandum also refers to two court cases, Bank of Ireland v. Smyth 1995 and Anglo Irish Bank Corporation v. Fanning 2009, regarding the jurisprudence on the courts’ discretion in respect of orders for repossession. I am familiar with both of these cases and the Deputy’s reference to them in the context of the purpose of his Bill — matters to which the court should have regard in a repossession hearing — is mistaken and of no real relevance to the measure we are considering today. The net issue in the Smyth case related to the validity of the consent of a spouse to an application for a mortgage and the consequences of default in the context of specific provisions contained in the Family Home Protection Act 1976. In the Fanningcase, a loan of €7.9 million, secured on the house and lands, was provided to purchase shares in a telecoms company. A further loan of €505,000 was provided to the borrower for his personal investment purposes. There was default on these loans and the court granted a possession order to the bank. While these cases are interesting in themselves, I cannot believe that Deputy Donnelly seriously thinks that they have any direct relevance to the stated purpose of his Bill.
In general, the Bill proposes that the court should take account of a number of factors when determining an application for repossession of a family home. Some of the proposed factors are self evident and are already effectively taken into account by the courts. For example, our judges, who I believe have dealt very humanely with such applications since the current crisis began, take into account the general circumstances in each case.
Let me now turn to a more detailed consideration of the Deputy’s Bill. Section 1 consists of a short number of definitions. In the context of courts, the definition includes reference to the District Court. As the District Court does not hear repossession orders, this is something of an irrelevance.
Section 2 sets out, in paragraphs (a) to (g), inclusive, a number of matters which, in any proceedings for possession of a family home, the court may have regard to in determining whether to grant or refuse such application. I presume these proposed factors are intended to be additional to the current options open to the court, which include adjourning proceedings for a specific period before final determination or to make or decline to make an order for possession and give or withhold a stay on execution.
In section 2(a) the court is required to consider any offer, including an offer involving the restructuring of the loan, made by or on behalf of the borrower. In practice, courts consider whether an offer to restructure loan repayments has been made and the capacity of the borrower to make such payments in the context of both outstanding mortgage arrears and the legal obligation on the borrower to make future mortgage repayments. Where financial institutions are in the court’s view being unreasonable judges have adjourned cases to afford borrowers in mortgage arrears take the necessary steps to address the arrears that have accumulated. It is a fact, having regard to the relevant statistics, that Irish courts are slow to order repossessions. In fairness, Irish financial institutions have also been slow to seek repossessions for a variety of reasons.
What is proposed here, however, by Deputy Donnelly appears to go a great deal further than simply requiring the courts to give some time to those in mortgage arrears to make good outstanding payments due and meet future financial obligations. It seems the Deputy envisages the courts restructuring mortgage loans and effectively determining that a portion of outstanding capital should cease to be payable to an individual financial institution. The courts currently do not have such jurisdiction and the Bill does not give guidance as to how it could be exercised or on what basis a court could simply reduce the amount of capital outstanding by way of a loan secured on a family home. In its failure to properly address how the court should approach matters in this context the Bill is unfortunately fundamentally flawed. This aspect of the Bill also gives rise to profound constitutional difficulty.
I have, in the context of the Personal Insolvency Bill, in respect of secured debt where major financial difficulties arise, proposed the use of the non-judicial personal insolvency arrangement or PIA. This arrangement offers a better and more considered approach and I will return to this matter later.
In section 2(b) I am not sure what inference the court is to draw from consideration “of the level of arrears on the loan” or what difference reference to this factor contained in the Bill will make to the manner in which courts currently approach repossession applications. The level of arrears on a loan is a matter of specific relevance in the determination of every court application made for repossession of the family home. Where arrears are substantial and there is no prospect of their being discharged courts currently grant repossession orders. Where there is a reasonable possibility of arrears being discharged, courts often adjourn proceedings to afford individuals time to discharge arrears due. If it is Deputy Donnelly’s proposal that the courts should simply refuse to grant an order of possession in circumstance in which there is no realistic possibility of mortgage arrears being discharged, such statutory provision could render a financial institution’s security illusory and undermine the credibility of all secured debt. This would disadvantage any new mortgage seekers from being granted home loans by the banks as the concept of security on residential property would essentially become meaningless.
It is clear that this provision gives rise to substantial constitutional issues pursuant to Article 43 of the Constitution and also raises issues under the European Convention on Human Rights. Any such provision would not only impact on security held by a financial institution on a family home purchased subject to a loan but would also impact on security held on a home by any individual who lent money to family or a friend to facilitate a home purchase.
There would also be a significant risk that if debtors believed repossessions were not possible, mortgage repayments would cease or be diverted to other expenses. This provision could effectively incentivise those who have sufficient income to discharge mortgage obligations to cease making mortgage repayments. This would have a catastrophic impact on our recapitalised financial institutions and could result in further funds being required to ensure their continuing financial stability and taxpayers having to make good resulting bank losses. It is surprising that Deputy Donnelly, of all people, would propose such an ill considered measure.
I remain unclear as to what is meant by the proposal, at section 2(c), that the court is to have regard to “the current market value of the home and the amount of the mortgage debt as a proportion of that”. What is the court supposed to do having had regard to this? Could a perverse situation arise with courts ordering repossessions and sales on the basis of the least damage to the bank’s security being a sale now rather than letting a person remain in his or her family home for fear that the home’s value could further reduce in the current volatile and uncertain market? Again, there is a danger that this proposal could very well contravene the Constitution. It could allow the court to retrospectively and unilaterally rewrite a valid contract freely entered into between two competent parties some time in the past. Also, what evidence would the court or the mortgagee have to adduce concerning the current value of the home? If the home is in negative equity, it is not clear whether this provision is designed to encourage or discourage an order for possession and sale.
The Deputy’s proposal at section 2(d) is somewhat extraordinary and could have far reaching implications for the financial stability of lending institutions if implemented. Section 2(d) would require evidence from an expert as to the expected value of the family home over a period of five years from the date of the hearing of the proceeding for possession. This would appear to be impractical at any time but especially now in the context of current difficult property market conditions. If such a proposal were accepted, it could impact negatively on every financial institution’s ability to enforce its security. In the context of how the property market has developed, I wonder where we are to find such experts with clairvoyant powers as to be able to predict property values five years hence. For example, let us imagine what a property expert in February 2007 would have predicted for values in February 2012. I do not believe there is anyone who can give any credible evidence of any nature that could be currently relied upon by any court predicting residential property values in five years, as they depend on so many volatile variables, many of which are completely outside our control. This proposed factor essentially attempts to rely on prophecy as fact.
Section 2(e) refers to the code of conduct applying at the time of the order for possession. This adds little to the current position. In the High Court the master always asks for confirmation of compliance with the mortgage code of conduct. Financial institutions operating in this State are required to adhere to the code of conduct on mortgage arrears, as set out in regulations by the Central Bank. I see little practical point in this House seeking to further legislate on these matters when they are already part of the consideration. The purpose of legislation is not to send particular messages, even if well motivated, where such are not necessary.
Section 2(f) makes a radical proposal that the court should have regard to the conduct of the lending institution. This is a wide ranging concept. Would the court have to judge or investigate the totality of the practices of the bank from the moment the home loan was approved? Is this what the Deputy intends or is he asking that there should be a full investigation of the totality of the conduct of the bank or lending institution in respect of all banking matters over the past one or two decades at each repossession hearing? Is it proposed that in an individual case the Circuit Court or High Court should embark on some form of general banking inquiry or is it proposed that the court explore the general conduct of the lending institution with regard to the borrower in respect of one specific transaction, namely, the loan on the home to be repossessed, or the conduct in total over an unspecified number of years of the bank in question towards the specific borrower or from the time the specific borrower first opened an account with the institution concerned? Is the court to explore the lending financial institutions relationship, if any, with the vender, be it a developer or an individual, who sold the home to the borrower five, ten or 20 years previously? Are the courts to make judgments as to the level of mortgage interest appropriate for a financial institution to charge an individual borrower on a home loan? Is it intended that the courts enter into the realm of making decisions about the liquidity of financial institutions and the extent of the liability that should fall on the State or on taxpayers to ensure their liquidity or solvency? How are the courts to deliberate on any such factor?
Also, why is the conduct of the lender only to be examined? Are there no circumstance in which the conduct of a borrower is to be addressed? What about a borrower who fraudulently misleads a financial institution as to his or her real income or true assets? What about a borrower who entered into a mortgage arrangement with no intention of making any repayments of any nature? Unfortunately, the Bill has totally failed to address issues of substantial importance. At this stage, it is worth noting that no definition of the word “conduct” is included in section 1.
Section 2(g) mentions any other matter that the court shall, in its opinion, consider proper to take into consideration. This is potentially a very expansive requirement, which could result in completely extraneous matters being introduced for consideration by a court. There is no mention of what would be a necessary qualifier, namely, that the matters be relevant to the particular case made for repossession. The court already takes into account matters that appear to it to be relevant to the particular case.
I am conscious that a short time is left to me. I refer Deputies to the rest of the speech, as distributed in the House, which makes specific reference to the option that Deputies will have to contribute to the development of the insolvency Bill and address issues relating to family homes and mortgages and borrowers who are in difficulty. I hope that a constructive engagement will take place on that and, in particular, we make reference to the personal insolvency arrangement which will create the possibility of mortgage debt being restructured and, indeed, in the context of the capital outstanding, on some occasions, that it would be agreed that some of the capital would be no longer payable.
In response to Deputy Calleary, the personal insolvency arrangement requires agreement between both the person who is in financial difficulty and the lending institutions but not all lending institutions’ consent would be required because only 75% of those which have lent funding will, of necessity, have to agree to the arrangement. What puts the lending institution under pressure and what is of huge advantage to borrowers is the possibility that if the lending institution does not comply and does not agree in circumstances where it is appropriate that there should be some haircut on the capital outstanding, it could be confronted by the possibility of the borrower seeking bankruptcy and it recovering less than it is entitled to. The borrower would know that if, due to his or her unfortunate financial circumstances, he or she had to go through a bankruptcy process and if he or she behaved honestly, made full and proper disclosures and did not behave fraudulently, then at the end of the three years, he or she would emerge from that process with no debts outstanding and be able to get on with his or her life and rebuild his or her financial security for the future.
