Dáil Éireann Debate, Tuesday - 8 April 2014
115. Deputy John Browne asked the Minister for Finance if his attention has been drawn to the fact that some financial institutions are advising customers that the statutory codes of protection for mortgages are just aspirations; and if he will make a statement on the matter. [16322/14]
View answer117. Deputy John Browne asked the Minister for Finance if there is a discrepancy in the code of conduct on mortgage arrears where it states that lenders must act in the best interests of their customers when certain lenders are clearly not acting in the best interests of their customers by refusing to engage with their customers other than seeking sale or surrender; his views on whether there should be a clause which requires lenders to co-operate with borrowers; and if he will make a statement on the matter. [16324/14]
View answer122. Deputy Terence Flanagan asked the Minister for Finance if lenders have the legal authority to seek a standard financial statement in regard to arrears on a non-principal dwelling house mortgage; and if he will make a statement on the matter. [16345/14]
View answerI propose to take Questions Nos. 115, 117 and 122 together.
The Code of Conduct on Mortgage Arrears (CCMA) sets out requirements for mortgage lenders dealing with borrowers facing or in mortgage arrears on a mortgage secured on their primary residence. The CCMA was put in place under section 117 of the Central Bank Act 1989 and lenders covered by the Code are required to comply with it as a matter of law. The Central Bank has the power to administer sanctions for a contravention of the CCMA.
The CCMA provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender, and that long term resolution is sought by lenders with each of their borrowers in mortgage difficulty. It also sets out that mortgage arrears and pre-arrears cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his/her mortgage obligations.
The CCMA sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or in pre-arrears. This framework is known as the Mortgage Arrears Resolution Process (MARP) which sets out the steps which lenders must follow:
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrowers circumstances; and
Step 4: Propose a resolution.
In order to determine which options for alternative repayment arrangements are viable for each particular case, a lender must explore all of the options for alternative repayment arrangements offered by that lender having assessed the borrower's financial circumstances using the Standard Financial Statement (SFS).
If a borrower is offered an alternative repayment arrangement, the lender must give the borrower a clear explanation of the proposed arrangement and how it works, including the reason why the lender considers it to be appropriate and sustainable for the borrower. The lender must also provide the borrower with the advantages of the offer and explain any disadvantages.
If the lender is not offering the borrower any alternative repayment arrangement, the lender must give the reasons why in writing. The lender must also inform the borrower that a copy of the most recent SFS is available on request, and provide the borrower with details in writing, including:
· other options available to the borrower, such as voluntary surrender, trading down, mortgage to rent or voluntary sale and the implications of each option for the borrower and his/her mortgage loan account
- the borrower's right to make an appeal to the lender's internal Appeals Board
- the website of the Insolvency Service of Ireland
- that legal proceedings may commence three months from the date the letter is issued or eight months from the date the arrears arose, whichever date is later
- that the borrower should notify the lender if his/her circumstances improve;
- the importance of seeking independent legal and/or financial advice.
Borrowers can also make an appeal to the lender's Appeals Board if they are not happy with the alternative repayment arrangement offered or where a lender declines to offer an alternative repayment arrangement or if they believe they have been wrongly classified as "not co-operating". If a borrower is not happy with the way that their lender is dealing with them, or if they think the lender are not complying with the CCMA, the borrower can make a complaint to their lender. If the borrower is not happy with the outcome of the complaint made to the lender they can refer the matter to the Financial Services Ombudsman (FSO). Further information on how to make a complaint to the FSO is available at www.financialombudsman.ie.
The Code of Conduct on Mortgage Arrears (CCMA) applies to the mortgage loan of a borrower which is secured by his/her primary residence and it also applies to a buy-to-let mortgage where the buy-to-let is the only residential property in the State owned by the borrower. A lender is only required to use a SFS to obtain financial information from a borrower in arrears or in pre-arrears where the loan is a mortgage loan to which the CCMA applies. However, this does not preclude a lender from using the SFS in respect of other loans.
