I have been advised by the Central Bank of Ireland that the Code of Conduct on Mortgage Arrears 2013 (CCMA) seeks to ensure that lenders have fair and transparent processes in place for dealing with borrowers in or facing mortgage arrears. All cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his or her mortgage obligations.
The Central Bank expects that where a co-operating borrower is complying with the terms of an alternative repayment arrangement (ARA) and where the borrower’s circumstances have not changed, the terms of the ARA will continue to be honoured. Where the borrower’s circumstances have changed, in line with Provision 40 of the CCMA, any change to the ARA must be appropriate and sustainable for the borrower’s circumstances.
Provision 42 of the CCMA requires that where an alternative repayment arrangement is offered by a lender, the lender must advise the borrower to take appropriate independent legal and/or financial advice and provide the borrower with a clear explanation, on paper or another durable medium, of how the alternative repayment arrangement works. This explanation must include the frequency with which the alternative repayment arrangement will be reviewed, the reason(s) for the reviews and the potential outcome of the reviews, where:
(i) circumstances improve,
(ii) circumstances disimprove, and
(iii) circumstances remain the same;
Lenders must ensure that any changes to the ARA are proportionate to the change in the borrower’s circumstances.