The Code of Conduct on Mortgage Arrears (CCMA) forms part of the Central Bank’s Consumer Protection Framework. It provides a strong consumer protection framework, requiring relevant firms to ensure that borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner and that due regard is had to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits.
Banks, retail credit firms and credit servicing firms servicing loans on behalf of unregulated loan owners are all required to comply with the CCMA. The CCMA recognises that it is in the interests of borrowers and regulated firms to address financial difficulties as speedily, effectively and sympathetically as circumstances allow. The CCMA sets out the Mortgage Arrears Resolution Process (MARP), a four-step process that regulated entities must follow:
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrower’s circumstances; and
Step 4: Propose a resolution
Each regulated entity must consider the borrower’s situation in the context of the solutions they provide, which may differ from firm to firm. The CCMA does not prescribe the solution which must be offered to address a mortgage difficulty. However, the CCMA includes requirements that arrangements be sustainable and based on a full assessment of the individual circumstances of the borrower and that possession be sought only as a last resort. Borrowers who engage with their lender, therefore, benefit from the protections afforded under the Mortgage Arrears Resolution Process (MARP).
Under the CCMA, a regulated entity may only commence legal proceedings for possession where it has made every reasonable effort to agree an alternative repayment arrangement with the borrower in mortgage difficulty and other clear requirements are met, or the borrower has been classified as "not co-operating". During the legal process, borrowers have opportunities to re-engage with lenders to find a solution. In some circumstances, however, loss of ownership may be unavoidable where there is an unsustainable mortgage.
In terms of the Courts process, the Land and Conveyancing Law Reform Act 2009 also provides that where applicable a lender may not, in respect of a housing loan, take possession of a mortgaged property without a court order or the prior consent in writing of the mortgagor. The Land and Conveyancing Law Reform Act 2013 further provides that, in any application for possession of a principal private residence, the court may having regard to certain stated matters (such as if the borrower had made any payments on the mortgage within the preceding twelve months) adjourn the proceedings with a view to allowing the borrower to consult a personal insolvency practitioner (PIP) and, where appropriate, to make a proposal for a Personal Insolvency Arrangement (PIA). In formulating a PIA, there is an onus on the PIP, insofar as is reasonably practicable, to do so on terms which will not require the borrower to dispose of an interest in or cease to occupy his/her principal private residence. Furthermore, should such a PIA be rejected by creditors, the Personal Insolvency Act 2015 now provides that a Court may where applicable review the PIA proposal and it can, if it considers that the PIA proposal offers a fair and equitable solution for both the debtor and his/her creditors, make an order to confirm the PIA.
