I move:
That leave be granted to introduce a Bill entitled an Act to provide for the establishment of a Mortgage Resolution Office; to provide for a non-judicial Mortgage Resolution Order concerning mortgages over family homes; to provide for an independent appeals process against decisions of the Mortgage Resolution Office; and to provide for related matters.
I am pleased to introduce this important Private Members' Bill on behalf of Fianna Fáil. The mortgage arrears crisis is not over. Over 41,000 family home mortgages have been in arrears for a year or longer. These mortgages have a combined value of €8.8 billion, with arrears of €2.6 billion. Behind each one of these statistics is an individual or a family struggling with debt and often with little hope for the future. The programme for Government promised that a new court would be established "to sensitively and expeditiously handle mortgage arrears and other personal insolvency cases, including through imposing solutions, including those recommended by the new service". We have seen no such legislation from the Government and we do not have a date for such legislation.
The Bill I am introducing today on behalf of my party is designed to help mortgage holders in arrears to secure sustainable solutions and to help them to stay in their family homes. An independent mortgage resolution office will be established. It will work from a suite of restructuring options and will have the power to impose a resolution in a mortgage arrears case. In the case of the family home, the effect of this Bill will be to remove the bank veto. Home owners who are in mortgage distress will be able to engage with the Money Advice & Budgeting Service, MABS, and the Abhaile service throughout the process so they can obtain independent legal and financial advice on their situations and on the options open to them.
Stiff penalties, including the ultimate loss of the home, can currently be imposed on home owners who do not engage with their lenders when they get into financial trouble. There are no such issues when banks choose not to engage with the insolvency process. The bank can simply walk away. This Bill would put a stop to that by removing the veto from the banks when it comes to mortgage arrears. MABS and other personal insolvency practitioners, including the Association of Personal Insolvency Practitioners, have said the bank veto is one of the major issues in mortgage arrears cases.
This Bill would rebalance the scales in favour of the home owner, who will be able to apply to the mortgage resolution office to seek to have the office make a mortgage resolution order. The lender would have to find sustainable solutions in each mortgage arrears case. If it does not do so, the mortgage arrears office would analyse the case and make a mortgage resolution order that can be binding on both the lender and the borrower. All legal action would be halted while cases are being analysed and when orders are made. This would remove the pressure that is currently on the courts system and remove the threat to the home owner, which is currently a source of major distress, as we know.
The mortgage arrears office would have an entire suite of solutions available to it when it is making orders. These solutions would include split mortgages, interest-only payments, mortgage term extensions, etc. Critically, the office would also have the mortgage-to-rent scheme as a potential option. As we all know, this scheme is not working at the moment. It is hoped that by giving it statutory recognition and including it in a menu of options open to the independent office, the Government would have to reform and stand behind the mortgage-to-rent scheme. Many media reports have suggested that the Government is planning a large-scale mortgage-to-rent scheme, but nothing has happened. All the while, more and more mortgage holders are losing their homes through voluntary surrender, voluntary sale and, in some cases, repossession following a court order.
In our view, the banks should not have been given a veto in the insolvency process. Under the code of conduct on mortgage arrears and under existing law, the bank decides which restructuring option, if any, should be offered to a mortgage holder. It is also the bank the decides whether a mortgage is sustainable or can be made so. In our view, the key missing ingredient in resolving mortgage arrears cases is giving an independent office the power to make the final decision on the future of a mortgage. Our Bill seeks to remedy this. I look forward to a full debate on it in this House shortly.