I thank Deputy Donnelly for the opportunity to discuss this Bill. As Minister for Justice and Equality, it is my obligation to carefully legally analyse any proposal that comes before the House. I know the proposal he brought before the House was well intended and I hope he will understand that for the reasons given, it is unworkable and the Government, unfortunately, cannot support its proceeding from Second Stage to Committee Stage.
An Ceann Comhairle: I call Deputy Dara Murphy. We have until 1 o’clock for Deputies to make contributions. If everybody is conscious of the time and makes his or her points succinctly, those who wish to speak will be able to do so. I will go backwards and forwards to be fair to each side.
Deputy Dara Murphy: I very much welcome the legislation brought forward by Deputy Donnelly. This process is a welcome development in this new Dáil where members of the Opposition or, indeed, of the Government parties can bring proposals forward. I was very interested in the Minister’s response, although I did not read the last section which he did not have time to complete.
This legislation runs concurrently with the Government’s Personal Insolvency Bill 2012. In his opening remarks, Deputy Donnelly suggested that he accepted this legislation was doomed to failure on Tuesday but from my point view, it certainly adds to the debate and will help the process considerably. I am also working on my own Private Members’ legislation. It is quite an arduous process to go through and I would advocate greater levels of support for Members who bring forward Private Members’ legislation, in particular in terms of legal advice.
I was most interested in the Minister’s comments about sending messages to courts. Having read Deputy Donnelly’s seven proposals, I support each message he is endeavouring to deliver. Equally, the job of sending messages is not the job of the Legislature. If we look at the ongoing debate on legislation in regard to upward only rent reviews, which has proved so difficult to bring in due to constitutional constraints, it shows that the method for sending messages is separate from the process of sending legislation. That is why I particularly welcome the initiative today because the messages which can be sent, whether or not this legislation is successful, are important ones to send to the courts. Having said that many, although not all, of them are already taken on board by the courts.
The Minister mentioned that we must protect existing legal arrangements made between parties which cannot be changed retrospectively. In the proposals before us, it is very interesting that the three main ones are non-judicial in nature. That highlights not only the limitations of Deputy Donnelly’s legislation but the constraints the Minister is under when it comes to what he and the Government propose. The debt settlement relief certificate, the debt settlement arrangement and the personal insolvency agreement are non-judicial agreements.
There has been some comment on how many Members attend on Fridays. There are 166 Deputies, many of whom specialise in certain areas. This process is for Members to get their teeth into certain issues. I am sure Deputy Donnelly has put much time into this legislation and I commend him on that but I would not expect him, no more than anyone else, to be in the House every first Friday. The more Opposition and Government backbenchers that specialise in certain areas, the better this will become.
I must take my lead from the Minister for Justice and Equality who stated clearly that, although we might agree with Deputy Donnelly’s sentiments, we will have to try to work them through the committee process.
Deputy Jerry Buttimer: I compliment Deputy Donnelly on his legislation. It is a sad fact of life that one of the greatest threats to family life and the quality of life of cohabiting couples is the loss the family home, or the home in which people live. It is having a huge impact on the quality of life of couples, children and society.
I am very proud of the Minister for being able to come into the House today to speak about the Personal Insolvency Bill 2012. Despite what Deputy Ellis said, it is not just a little piece of legislation. As Deputy Donnelly right said, it will be conveyed across the world as a template for the future.
It is a pity the House must divide on this legislation because it is not about point scoring but about people’s quality of life and homes. Whether we like it, it is also about striking a balance between those of us who own a house and the lending institution. I do not support the lending institutions in any shape or form because their behaviour prior, and subsequent, to the crash was appalling. The issue of mortgage distress is one on which we should not divide the House. In constituencies across the country, every Member can point to a new type of person coming into clinics. It is important to protect homeowners. People in this country have an extraordinary love of owning homes, to a far greater extent than many European countries. Friends of mine in Europe say we should not follow this path but we did. Perhaps it is because of the Land League or being dispossessed in history. Every effort must be made to allow the next generation to buy a home that they can call their own. It is a complex issue. The Minister is far more learned than I am and he says it is completely unworkable. In the Cork South-Central constituency, the Vita Cortex workers are on day 50 of their sit-in. They have an issue with company law and how they are treated by big business. Today we are talking about the financial institutions and their inability to relate to the ordinary person. Many ordinary people purchased houses in the boom not because they wanted to but because they had to. There was a domino effect whereby if people did not buy, they would have to pay an inordinate amount of money in the future. The Taoiseach was right in Davos last week, whether people like it. There was an element of greed by some people, not everyone. It caused a spike. The Taoiseach deserves credit for being able to say things honestly. Not everyone caused greed and went berserk but some did. The lending institutions threw money at people. We got money to buy a new car, money to buy a second property, money to refinance mortgages and we were asked if we wanted to go on a foreign holiday. Letters came in every day from banks. Where are they today? I have a very good relationship with my bank manager because I owe him money through my mortgage. I can walk into my bank and talk to him. How many bank managers are like that and how many people were put to the pin of their collars to meet demands and to sell services at the expense of the ordinary person?
The Minister should take note of Deputy Dara Murphy’s point on sending messages to the courts. The courts and the sheriffs have a critical role to play. They must strike a balance. I also appeal to the Revenue Commissioners to be mindful that more and more people are under pressure, faoi bhrú. It is not just about messaging, as Deputy Dara Murphy said, it is about how we deal with people.
Deputy Dara Murphy also referred to upward only rents, which are a huge concern for small business people trying to survive and make a go of their holdings, whether it is a coffee shop in Wilton Shopping Centre or a shop on Patrick Street. The rents are astronomical. In many cases, to be fair to owners, there has been a reduction but in other cases nothing is being done. It is important to strike a balance, without losing sight of the fact that debt settlement, personal insolvency and debt relief concerns the small person trying to hold onto a home and provide hope for the family. I refer to the ordinary man and woman in a relationship or not. If we do nothing else in this Dáil term, we must preserve the integrity of the relationship to, and the value of, the family home. The Minister remarked that the Bill is unworkable and contains flaws. It behoves all of us who have a common aim and purpose to work together. Perhaps Deputy Donnelly will not call a division in the House and will withdraw the Bill rather than calling a vote on Tuesday. Those of us who are present in the Chamber have a similar viewpoint and our goal is the same.
Deputy Maureen O’Sullivan: Like Deputy Buttimer, I think home ownership is linked to our history. We can go back to the landless tenants dispossessed during plantations and at the mercy of unscrupulous landlords. The 19th century saw the land campaigns for the three F’s that are still relevant today, fair rent, free sale and fixity of tenure. This led to the Land Acts, whereby tenants could buy their holdings. I can understand why the tradition of people buying their homes has developed from our history, unlike another countries where the tradition is to rent. In the 20th century, there was a tradition of saving in order to buy a house. People had to save significant deposits and banks put difficulties in front of people before they bought houses. Maybe it was better advice at the time. We are now in a different situation. We can see a variety of circumstances that led to this.
There was massive building of apartments and houses during the so-called Celtic tiger. Some of them were totally unsuitable, of which Priory Hall is just one example. Banks threw money at people, offering 100% mortgages in many cases without taking into account the ability of the borrower to repay. The media fuelled the idea that people had to get into the property market or they would miss it completely. The result is that people have impossible mortgages. Deputy Donnelly has done a great service to the ordinary individual, who sometimes gets lost in the legalese. The Bill is based on common sense, which we do not see enough of here, and I hope it prevails.
What does repossession achieve? Every effort must be made to prevent it. Judges must be able to take matters into account when making decisions on repossession. Figures of one in 12 are startling, although that indicates that many are not in arrears. The difficulty is that the number is likely to increase. In the past number of days we talked about health and the Independent group tabled a motion on mental health. We know the effect of repossession and difficulties with mortgages on people and families. Parents will try to protect children but children pick up on difficulties at home. Schools see the effect of difficulties paying bills and mortgages on young people. If repossessions continue, they will have a negative impact on the capitalisation levels of the so-called pillar banks, as pointed out by Deputy Donnelly. He also referred to the constitutional aspect and I cannot understand why the Minister believes there are constitutional difficulties. Surely the Constitution is there to protect the person, not the other way around.
There is a responsibility on the borrower to repay what he or she has borrowed. People ask why we should help those who took out money irresponsibly but there were extenuating circumstances. Many took out a mortgage on the basis of the job they had and, through no fault of their own, they lost the job and the ability to repay the mortgage. Deputy Donnelly is addressing that situation in this Bill in giving judges more discretion than they had to date.
I acknowledge the work of New Beginning, which has been very practical and has been to the fore in helping people in a real way. Returning to history, de Valera stopped paying the land annuities. The money did not return to the people but perhaps there is a message for us in that. New Beginning made the point about the Bank of Scotland, which was here in the good times and made loans available. As the song says, when the going got tough, it hightailed it out of here. Where is our responsibility to Bank of Scotland? It did not set the best example for other banks.
What is the point of Friday sittings if anything suggested on this side of the House is automatically turned down by the Government? On issues that are so real and relevant to people, there should be a collaborative effort rather than an automatic proposition and opposition.
Deputy Simon Harris: I wish to express support for Friday sittings and I was disappointed to hear them described as merely optics by one or two Members who are not present in the Chamber. I am sure Members on all sides were also disappointed. In fairness to my constituency colleague, Deputy Donnelly, the House is discussing one of the most important issues facing middle Ireland, keeping a roof over the home of the family, protecting the family home and supporting those in mortgage arrears. If anyone thinks national legislators coming together on all sides of the House to give our views, comments and potential solutions and help in our own small way shape Government thinking on this issue is simply optics, it is disappointing and a sad state of affairs.
