Dáil Éireann Debate, Tuesday - 26 March 2013
177. Deputy Joanna Tuffy asked the Minister for Finance if any consideration has been given to the extension by banks of the moratorium on repossessions to a period longer than 12 months; and if he will make a statement on the matter. [14714/13]
View answerI have been informed by the Central Bank that under the Code of Conduct on Mortgage Arrears (CCMA), where a borrower co-operates with a lender, the lender must wait at least 12 months before applying to the courts to commence legal action for repossession. This 12-month moratorium is intended to provide co-operating borrowers with the necessary time to agree an alternative repayment arrangement with their lender. It commences 31 days after arrears have first arisen on a mortgage account and excludes any time period during which:
the borrower is complying with the terms of any alternative repayment arrangement;
the borrower can consider whether he/she wishes to appeal a decision of the Arrears Support Unit;
an appeal by the borrower is being processed by the lender’s Appeals Board;
and a complaint from the borrower is being processed by the Financial Services Ombudsman.
Under the CCMA, there are two scenarios that affect the application of the 12-month moratorium:
1. Where a lender has complied with the Mortgage Arrears Resolution Process (MARP) and offered an alternative repayment arrangement to the borrower, the 12-month moratorium does not continue to apply if the borrower declines the arrangement offered. A lender must, however, allow for the borrower’s right of appeal to the lender’s internal Appeals Board and to refer the appeal to the Financial Services Ombudsman.
2. Where a lender has deemed a borrower’s mortgage to be unsustainable and declined to offer an arrangement, that lender must wait for whatever period of time remains on the moratorium before commencing legal action. This allows such borrowers some time to consider their situation and to make alternative arrangements.
In relation to 1 above, and in the context of the new Personal Insolvency Act, the Central Bank is now proposing that a lender should be required to give a 30-day notice period, before commencing legal action, to a borrower who has declined an arrangement. This would allow the borrower a period of time to consider his or her options, particularly whether to consult a Personal Insolvency Practitioner.
In relation to 2 above, the Central Bank is seeking views on whether the 12-month moratorium should continue to apply where a lender has deemed a mortgage to be unsustainable (bearing in mind that the time remaining will vary, depending on the length of time a lender has taken to assess a borrower’s case). Or whether the 30 day notice period outlined above, is a sufficient alternative period of time for a borrower to consider his or her options in this circumstance.
The Central Bank has commenced a consultation process on the “Review of the Code of Conduct on Mortgage Arrears” (CP63). Submissions should be emailed to the Bank on or before 10 April 2013. Full details are available on www.centralbank.ie.
