I have been advised by the Central Bank of Ireland that, within their responsibilities for safeguarding stability and protecting consumers, its approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place.
The Code of Conduct on Mortgage Arrears (CCMA) forms part of the Central Bank’s Consumer Protection Framework. It is a statutory Code first introduced by the Central Bank in February 2009, with the current CCMA becoming effective from 1 July 2013. The CCMA provides a strong consumer protection framework, requiring relevant firms to ensure 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.
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. The CCMA includes requirements that arrangements be sustainable and based on a full assessment of the individual circumstances of the borrower and that repossession be used 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 repossession where it has made every reasonable effort to agree an alternative repayment arrangement (ARA) with the borrowers 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.
The Government is committed to supporting people in mortgage arrears to remain in their homes and there are a range of supports and services in place to assist people in that regard, including the Mortgage to Rent scheme; the personal insolvency system; and the Abhaile service which funds borrowers access to regulated financial or legal professionals.
As Minister for Finance, I am unable to interfere with any commercial decision of a financial entity and so I cannot comment specifically on whether institutions should be doing debt write-downs. However, I do think it is important to note that the review published last week of the Central Bank's Report on the Effectiveness of the Code of Conduct on Mortgage Arrears in the context of the Sale of Loans by Regulated Lenders states that for borrowers who engage with the process, the CCMA is working effectively and as intended.
Furthermore the Central Bank have stated that they will continue to assertively supervise regulated firms' compliance with the CCMA, track how long and short term arrangements are being applied to borrowers over time and that although strategy, commercial decisions and contractual rights of regulated entities cannot be interfered with, the Bank will investigate any patterns of behaviour it becomes aware of that suggests the CCMA is not being followed. The Central Bank will also engage with industry on providing fuller information to borrowers on the assessment of their case in relation to arrangements being considered or not.