If this Chamber is just to be seen as a Punch and Judy show that political leaders have said they now deride we are doing a huge disservice to the people of Ireland. We are here to hold the Government to account, and we all have a duty to do that, which is the purpose of Leaders’ Questions. We are also here to come up with ideas. My constituency colleague, Deputy Donnelly, has presented a Bill to the House, for which I commend and thank him. It provides us with a very valuable opportunity to put together our thoughts and views on this matter. It attaches a degree of political importance to and highlights the issue yet again.
The Government has adopted a non-partisan approach to discussing mortgage arrears. This was seen very clearly in the House when every single Member who wanted to contribute his or her views on the Keane report was allowed to do so. The debate ran on so that every Member, regardless of political affiliation, could give his or her view to Government. It is now up to it to take those suggestions and ideas from Members and put them together into a workable plan for this country to protect family homes, help citizens experiencing significant mortgage arrears and provide some balance between the banks and mortgage holders.
The lack of balance is what is most annoying the people of the country. Deputy O’Sullivan referred to the Bank of Scotland upping and leaving as quickly as it could as soon as times got tough. As we heard in Davos, some people over borrowed and overstretched themselves. A lot of people in banks made a lot of money from selling loans that were unsustainable. Getting the balance right between recapitalising and reforming banking structures and protecting our citizens is what we need to grapple with.
I am well aware, as is the Irish public, that work on addressing these issues is well under way at this stage. The publication of the heads of the personal insolvency Bill by the Minister, Deputy Shatter, was a landmark moment in this process. Perhaps Deputy Ellis did not mean to use the phrase “little piece of legislation.” It is probably one of the most comprehensive Bills to have been published by any Minister in this House in a number of years. The completion of the work of the interdepartmental group on the Keane report is almost complete and will be a major step in addressing these issues. In budget 2012 the introduction of increased mortgage interest relief, a key commitment of both parties in government during the election, was finally fulfilled.
The House should not divide on this issue. I am not long enough here or experienced enough to understand the intricate workings of this House and whether there is a way to avoid a division. To ask Deputies to vote Tá or Níl on a Bill that has merit in some respects but also has technical difficulties for the Government is missing the point.
The issue of mortgage arrears is a complex jigsaw with many pieces. The Bill offers a potential piece. The Government should examine, in a comprehensive way as the Minister, Deputy Shatter, has done, the elements that could work. In proposing the Bill, perhaps Deputy Donnelly should accept the parts the Minister has outlined may not work. We should determine whether the things that do work can be worked into the personal insolvency Bill.
I agree with Deputy O’Sullivan. All of us who are not Ministers or Ministers of State have an opportunity to propose legislation, through Friday sittings, and that should be encouraged. A number of us on this side of the House are also working on Bills on areas of interest to us. We need to know that they will be fed into the process, even if those of us on this side of the House cannot press the green button for technical, legal or constitutional reasons.
The Minister’s comprehensive script leaves us in no doubt as to where the Government stands on this important issue. We all share a common goal, namely to protect families from repossession. Technical issues, which the Deputy has acknowledged exist in his Bill and would exist in any Bill produced due to the complexities involved, should not overshadow the overarching aims of the Bill. Its aims are probably shared by all of us political life.
I would like the Minister to convey to the Government two issues which have been discussed in this House regarding mortgage arrears which we need action on as a matter of urgency as soon as the interdepartmental group concludes its work. One is putting expert advisers in place. I meet a large number of people in my constituency clinics who have a real fear of engaging with the banks and are intimidated, frightened and worried, with good reason in many cases. They receive technical letters which do not speak the language of the public and include jargon and phrases that worry people. MABS and the Citizens Information Board do excellent work but we need expert advisers that can negotiate on behalf of constituents. It was a very good point in the Keane report and I do not see why there should be any delay.
There is a second issue of which the Government needs to be aware. It was mooted that the rent back scheme, whereby if people can no longer afford to pay their mortgages as a last-ditch solution councils could rent people’s homes back to them. This protects the dignity of the family, allows children to continue to attend local schools, keeps private business private and keeps the family home. It was welcomed but when it was proposed people’s hopes kicked in and they are now waiting for action. People come to my clinic every week, and I am sure they go to those of Deputies on all sides of the House, wanting to know when the scheme will happen. It is another issue the Government should progress as quickly as possible.
I am grateful to Deputy Donnelly for the presentation of the Bill. I am grateful to the Minister, Deputy Shatter, for engaging with the Bill. Friday sittings are very useful and I hope the overarching aims of the Bill can be worked into the Government solution to this issue.
Deputy Catherine Murphy: There is a collaborative and co-operative approach from the Technical Group. I thank Deputy Donnelly for tabling the Bill. When he set out his stall on its provisions he accepted it was not the final product. No Bill presented to the House is the final product which is why there are five different Stages. Committee and Report Stages are very useful in crafting a Bill and finalising it to ensure it can take on board the range of different issues appropriate to it. It is a success if the ideas are taken on board. If today’s sitting delivers on that it will have been a success.
Would lending behaviour have been influenced if there was this kind of sanction? Had this been in place, lenders may well have had to be much more thoughtful about the kind of loans that were offered and the kind of pressure that was put on people. There was abuse of the system, whereby things were factored in in terms of people’s incomes that should never have been. Multiples of people’s incomes should not have been factored in. If we had had different lending practices would we be in our current position? We have to learn from the past.
Deputy Donnelly proposed this Bill, like any other piece of legislation. We have been told by the Government side on numerous occasions that one does not read one piece of legislation in isolation, rather several different pieces are read together. That was the intention in this case.
We debated the statutory instrument on Internet copyright intermediaries earlier this week. We were told the courts have to be proportionate. I accept the courts will not do things that are not proportionate or in the public interest. One cannot make that argument on the other side of the House and not transmit it to this side when there is a proposal on how the courts will interpret law.
Let me deal with moral hazard. It seems to apply only to the little people. When the inter-departmental working group on mortgage arrears was making its proposals, a group was established comprising bodies that felt they were not included in the process. The group included FLAC, Focus Ireland, the Society of St. Vincent de Paul, New Beginning, Respond and other such organisations with an interest in law, housing and debt issues. It stated the word “settlement” should be used rather than “forgiveness”. Many cheap headlines are pitting people against one another in regard to mortgage debt. The group stated:
The Minister, Deputy Shatter, stated he had no crystal ball to predict the cost of house prices in five years. The values will be influenced by a number of factors. There are many unfinished housing estates that will have an impact. When I was a local authority member throughout the 1990s, we were picking up the pieces from the 1980s. Deputy Durkan will remember this. There was no moral hazard for many of the people who left destruction after them because they reappeared as builders or developers in other guises. Many of us will remember this. The borrower seems to carry all the cost. Moreover, the borrower seems to carry the cost in respect of pyrite and shoddy workmanship, as in the case of Priory Hall. I question the use of the term “moral hazard” because very many considerations need to be made when considering economic morality.
Regarding some of the points that have been made on negative equity, the repossession of houses and the borrower carrying the residual cost over and above the value of a house when sold, we are talking about ruining people economically. One must either leave the country or depend on the public purse for housing. In Kildare, for example, 7,000 families are on the housing waiting list. This translates into approximately 20,000 people, which is the population of a large town in one county. This is before we begin to see the mortgage issue washed through the system completely. When this occurs, the problem will be exacerbated significantly. The people affected will not be in a position to buy a property because they will not get a mortgage again. Therefore, we must give people a second chance and take on board points that should be taken on board in the courts when repossession is being considered.
The lack of a public housing programme is a very serious issue. People renting houses who go to work do not receive rent assistance. People are being put into a poverty trap and into circumstances in which they have no hope. We then wonder why families break up and why there are children in difficulty in schools, as Deputy O’Sullivan pointed out. People do not buy houses with the intention of having them repossessed. They buy them with great hope and aspirations. People traditionally wanted to buy a house because they wanted certainty as to where they would live. This relates to our history in which people were shunted off the land. We must understand that the Irish aspire to house ownership. It is the tenure of choice for the majority.
All the Bills that have been taken thus far on Fridays have been Opposition Bills. I welcome the very good attendance today to address a problem that Members on all sides are genuinely interested in resolving. Unless Bills proceed to Committee Stage, however, individuals will ask genuinely, both inside and outside the Houses, whether we are engaging in an optics exercise. This applies to Government backbenchers as much as Opposition Members who propose legislation.
Deputy Robert Dowds: I thank Deputy Donnelly for introducing this Bill. I regret it does not seem possible to have it proceed any further. I have much sympathy with the remarks of Deputy Catherine Murphy on the importance of having Private Members’ Bills proceed to Committee Stage and, I would hope, to enactment. I hope this will occur soon, be it in respect of an Opposition Bill or one produced by a Government backbencher.
Of all the people for whom I have sympathy in regard to squandering during the Celtic tiger years, I have most for those in difficulty with mortgages. They were sold a pup and left in awful living conditions. I can hardly imagine the torment of many people over their not being able to make ends meet. There are those who deserve both our sympathy and actions.
This Bill touches on the sorest pressure point of people in their day-to-day lives. For that reason, I strongly welcome the work of the Government on the personal insolvency Bill and other legislation that will help people who are in great difficulty. In my region, south Dublin, there will be a pilot scheme to determine how the mortgage-to-rent proposals will work.
It is important that we consider how we came to be in the situation where housing spiralled out of control both in terms of the amount constructed and the cost of it. In the long term, as well as helping people in immediate difficulty, I suspect that the personal insolvency Bill may be the most important legislation the Oireachtas will enact. If we do not look at what went wrong we are likely to be damned to repeat the same mistakes again. We must consider such factors as the spiralling cost of building land. That, in a sense, is a knock-on of our failure to take heed of the Kenny report in the 1970s, which would have put some control on the price of building land. The fuelling of the property market under section 23 was encouraged by Fianna Fáil Governments. Madness was attached to that. I remember driving through Drumlish in rural Longford with a friend of mine who lived nearby. He said, “Who the heck is ever going to live in these houses — Drumlish is so far off the beaten track?” That is just one example of that absolute madness. The situation was made worse by the banks in terms of throwing money at people, which in its own way fuelled the increase in property prices.
