The Government attaches great importance to addressing the issue of mortgage arrears and wants to keep families in their homes and avoid repossessions insofar as possible. In this context, it is important to note that there are a number of protections already in place to protect borrowers in arrears. In particular, the Code of Conduct on Mortgage Arrears (CCMA) sets out how mortgage lenders must treat borrowers in or facing mortgage arrears, with due regard to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits.
The CCMA is a statutory code issued under Section 117 of the Central Bank Act, 1989. The CCMA applies to all regulated mortgage lenders operating in the State when dealing with borrowers facing or in mortgage arrears on their primary residence, including any mortgage lending activities outsourced by these lenders. Lenders are required to comply with all aspects of the CCMA and non-compliance with the CCMA is enforceable against regulated entities by the Central Bank.
Since revision in 2013 the CCMA requires all regulated lenders to wait at least eight months from the date the arrears arose before legal action can commence against a co-operating borrower. Separately, regardless of how long it takes the lender to assess a case, and provided that the borrower is co-operating, the lender must give three months' notice to the borrower before they can commence legal proceedings where the lender does not offer an alternative repayment arrangement or the borrower does not accept an alternative repayment arrangement offered by the lender. This gives co-operating borrowers time to consider other options such as a Personal Insolvency Arrangement.
The combined effect of these two protections (an eight month protection period and a requirement for three months' notice) is that, for a co-operating borrower, legal proceedings may not commence until three months from the date the letter (setting out one of the above positions) is issued or eight months from the date the arrears arose, whichever date is later. It is important to also note that the commencement of the court process is not a signal that a repossession will occur. It may often be the case that the process then prompts re-engagement by borrowers with cases being adjourned to allow both parties time to find a sustainable solution. Consequently, I would urge borrowers in arrears to contact the Money Advice and Budgeting Service (MABS) for free and confidential advice and support.
