Dáil Éireann Debate, Tuesday - 9 February 2010
183 Deputy Terence Flanagan asked the Minister for Finance his plans to ensure that the moratorium on housing repossessions and the code of conduct on mortgage arrears will be extended for those 6,400 households who have failed to pay their mortgages for a year or more and will be open to repossession of their homes from March 2010; and if he will make a statement on the matter. [6333/10]
View answerOn 27 February 2009 a Code of Conduct on Mortgage Arrears (the Code) was introduced for all mortgage lenders. This Code contained a requirement that lenders must wait six months from the time arrears first arise before applying to the courts to commence enforcement of any legal action on repossession of a borrower's primary residence. In response to the continuing difficulties being faced by mortgage holders, the Financial Regulator has written to all mortgage lenders informing them that with effect from 17 February 2010, the Code has been amended to require that lenders must now wait twelve months from the time arrears first arise before applying to the courts to commence enforcement of any legal action on repossession of a borrower's primary residence.
Contraventions of the Code may be subject to the imposition of administrative sanctions by the Financial Regulator. The requirements of the Financial Regulator's Consumer Protection Code, including those on mortgage arrears, continue to apply. The updated code and letter issued to institutions on Friday 5 February 2010 is available on the website at http://www.financialregulator.ie/processes/consumer-protection-code/Pages/codes-of-conduct.aspx.
While the extension of the statutory code to 12 months is a welcome development, it should be noted that it does not necessarily follow that legal action will commence once the statutory 12 month timeframe has elapsed. The revised Code on Mortgage Arrears mandates that the lender “must not seek repossession of the property until every reasonable effort has been made to agree an alternative repayment schedule with the borrower”. Further, even where legal action is being taken to obtain an order for repossession, the Code mandates the lender to maintain contact with the borrower and, if agreement can be reached “the lender must enter into repayment arrangements and put on hold proceedings in the event of agreed regular repayments being maintained.”
In addition, the Irish Bankers Federation published a Statement of Intent in November 2009 which provides further reassurance to homeowners who find themselves genuinely unable to maintain repayments on their principal private residence. The Statement of Intent has been agreed and supported by all IBF members. The IBF Oversight Committee on the implementation of the Statement of Intent will include a representation from the Money Advice and Budgeting Service. Overall, I am satisfied that the new arrangements in place provide strong protections to all mortgage-holders who are genuinely unable to meet their mortgage commitments.