It points to a need for us to think carefully about how we go about things. For example, we need to have brakes on the property market in the sense of trying to prevent property prices increasing. In that regard the notion of introducing a property tax is worthwhile because although any tax is clearly unpopular a property tax would have the virtue of being progressive if it is applied in such a way that those with the greatest wealth and properties have to pay the most and those with the smallest properties pay the least. We must accept that such a tax might have a beneficial effect both in terms of controlling the property market and also as a source of revenue for local authorities. Those two factors should be linked. That goes back to another aspect of the madness of the property boom; organisations such as county councils were happy for the property boom to continue because it was a source of development levies and the Government was happy in the short term because it brought in a lot of money in stamp duty. We must take lessons from those terrible mistakes and build a society where it is possible for people to get a home but without the madness that we have gone through.
I thank Deputy Donnelly for introducing the Bill because it focuses on this important and sensitive issue that must be dealt with as soon as possible. I regret the fact that the personal insolvency Bill is so slow in coming forward although I can understand the reason. I presume it is because of the sheer complexity of trying to draft such legislation. There was clearly no possibility of bringing in such legislation until the banks were recapitalised because it is only through the recapitalisation of the banks that it will be possible to put such legislation in place.
We will get a chance to discuss the insolvency Bill at a later stage but it is important that when the legislation is passed the Minister carefully monitors the behaviour of the banks and the operation of the legislation. I suspect that due to the huge complexities involved the legislation may need tweaking. We must keep an eye on what the banks are doing because we must ensure that they serve the needs of those whom they led down the garden path and got into such terrible difficulties.
Deputy Finian McGrath: I thank the Acting Chairman, Deputy Catherine Byrne, for the opportunity to speak to this new legislation, the Family Home Protection (Miscellaneous Provisions) Bill. I commend and thank my Independent colleague, Deputy Stephen Donnelly, for introducing this new and radical Bill. It shows once again that Independent Deputies are putting forward solutions to some of the major problems facing people at the moment, in this case householders in particular. The new Bill is sensitive and compassionate but above all it is the right thing to do for people who are currently in dire need. It also protects the family home. That should be the ethos and emphasis of today’s discussion. There should be a strong social justice dimension to the debate, as there is to the legislation. This is the type of practical leadership the country needs at the moment. We need people to help us come up with solutions.
On the broader issue of what is happening currently to householders, the general income of people and the trends in wider society, surveys have shown that 70% of adults in this country feel that the amount they have left each month after paying essentials has fallen during 2011. Other findings highlight the fear that approximately 83% of people believe 2012 will be a more difficult year. A total of 55% of people are now struggling to pay their household bills on time. That is something we must deal with as well. Mortgage and rent continue to be the most expensive bills for 75% of adults in this country. That is the real world and that is the reaction of people at the moment. Yesterday’s increase in VHI payments by an average of 9% will impact on families, especially those who have someone who is ill and is required to attend hospital. We must focus on such issues in discussing the legislation. There is a broader issue and agenda at stake. I will return to the details of the legislation in a moment.
In addition to an increase in utility bill costs, there have been increases in the cost of groceries and other shopping for householders. The increasing cost of private health care has led to 9% of people saying they will give it up in 2012. A further 31% may be forced to give it up if there are any further price increases. People are facing another hit at the moment. Many people are fearful for the year that lies ahead and how they will cope with the increasing financial pressure. I will focus on them today. A total of 24% of those surveyed said they are worried about how they are going to manage in 2012, with 6% stating that they will not be able to cope. That is something we can link to the mental capacity Bill as well. Within that 6%, one will have people getting so upset, depressed and stressed that it will lead to serious mental health issues. A total of 84% worry about how they will cope with unforeseen expenses. I provided those statistics to show what is going on in the background to the legislation.
I wish to turn to the details of the Family Home Protection (Miscellaneous Provisions) Bill 2011. First, the Bill will give judges discretion when hearing cases where a mortgage lender seeks to repossess a family home. It will give them jurisdiction to take into account certain matters such as whether the borrower has proposed a credible offer for paying off the mortgage when deciding whether to grant possession of a family home to a lender. That is what is in the Bill. Currently, many mortgage holders are feeling stressed. The purpose of the legislation is to address the situation. At present if a borrower has defaulted on a mortgage payment and the lender seeks to repossess the house, the judge must grant possession. The judge is not entitled to take into account anything other than the terms of the agreement made between the bank and the borrower. The judge has no authority to consider whether the loan was given responsibly in the first place, whether the lender has followed the code of conduct on mortgage arrears, whether the lender has engaged with any credible offers made by the borrower, the amount of arrears or what prospect the borrower has of paying them off. We all saw during the mad years of the boom how money was pumped out to people while they were egged on to borrow more. Based on cases of recent actions taken by some banks, it must be noted that the judge is not allowed to take into account circumstances such as a mortgage holders with variable rates being pushed into arrears due to repeated interest rate increases.
A common sense approach must be taken with economic legislation which this Bill does. Is it not better for the lender to be getting at least €20 a month rather than nothing? Is it not better to get some repayment rather than kicking a family out of their home and ending up on the local authority housing list, costing the State more in the long term?
We all have to face the reality that debt is a major problem in this country, be it family mortgages or the great international banking debt. The ECB and the EU must be told that both in the interests of Ireland and other EU countries, Ireland’s bailout will have to be renegotiated. This is the elephant in the room that must be dealt with before we even tackle the mortgage debt issue.
Deputy Donnelly’s Bill has ideas on how to tackle mortgage debt. I appeal to the Minister not to throw the baby out with the bathwater and incorporate some aspects of this Private Members’ Bill with his own proposed legislation on personal insolvency. I accept there are technical issues with this Private Members’ Bill. However, they can be tightened up while the core principles of the legislation are respected. The Minister is concerned about the financial implications of section 2(d) and the code of conduct in section 2(e). However, these can easily be tweaked.
Earlier I recalled how the banks carried on during the boom with crazy lending. Some people got too greedy during that time but there were innocent victims too such as the residents of Priory Hall who got hammered. It is not acceptable that young families who bought an apartment in the development are treated so badly and the required works not carried out. Members of the Technical Group have visited the site and spoken with the residents. I have already spoken to the Minister for the Environment, Community and Local Government about the plight of the Priory Hall residents. I urge him again to see if anything can be done to help them.
Against the size of arrears, the number of repossessions by court order is relatively low. In the 12 months up to September 2011, 180 court orders were granted for repossession against non-payment of arrears. Reports from the courts suggest certain lenders, particularly sub-prime lenders, have been aggressive in seeking repossessions. The pillar banks — although considering some of their carry on I am concerned about describing them as that — have been slow to seek repossessions which means that this Bill will be likely to have little impact on their balance sheets. I have been involved in some cases of lobbying individual local bank managers who have subsequently reorganised loans in a sensitive and sympathetic manner. Again, it is about being sensible. As I said earlier, it is better to be getting €50 out of someone rather than nothing.
Following the BlackRock stress tests of the banks, Bank of Ireland, AIB and EBS were given a further recapitalisation of €24 billion. Of this, €7.6 billion was to deal with residential mortgages. As of last October, AIB which had received €2.3 billion for this purpose had written off a total of just €600,000 in mortgage debt while Bank of Ireland, which received €1.8 billion, had written off none. Even were the situation to change dramatically and this legislation’s provisions refused a large number of repossession, it would still have a negative impact on the banks’ recapitalisation levels.
Article 45.2.ii of the Constitution states: “That in what pertains to the control of credit the constant and predominant aim shall be the welfare of the people as a whole.” Although the Constitution also gives strong protection to private property, Article 43 states, it must be regulated by the principles of social justice and balanced for the exigencies of the common good.
Will this legislation cost the taxpayer money? It may cost a small amount in the short term if it applied to cases of repossession being taken by State-owned banks. However, they have not been leading the way in repossessions. A judge has to consider that the total public good, for example the total costs of rehousing a family, may significantly outweigh the benefit to the bank of repossessing a house.
I urge the Minister to examine the sensible ideas put forward by Deputy Donnelly whom I commend on bringing this important Bill to the House. I welcome the call by some Government Deputies for the legislation’s core ideas to be examined.
Deputy Bernard J. Durkan: I compliment Deputy Donnelly on bringing this Bill before the House and for giving time for a discussion on a matter of this nature. The Minister has rightly identified the personal insolvency Bill as an important matter, along with mortgage relief. Of all the subjects on which I have spent time since I became a Member, this is the subject I have dealt with most. I agree with the Minister that there are several misconceptions about this issue.
Deputy Donnelly referred to the Smyth and Fanning cases. The Family Home Protection Act 1976 was very innovative legislation in that it protected spouses, particularly women, from having the family home sold over their heads by the other spouse. This was a vital provision at that time. Of course, someone went to court to challenge it and, eventually, like everything else it was overtaken.
It is not true that judges do not have discretion in these cases. They use discretion regularly, in fact. I have been in court on many occasions with constituents faced with repossession when the judges took into account their efforts to make repayments and granted adjournments to allow that to continue. It is totally untrue to suggest there is no option other than granting permission to repossess in the event of arrears on a mortgage.
Two types of problem arise in regard to property values and negative equity. The first involves the person who paid €500,000 or €800,000 for a house at the peak of the boom and still has a job. This person can pay the mortgage but it is in negative equity. There appears to be a notion in public debate that everybody should get a write down. If that happens nobody will pay anything. Reference is made to people who will not pay. There will always be people who decide to get in on an act but we must also take account of those who carry the burden for the duration irrespective of whether they are in a financial position to do so.
The second type of problem involve those who have fallen on hard times after losing their jobs. They are trying to do the impossible in terms of paying off a mortgage on vastly reduced incomes. Even the sub-prime lenders are willing to talk at present because they are realistic about the options. That was not always the case in the 1980s.
I raised this issue for the first time in this House in 2008. There is a tendency to add compound interest, which is lethal. Once it is applied it multiplies so rapidly that it leaves no opportunity for recovery. There is only one option. The judges have, rightly, examined the degree to which compound interest is being used as a vehicle to repossess houses. The responses to my appeals to the courts have varied between surprise, welcome and no comment but judges have been more than fair in recognising the dilemma faced by householders. However, that should not be used to excuse somebody who borrowed several million euro for whatever purpose. It may be true that the bank should not have loaned such a sum of money but the individual would have known at the time that he or she faced consequences in the event of being unable to repay. Several years ago a businessman suggested to me that collateral should be determined based on the ability of an individual to pay but I disagreed because that can fluctuate rapidly. The borrowing should be based on good value.
For many years local authorities granted loans on the basis of the valuations their engineers put on properties. We used to object because the valuations were usually too low but that valuation kept debts in line. Things went wrong when a cohort of people who previously would have been housed by local authorities either directly or by way of loans were moved to the private sector. We were told the private sector would do the job better but they did not cater for this market at all. Approximately 100,000 families across the country have no chance of acquiring homes because the local authorities are no longer in that business. While these families are waiting on housing lists, we end up paying their landlords for them because they are eligible for rent support. There are more landlords today than ever before in the history of the State. Markets always allow for speculators but we do not have a moral obligation to ensure they are paid for speculating. Our obligation as legislators is to meet the needs of different sectors of the community to a reasonable extent. For the past ten to 15 years, we have not been meeting the needs of those who are on housing lists.
Like other Deputies, I hope to have another opportunity to discuss this subject in more detail. The Bill is well meaning but it does not reflect what is happening in the courts at present nor does it identify the multitude of issues that surround court cases. It does not address the issue of shared ownership loans. Nobody with a shared ownership loan who bought a house five or six years ago can hold on to the house while drawing the dole. It cannot be done because the repayment on the half equity that is rented from the local authority is higher than the mortgage. These people have been hammered for the past ten or 15 years. I could easily blame the Bacon reports, and we all know where they came from. I was at the meeting of the Committee of Public Accounts in which this issue unfolded more than ten years ago. I could see what was coming down the road. We need to offer hope and support to families who are now out of work through no fault of their own and are endeavouring to hold onto their houses. We must be prepared to stand with them in all reasonable efforts to hold on to their properties.
However, we should not give carte blanche to everybody to default. All this nonsense about default and burning bondholders from the opposite side of the House — my remarks are not directed at Deputy Donnelly — does not work and it undermines the legitimacy of our arguments. I hope to have another opportunity to speak at greater length on this subject. Unfortunately the five or ten minutes allocated to us are insufficient to cover the issues arising.
Deputy Eoghan Murphy: Further to Deputy Harris’s comments on Friday sittings, we are elected not only as constituency representatives but also to bring our judgment to issues of national importance. Our role is not confined to the five minutes we are allocated here and there to contribute to debates in this Chamber. We also get opportunities for bringing forward our own Bills, which is why Friday sittings are important. I urge the Chief Whip to increase the number of Bills that can be taken on Fridays because other Deputies would like to table Bills for debate. I have been waiting several months for an opportunity to introduce the Bill I have drafted. It is important for the House that Deputies are given opportunities to legislate.
I congratulate Deputy Donnelly on the Family Home Protection (Miscellaneous Provisions) Bill 2011. It is not an easy task to prepare legislation when one does not have the resources available to Departments or Government Deputies. It is also an important and complicated issue. It is welcome to have an opportunity to propose potential solutions to the problems it identifies. The Government shares Deputy Donnelly’s concerns. As representatives, we face the problems arising on a daily basis.
As the Minister for Justice and Equality pointed out, we have already put in place measures to aid distressed home owners and an interdepartmental working group will shortly complete its work on the Keane report. Relevant announcements will then be made by other Ministers. We will also have more to come in April. It is important to note that the contributions being made here regardless of the result on this Bill, will feed into that and will have an impact on what happens then because everyone is bringing his or her point of view. All Deputies in the House have a point of view and all that will feed into the legislation that will be eventually introduced.
The Bill seeks to give courts discretion when dealing with issues such as repossessions. The explanatory memorandum provided with the Bill states that giving the courts limited discretion would allow for protection of the family home in the broader societal interest without prejudicing the interests of the parties seeking possession. That is the balance we need to strive to achieve in every repossession case in the courts, and the legislation the Government will eventually produce and pass needs to find that balance between what is fair and right as the law determines and what we also believe is just in society. It is important to spend as much time as we can, working to find that balance be it in Friday sittings with legislation coming from other Members of the House or in the work the Government is doing.
I have some questions which have been mentioned already. One relates to the predictive capacity the courts might need to have in determining the value and what may or may not be fair. I believe the Minister has already addressed it and I would like to hear some more from Deputy Donnelly in that regard. Section 2(f) refers to the “conduct of the lender”, which is a very wide term and could be potentially unworkable. I would also like to hear the Deputy’s thoughts on that matter.
I would like to get an idea of the figures for repossessions forecast both in the non-State-owned banks and in the State-owned banks, in terms of the potential value being lost to the State, for example, even though billions of euro have been already put into the banks to deal with the issue. What is the potential loss to the State-owned banks both in financial terms and in the number of houses? Are there figures for the number of families and people affected, which would be also relevant to what we are discussing?
I compliment Deputy Donnelly on the very detailed briefing document he produced even though he does not have the resources others would have. It states that if the Bill were adopted a judge would then be able to consider the total public good. For example, the cost to the State of re-housing a family and providing a range of other societal protections may significantly outweigh the benefit to a bank of repossessing the house. That is a very important principle. When people use the cliché“joined-up thinking”, what do they mean? It is recognising that it is more than just the financial cost and that there is a societal cost. Value does not strictly mean the financial value of something, but means the other types of value from which one might derive benefit. We must take that into account when we consider these matters because if repossessing a family home will cost society more than not repossessing it — more than what it might cost the bank in financial terms — then we must do what we can to prevent that while taking into account other considerations including the ones mentioned in the Bill.
I support the sentiment of the Bill and will do what I can to ensure those measures thatare workable are incorporated into any legislation that comes from the Government in the future. I will support the Government’s measures when they come before us and I lookforward to further debate in this Chamber on this issue when that legislation comes before the House.
Deputy Dominic Hannigan: I welcome the Bill and I am glad we have the opportunity to discuss the issue here. I admire Deputy Donnelly’s honesty in acknowledging that the Bill is not perfect and needs to be worked on and finessed in the House, which is admirable. Friday sittings such as this show the Government’s commitment to reforming how we do business in the House, which I welcome. Your attendance, a Cheann Comhairle, and the attendance of the Minister for Justice and Equality show we are committed to Friday sittings. While there are not any members of the media present today, I hope they are looking on back in their offices and they can report on the quality of the debate taking place today.
Earlier the Minister pointed out the constitutional difficulties the Bill would potentially create. I have no doubt the spirit of the Bill will find its way into the final draft of the personal insolvency Bill to be published in a few months’ time. I look forward to making many comments on that Bill when it comes to the House. I hope it will have a fast passage through the House because people need leadership and help from us on this issue.
I know that everybody in this Chamber will have heard terrible stories from people who are living in fear because they are scared of having their homes taken away from them and ending up out on the street. A person came to my constituency office two weeks ago, who is an example of the type of person the personal insolvency Bill will help. That person was one of a couple, who bought their home at the height of the boom three years ago and it cost them just over €700,000. Unfortunately their relationship broke down and in addition there has been a more than 50% decline in the value of the property which is now worth just over €300,000. The bank is refusing to accept an offer on the property even though a potential buyer is willing to purchase it. The person who saw me is in complete stress over the issue of not just a broken relationship but also a broken home. No doubt the former partner is in the same situation. It is not fair and we need to act on the matter to provide leadership in order to help people like this out of their current crises.
Deputy Durkan spoke about how we can help people in significant negative equity. He made the very fair point that many people in negative equity do not fall behind with their mortgage repayments because they are in the lucky position of still having employment. I bought at the very top of the market and am in significant negative equity, but I do not need help from the State because I am in the lucky position of having employment and there are others like me. My point is that we need a targeted approach to dealing with this issue. Some people are not falling behind and do not need help. We need to help those people in financial difficulty and under stress. The Government is determined to deal with the problem. I have listened to the Minister, Deputy Shatter, and others and I know we are determined to get this issue right. The recently published heads of the personal insolvency Bill will be debated by the relevant committees so that the Members of the Oireachtas can have their say on the Bill, which we want to work for the betterment of all our people.
It is excellent that Deputy Donnelly has brought forward this matter. We should compliment him on the positive contribution he has made — the Government welcomes positive contributions from all sides of the House. I thank him for his work on the issue.
Deputy James Bannon: I welcome the Bill. It is important to bring the issue to light and I know all Deputies are very aware of people who are affected. In the budget the Government increased mortgage interest relief to 30% for first-time buyers who bought between 2004 and 2008, which is a very welcome decision. Mortgage relief helps more than 250,000 homeowners who are in negative equity and saves homeowners in distress up to €166 per month. If we had not taken this action, rising interest rates would push more homeowners into severe arrears.
The cost to the Exchequer is between €130 million and €140 million per year but I believe it was necessary. I compliment the Government on its compassion in this area during these difficult times because it is not easy to find money for schemes. We are trying to do our best with a limited purse. The sooner the people get back control of the purse, the better. The IMF, EU and European authorities are dictating to us how we spend our money and this is regrettable. This was brought about by the reckless spending of the previous Government.
We must help hard-hit home-owners in every way we can and the Government is doing its best. We are aware of the number of households becoming homeless as a result of repossessions, which are running at a high level throughout the country. The threat of homelessness is real and rapidly increasing, with a 70% rise in people seeking help to pay their mortgages. The Society of St. Vincent de Paul and other organisations, including the Government and the Department of Social Protection, are doing their best. We cannot abandon these people.
The current economic climate and persistent increases in mortgage repossessions make it clear that this area needs to be addressed urgently. Financial de-regulation and an increase in sub-prime lending has drawn in more economically vulnerable households by giving loans to people who cannot afford to pay.
Education must be provided to ensure that people have the necessary financial capabilities to manage their affairs and in order that the information offered to them is understandable. I know the Government is considering the matter. Support services are necessary for people who intend to acquire a mortgage. Mortgage rescue schemes are already in operation in many parts of Europe. These can take the form of shared ownership. Deputy Durkan referred to these schemes earlier. These schemes can reduce the level of mortgage repayments or facilitate the complete purchase of a property when the former owner becomes the insured tenant. I believe this should be considered in consultation with the banks and building societies and I have no doubt the Government is examining this possibility.
Rural areas are not immune from the threat of homelessness due to repossessions but the problem is often hidden due to the stigma facing small communities in respect of those who lose their homes. The Bill is important and it is important that we debate the issue. I know the Government will bring forward every possible support in this regard.
Deputy Donnelly’s Bill is well-intentioned and his motives laudable. However, the Bill is probably poorly drafted because he does not have a back-up team in place such as that which is available to the Government parties. The Bill is somewhat confused in its approach. If it were implemented we would risk serious legal and constitutional difficulties, not to mention the time considerations and costly procedures at the courts for the parties concerned.
It is important to debate the issue. I do not suggest it is the case but we cannot sweep problems of this nature under the carpet. I have no doubt the Government is doing its utmost to help people. We are all human beings and we all have clinics throughout the country. We all know from first-hand experience of the serious problems confronting people in serious distress because of their mortgages. As I stated at the outset, if funding were available something could be done. We are all human and we do our utmost to help these people. I know of people who went to court and who were nervous beforehand but a humane approach was taken by the court. These people came back to me and told me of their excessive concern in advance of the hearing but, in the event, compassion was shown to them. Judges are human like everyone else and they consider the human aspect of these situations. I thank the Ceann Comhairle for giving me time to speak on the matter.
Deputy Joanna Tuffy: I compliment Deputy Donnelly on putting forward this legislation and on all the work he has put in to drafting and researching it. This is one of three key issues we face as legislators at present in the context of everything that has taken place, that is to say, the economic and financial crisis and the fact that many people have difficulties paying their mortgages. Some people have lost their jobs or taken pay cuts which has added to the problem. Protecting the family home is important and people should be facilitated if possible in retaining and continuing to live in their family home. Another issue that must be tackled is unemployment and the need for job creation. In addition, we must bring about a greater equality of income in the country, along the lines of what President Obama has begun to discuss in the United States. We should have the same debate here.
Deputy Donnelly’s Bill is important and he has raised an important issue. The considerations he wishes to be taken into account in repossession cases are relevant and they should be borne in mind by a judge when making a decision. I hope this matter is taken further.
Deputy Donnelly’s proposal could be considered as part of the deliberations on the personal insolvency Bill, the heads of which, I understand, have gone to the Joint Committee on Justice, Defence and Equality. I hope Deputy Donnelly will participate in that process to establish if there is any way this work could be considered as part of that legislation. He may wish to table amendments to that legislation.
I have been in Opposition previously. When I was in the Seanad, I recall putting forward amendments in respect of the Land and Conveyancing Law Reform Bill which were rejected by the then Minister for Justice, Equality and Law Reform. I continued to raise the issues at every opportunity. Then, I happened to be elected as a Deputy and the Bill finally came to this House and it was discussed here. I put forward my amendments at that stage and the Minister accepted some of them. I cannot recall whether he put forward a version of my amendments or whether they were in my name but the fact is that the point was conceded. Deputy Donnelly should not give up if the Minister does not accept his Bill at this stage.
People have questioned whether this forum is a sham and the worth of the extension of sittings to Friday. There is room for improvement. Deputies should make more of an effort to attend. The problem is not only with Friday sittings. There are other aspects to Dáil debates, including the issue of a near-empty Chamber during Topical Issues and when some legislation is going through the Houses on Report Stage. A good deal of pressure is put on Deputies from various parties to attend the Order of Business and Leaders’ Questions and those in the media fill up the Press Gallery during these times.
However, we should deal with the issue of the near-empty Chamber. This is not only a phenomenon in Ireland; it happens in Westminster and all parliaments. Chambers are often near-empty for some proceedings. We cannot be in the Chamber all the time. A Deputy cannot sit in the Chamber for the entire day. It is not sustainable because one must carry out research, deal with one’s constituents, attend committee meetings and so on. However, it is a valid issue. On the other hand, debates such as this present a great opportunity for Deputies and I am pleased Deputy Donnelly has decided to take advantage of it. We are being allowed to put forward Bills and Opposition and backbench Deputies are being facilitated with a Friday sitting once a month to debate these Bills. We are provided with resources by the Oireachtas to do this and can get assistance from legal draughts people to draw up our Bills. The resources are being provided and we must grasp the opportunity. There is no point being cynical about the sittings, as some Deputies have been, or saying they are a sham. They are not. While there is always room for improvement, this development is a big improvement on the way things were. It is not the only reform we have seen. The topical issue debate has also given backbenchers and Opposition Deputies more power.
When the Minister for Justice and Equality was in opposition, he managed to bring forward legislation that brought important, progressive and significant reform to family law legislation. It should happen in the course of every Dáil session that the Opposition gets an opportunity to initiate legislation and that it is possible that this legislation is accepted by Government. Deputy Donnelly’s Bill may not be one that is accepted this session, but if this is to be a proper process, the Government must take on board some of the legislation put forward. Deputy Shatter would be the likely Minister to recognise the importance of this.
Deputy Donnelly has flagged this important issue and this should not be the end of it. We need to take it further. If the Government does not intend to accept it now, there may be other opportunities to raise the issue. I urge him to continue to push forward with his proposals.
Deputy Catherine Byrne: I thank Deputy Donnelly for bringing this debate to the House. I have listened to the debate with great interest and believe this is where these debates should take place. I see these Friday sittings as an opportunity for these debates to be raised in the House because there is no opportunity on other days because of the full agenda on the normal sitting days. It is a pity there are not more Members here this afternoon to listen to the debate and to hear, in particular, the closing statements from Deputy Donnelly and the Minister.
As a parent, I want to speak briefly on this issue. I have family members who are in negative equity and also have neighbours, friends and extended family in difficulty. These and people in my community find themselves unable to meet their mortgages for various reasons. This is a time of emotional stress for the many people involved. However and for whatever reason people were drawn into the borrowing net in order to get their foot on the mortgage ladder is not the issue any more. What matters now is that we help these people and give them hope and, above all, help them keep a roof over their heads. In that context, I welcome the Minister’s personal insolvency Bill. The purpose of any Bill is to help people. As Deputies, we all want to help the people who elected us. I too remember how difficult it was when in Opposition to put forward suggestions or introduce Bills to the House and get them through the various Stages. I am sure there is much merit in Deputy Donnelly’s Bill, but I am unsure it will be passed.
We live in difficult times, but I do not believe the Government has all the answers. We need to listen to the Opposition. When we were in opposition, the Government did not listen to us, but I hope that now Ministers and others will lend an ear and take time to listen. I believe this Bill has awakened many Members to the importance of trying to work together at some level over the coming weeks and months as elected Members, rather than as opposing groups. We must remember that the many families affected need our help and understanding. I urge the Minister and other Members of the Government to pay attention to contributions from all sides of the House when Members introduce Bills and perhaps they will be able to adopt some or all of the suggestions put forward.
My final comment is on the banks. We have all heard in our clinics from young people and people with families who have gone to the banks looking for help and how the banks have been reluctant to give that help. The personal insolvency Bill and other legislation that may come to the House offer an opportunity to put more pressure on the banks to help these people. We are all human beings and our role as Members is to represent those people who gave us the privilege and honour of being here.
Deputy Seán Conlan: I congratulate Deputy Donnelly on bringing this Bill before the House. It is important we deal with these mortgage issues. Many of my friends, neighbours and constituents have serious mortgage difficulties and these are an ongoing problem. I have listened carefully to the arguments today and to the Government’s position on the issue. I hope that when the personal insolvency Bill comes before the House, some of the best elements of Deputy Donnelly’s Bill will be incorporated in it so that we deal with the issue as best we can for all our constituents.
These Friday debates are an important format that allow Members bring Bills before the House and I commend Deputy Donnelly on doing that and on the time and effort he has spent in bringing his Bill forward. I hope we can get to grips with this issue in the next couple of months if possible. I understand the final version of the personal insolvency Bill will be before the House before the end of April. I understand there are some constitutional difficulties with regard to one aspect of Deputy Donnelly’s Bill and I, therefore, support the Government position. However, I thank Deputy Donnelly for bringing the Bill before the House.
An Ceann Comhairle: It is interesting to note that we have had 18 contributions during the two and a half hours of this debate. I congratulate Deputy Donnelly on bringing forward this Bill. It is a compliment to him and the House that in this short space of time we have had contributions from 18 Deputies.
Minister for Justice and Equality (Deputy Alan Shatter): I had to leave the Chamber briefly during the course of this debate, but I was able to follow the debate on the monitor while I was dealing with some urgent issues while wearing my hat as Minister for Defence.
As someone who was first elected to this House in 1981 and as one who fought to ensure that Members on all sides of the House could perform a legislative function in their own right and not just be lobby fodder for their parties — in or out of government — I welcome the fact we now have the opportunity on these Friday sessions to give Members additional time for processing Private Members’ Bills. This is an important opportunity for Members who are only just coming to terms with how we progress matters. In so far as I, as Minister for Justice and Equality or Minister for Defence, can assist a Deputy, be he or she on the Government or Opposition side, in effecting a Bill to bring before the House, I will be happy to do so. Obviously, both of my Departments have their own pressures with regard to bringing forward legislation. We have a huge agenda of proposed legislation in the Department of Justice and Equality and we also have an agenda of legislation in the Department of Defence and officials in both Departments are under substantial pressure. Nevertheless, I have no difficulty, if a Member has prepared the heads of a Bill or a draft Bill, in having an informal meeting with the Member to discuss it.
These Friday arrangements are serious arrangements on the part of the Government and are part of the programme for Oireachtas reform. As the Ceann Comhairle said, there have been contributions from 18 Members from all sides of the House to the debate on an issue that is of great importance to all of us. I set out in my speech the many difficulties that arise with a particular proposal contained in Deputy Donnelly’s Bill. He has, nevertheless, acted as a catalyst to a very helpful and useful debate, which I know will broaden out during consideration by the Joint Committee on Justice, Defence and Equality of the heads of the personal insolvency Bill and will, when after April we have published the Bill in its legislative form, contribute to the debate in this House on Second Stage.
I thank Deputy Donnelly for his initiative. Had he considered discussing this in advance with me, I might have been able to help him with it. I know it was a well-intended initiative, albeit unworkable.
I want to say something about today. I have curiously followed some commentary made by different people. Deputy Kelleher of Fianna Fáil said on the airwaves this morning that this was all a sham and was not serious, but he assured the nation that he was going to be present in the House for this important debate. Deputy Calleary is here, but he is the only representative of Fianna Fáil. If Deputy Kelleher——
Deputy Alan Shatter: I apologise if I left out Deputy Ó Fearghaíl on a very important issue such as this. I am sure Deputy Kelleher enjoyed being in the House. He used that euphemism. He was not in this Chamber in so far as he had a criticism to voice. Those of us who wanted to address this issue had every opportunity to do so this morning in this Chamber. If he wants to make silly political charges to get himself some personal headline, perhaps he should do so on an issue to which he intends to contribute and has something serious to say.
I do not think these charges, coming from a member of Fianna Fáil, have any credibility whatsoever. Fianna Fáil in government from 2002 onwards — there was a different ethic in the Fianna Fáil Party before then — crushed any Private Members’ Bill that was proposed. After 2002, that party ruled in arrogance and in ignorance. It became impossible for any Member of the House to progress constructively a single Private Members’ Bill. That was quite different before 2002. I published many Bills myself before that date and four of them were enacted simply as Private Members’ Bills. Over 20 others that I published were not immediately accepted by the Government, but within 12 to 18 months they led to Government legislation that substantially reflected the Private Members’ Bills. That ceased to be the case from 2002. I was out of the House from 2002 to 2007. After 2007, instead of dealing constructively or decently with Private Members’ Bills proposed by the Opposition and without acknowledging that Deputies had a genuine interest in issues and were bringing forward constructive proposals to facilitate their discussion, Fianna Fáil Ministers, along with Ministers from the Progressive Democrats and the Green Party, tended to denigrate personally the individuals who brought measures forward before they dealt with any analysis of the Bill.
I welcome today’s initiative and I welcome the discussion on it. I do not believe that it helps the House if, in order to get silly personal political headlines, some Members of this House seek to undermine the reforms rather than build on them, and seek to make the sort of charges that Deputy Kelleher made on an issue that he does not deem sufficiently serious for himself to enter the House and debate.
Members of this House should not opt into the corrosive cynicism about the manner in which we conduct our business that is constantly articulated by sections and individuals in the media. Instead of addressing the serious substance of major issues affecting this country, many of those who write some of these stories seem to spend their time phoning Deputies to check where they are, carry out completely irrelevant surveys or constantly table freedom of information requests on a broad range of issues that they could research themselves if they had any initiative.
I fully accept that this Bill was well intended. I know that the New Beginning organisation would have been of some assistance to Deputy Donnelly when drafting the Bill. The group has taken up the cudgels on behalf of individuals who are in mortgage difficulties and I think they have been of assistance in highlighting that issue and helping some individuals. Relevant Departments have engaged with some of the members of that organisation in helping to frame legislation. I am looking forward to any engagement I may have with the group on the insolvency Bill.
I want to invite Deputies to respond to the heads of the insolvency Bill. If it is not possible for Members of either House to attend the justice committee meetings, constructive proposals to feed into the development of the full Bill are welcome. I want to encourage them and I am looking forward to receiving proposals from Members of this House and those outside the House so we can meet our deadline on 30 April. I ask those who want to contribute to do so by 1 March, because serious work has to be done to the Bill by the Office of the Attorney General so it can be published in proper legislative form.
The central purpose of the Bill is to try to ensure that where people are in financial difficulties, they can rely upon a non-judicial debt resolution process instead of bankruptcy proceedings. Its very availability should encourage financial institutions which are not dealing reasonably with people to behave reasonably, given the difficulty that could arise for them should insolvency proceedings be initiated. Nobody wants to be declared bankrupt or insolvent and go through a court process. We need to put in place a range of options in our policy framework and our legal architecture to help people in that respect.
The people for whom we have the most sympathy are those who are leading ordered lives and who did not borrow excessively, but who find themselves in unexpected financial difficulties as a consequence of the economic collapse that has affected this country and the unexpected loss of their jobs or businesses that they were running and which provided employment to others. During the property boom, many people purchased properties at exorbitant prices and did so in good faith, believing that if they did not get on the property ladder, they would never purchase their own home. They now find themselves in substantial difficulties.
My Government colleagues and I remain deeply concerned to promote measures to alleviate as far as possible the difficulties experienced by home owners in repaying mortgage debt. The budget last December contained measures in respect of increased mortgage interest relief for those home owners who bought their properties in the most recent years at the peak of the boom and who have been worst hit. The code of conduct on mortgage arrears is being applied by the financial institutions in their dealings with those in mortgage arrears and is being monitored by the Central Bank.
Significant progress has already been achieved by the interdepartmental steering group in a number of important areas following the Keane report. The Department of the Environment, Community and Local Government has reached an advanced stage in the development of a pilot mortgage to rent scheme. In addition, the Central Bank is engaging with licensed mortgage providers in the development of mortgage arrears resolution strategies and plans which will ensure mortgage providers have real options for borrowers experiencing significant repayment difficulty. The proposed personal insolvency arrangement in the insolvency law reforms provides an innovate approach to the settlement of unsustainable secured credit such as a mortgage. Taken together, all of these measures will provide hope and assistance to homeowners in difficulty.
Despite the genuine difficulties being experienced in making mortgage repayments by many people, the number of home repossession orders made by our courts is relatively small. The number of repossession cases in the High Court, both new cases and orders, showed a decrease in 2011 from 2010, contrary to public perception. New cases for possession of all types of real property in the High Court dropped from 583 in 2010 to 480 in 2011. High Court orders for possession of all types of real property decreased from 326 in 2010 to 281 in 2011. It is the case that Circuit Court orders for possession showed an increase in 2011 by 47 to 353, of which 289 were residential and 64 non-residential. However, adding the overall figures together, fewer orders for repossession were made in 2011 than in 2010.
I share the Deputy’s undoubted concern about individuals and families who, due to their individual financial circumstances, are experiencing difficulty in discharging their home loan repayment obligations. However, enacting a Bill which requires the courts to consider unnecessary, unworkable and constitutionally flawed factors in determining home repossession applications will not improve matters. The unfortunate reality is that the Bill could make matters worse rather than better. It is important that we find the correct balance between the interests of the homeowner and those of the financial institution and unfortunately the Bill does not do so.
The issues involved here are undoubtedly varied and complex. We must not be led into believing there are easy solutions. We must also bear in mind our consideration of the reform of the law in regard to personal insolvency does not take place in dealing with what could be described as a normal economic context. This was an issue to which special regard had to be given in the drafting of the heads of the insolvency Bill. What we are doing in addressing the necessary law reforms is trying to come to terms with the consequences — this is particularly relevant today — of an easy credit fuelled property boom, bubble and bust. The banking system had to be rescued from collapse and is now primarily in State ownership and largely dependent on continuing financial support from the European Central Bank.
Deputies should take these wider external circumstances into consideration in contemplating solutions to this very difficult problem. We cannot allow ourselves to be seduced into believing, however much we sympathise with the plight of persons struggling to deal with over-indebtednesses, that there are simple measures that can be taken that will deal with the problem. There are no back of the envelope solutions, nor is there any magic bullet. All solutions will have significant consequences and potential costs. What is needed in the context of the difficulties faced by homeowners is a range of possible measures which offer individuals in financial difficulties the possibility of remaining in their home, postponing mortgage payments, where appropriate, and allowing them some space to discharge other debts they may have where there is a realistic possibility, if given a reasonable period of time, that they may be able to work themselves out of their debts and retain their home. No one on any side of the House wants individuals who are in temporary financial difficulties, through no fault of their own, being put out of reasonable family homes and having their homes repossessed. Not only is it not in the interests of individuals and families that this occur but the financial institutions cannot, in the long-term, benefit to any degree if tens of thousands of homes are repossessed. Clearly, this has been understood by the financial institutions given the number of repossession orders that have been effected.
I thank Deputy Donnelly again for producing the Bill. From past experience, I know drafting Private Members’ Bills is not an easy job. In the context of the Deputy spending his first year in the House, one has to learn to come to terms with the technical issues that must be addressed, the manner in which courts may apply legislation containing basic principles, the extent to which judicial discretion should be left to the courts and the extent to which principles prescribed are workable in circumstances where an add-on structure is not in place for them. The approach of the Government, in the context of Deputy Donnelly’s Bill and any other Private Members’ Bill, is not to adopt the approach of Governments previously led by the Fianna Fáil Party in the years I described. That approach was to not try to assist——
Deputy Dara Calleary: On a point of order, the Ceann Comhairle pulled up a Deputy for making comments that were not relevant to the Bill. The Minister has spent the past five minutes making comments that are completely irrelevant to the content of the Bill.
An Ceann Comhairle: Some of them were raised. I was very careful and noted that Members made comments regarding empty Chambers, Deputies not attending the debate and so forth. The Minister is entitled to reply and I cannot put words in his mouth. In any case, his time has concluded.
Deputy Alan Shatter: It is not the approach of this Government that it will automatically vote down or ride roughshod over constructive or workable proposals contained in a Private Members’ Bill to address an issue that genuinely needs to be addressed.
In thanking Deputy Donnelly I encourage Members on all sides, including my many colleagues from the Fine Gael Party and Labour Party who contributed to this debate, to bring forward proposals with regard to Private Members’ Bills. As we move through this year, we will see the extent to which the reforms that have been implemented in this area work. We need to look at whether additional time or days should be made available to ensure there is not an accumulation of Private Members’ Bills which have not had an opportunity to be aired in the House.
Deputy Stephen S. Donnelly: I express gratitude to the Minister. Having listened to his detailed and considered response, I have no doubt it took a considerable amount of his time and energy to draft it. I also thank all the Deputies who attended the debate. Their presence is very much appreciated. It took a long time for me, my team and members of the New Beginning group to reach the point at which we were reasonably happy to introduce the legislation for the consideration of the House. I thank the Fianna Fáil Party and Sinn Féin for supporting the Bill. It is great to receive such support. I acknowledge and accept the reasons my colleagues on the Government benches will not be able to support the legislation when the House divides on it on Tuesday. I am gladdened by the support the principle enshrined in the Bill has received and welcome the tips more experienced Deputies have given me on how the essential elements of the Bill could be incorporated in the Minister’s legislation.
I did not hear anyone suggest the principle I am trying to employ in the legislation is fundamentally wrong. My understanding of the Minister’s critique is that much of it focused on detail, implementation and so forth. The principle we are trying to enforce it to provide judges with a workable, sensible and constitutionally compliant level of discretion in cases of possession as part of a package of policies. I hope the essence of this principle can be advanced and I will take up the Minister’s offer of a meeting to discuss useful proposals that could be made when the Select Committee on Justice, Defence and Equality is considering the heads of his Bill.
If Deputies will bear with me, I will respond to the various technical points raised, most of which were also alluded to in the Minister’s contributions. I will also address Deputy Murphy’s point on the scale of repossessions, both in terms of mortgages and individuals.
The Minister is correct to note that the provisions of the Bill “could impose time consuming and costly procedures both on the court and the parties engaged in repossession proceedings.” While the enactment of this legislation would result in longer court proceedings, it should be noted that courts frequently spend a full week hearing personal injury claims but usually take only a short time to hear repossession cases. The reason is that in the latter cases, judges must rule according to the contract. While I accept the Bill could result in the courts incurring additional costs and cases taking longer to hear, this is reasonable given the crucial importance of cases involving the repossession of a family home. I would not have a problem if such cases lasted as long as some of the personal injuries claims that come before the courts.
The Minister stated the explanatory memorandum accompanying the Bill seeks “to link the normal contractual requirement to repay one’s home loan with the article of the Constitution which refers to the rights of the family in Article 41”. I do not have the text of Article 41 of the Constitution to hand and if there is a mistake in the explanatory memorandum, I accept the Minister’s point.
As I am also not in a position to respond to the points the Minister made on two court cases, Bank of Ireland v. Smyth and Anglo Irish Bank Corporation v. Fanning, I will seek expert opinion on the points he made in this regard.
It was stated that, in general, the Bill proposes that the court shall take account of a number of factors when determining an application for possession of the home. That is true. It was then suggested that the courts already take account of that. That point was raised previous to this debate by somebody and I put it to the senior counsel helping me to draft the Bill who is very familiar with, and represents people in, these cases all the time. He stated categorically that the courts do not have discretion. He was very firmly of that view. I am not a legal expert but that was very clearly his view. He stated that once there has been a default, the lenders are entitled to possession. I am told the only exception to this is compliance with the current code on mortgage arrears which provides that lenders will not institute proceedings for one year. What is actually happening is that lenders are waiting for the year. I guess it is a difference of opinion in an area in which I am not expert but that is the advice I was given.
It was stated that there is no need to refer to the District Court. That was well spotted and we will take that out. The Minister stated, “I presume that these proposed factors are intended to be additional to the current options open to the court to adjourn proceedings”. The answer to that is “Yes”. I am told by senior counsel taking these cases that while the courts have the ability to use adjournment, they are using it less and less.
It was stated that, in practice, courts consider whether an offer to restructure loan repayments has been made and the capacity of the borrower to make such payments in the context of both outstanding mortgage arrears and the legal obligation on the borrower to make future mortgage repayments. The advice I was given is that the courts may consider it but that, ultimately, they must enforce the contract. Regardless of the reality, ultimately, the courts must enforce the contract and possession.
It was stated that it is a fact, having regard to the relevant statistics, that Irish courts are slow to order possessions. I agree with that and take the Minister’s point on the falling numbers. This Bill would have an impact not be in the court, although obviously it would have in a few marginal cases, but much like the Minister’s proposed legislation, the real impact would be at the negotiating table. With that sensible set of measures, we should see a fall in possessions because the balance will have been struck in the negotiations and the banks will begin to make more sensible decisions.
It was stated that it seems I envisage the courts restructuring mortgage loans and effectively determining that a portion of outstanding capital should cease to be payable to an individual financial institution and that the courts presently have no such jurisdiction and the Bill gives no guidance as to how this might be exercised or on what basis a court could simply reduce the amount of capital outstanding. The Bill does not give judges explicit statutory power to enforce an arrangement.
On the issue of not giving guidelines, I am certainly very open to that and I discussed this very point again with senior counsel who told me that it is something of a philosophical argument. I am way outside my area of expertise but it is essentially civil versus common law and that one approach is to give judges discretion and let a set of case law build up quickly, to which the courts would refer or that the Oireachtas could provide guidelines. There are people on both sides of that argument as to which is better. I certainly would not live or die by either, so I would be very happy to consider what the Minister believes would be most workable.
It was stated that the level of arrears on a loan is a matter of specific relevance in the determination of every court application made for possession. I have covered that point and I take the Minister’s point on the adjournment but, ultimately, the court cannot stop a possession on foot of it.
On the implications for the banks, an area about which I feel a bit more comfortable talking, it was stated that statutory provision could render a financial institution’s security illusory and undermine the credibility of all secured debt, that this would disadvantage any new mortgage seekers from being granted home loans by the banks as the concept of security would become meaningless and that it is obvious that this provision gives rise to substantial constitutional issues pursuant to Article 43 of the Constitution. I disagree with that; I do not believe it does. It is very much at the margin. In the same way as the proposed personal insolvency Bill is in a way retrospective in that it allows people do things under existing contracts, this would be exactly the same. The safeguard is that the judge would have discretion. If I tried to introduce a Bill which stated that possession is now not possible, then something like that might happen but certainly it is at the margin. I do not believe that it would cause the above because of the low scale and the discretion of the courts in the same way as I do not believe Minister’s Bill would. His Bill will be open to the same argument.
It was stated that this provision could effectively incentivise those who have sufficient income to discharge mortgage obligations to cease making mortgage repayments. It is the moral hazard argument. Again, that is why discretion is given. I have spent very little time in the courts but I would hope a judge would be able to see someone who is trying play the system, apply his or her discretion and say he or she is granting possession.
It was stated that this would have a catastrophic impact on our recapitalised financial institutions and could lead to further public money being required. From an economic perspective, I do not see that at all. We have already given them €7.5 billion and they are not using one cent of it. They are taking the hit on their balance sheets but they have the money. The number of possession cases which come up is negligible relative to the €7.5 billion, so I do not accept that it would have an effect on the financial institutions that has not already been provided for by the State many times over.
The next issue is the current market value of the home and the amount of mortgage debt and judges taking this into consideration, which already happens. The intention is that the judges would be able to consider the current market value in the same way as the Minister stated they do for adjournments and so forth.
The next point is a very substantive one. It was stated that there is a danger that this proposal could very well contravene the Constitution and allow the court to retrospectively and unilaterally rewrite a valid contract. I am not a constitutional lawyer but Professor Gerry Whyte looked at this and did not seem to think it would. I will not read Article 43 out but it basically refers to private property and that when one owns something, one owns it and it cannot be taken from one. Article 43 states: “The State, accordingly, may as occasion requires, delimit by law the exercise of said rights [the right to private property] with a view to reconciling their exercise with the exigencies of the common good.” I understand from Professor Whyte that it may not be in contravention and that there is provision in the Constitution for this kind of approach. Obviously, if it was felt that it was constitutionally invalid, we would have to figure that out. The Minister referred to the future value of the property and I take his point. The point on clairvoyance is well taken and I agree.
The Minister stated that enacting a Bill which requires the courts to consider unnecessary, unworkable and constitutionally flawed factors will not improve the situation. That would be a terrible situation but that is the point of the parliamentary process.
The Minister raised several technical factors which it seems could be addressed. It seems the nub of this legislation could be included in the personal insolvency Bill which will be brought forward. I worked very closely with Ross Maguire SC on this and consulted a lot with New Beginning. As the Minister said, they are doing this work free for some of the most exposed people. It is their opinion, as people working on this every day, that this additional piece matters. They are seeing situations where the bank is saying that no matter what one does, it can take one’s family home but this would say that it cannot and that under appropriate circumstances, it does not have an automatic right to one’s family home. In their opinion, this would be a really useful addition to the legislation proposed.
Deputy Alan Shatter: I very much appreciate Deputy Donnelly’s response. On the basis that it is accepted that there are difficulties with this legislation, instead of dividing the House on the matter, would Deputy Donnelly consider withdrawing the Bill and engaging in the constructive dialogue he talked about in the context of the personal insolvency Bill?
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