This Government has put in place a number of initiatives to assist homeowners in difficulty, including reform of Personal Insolvency legislation, the provision of independent advice to those dealing with debt issues and revision of the Code of Conduct on Mortgage Arrears.
The Code of Conduct on Mortgage Arrears (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. The Mortgage Arrears Resolution Process (MARP) framework, as set out in the CCMA, sets out the steps which lenders 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.
The latest Mortgage Arrears and Repossession statistics published by the Central Bank are available on their website at http://www.centralbank.ie/polstats/stats/mortgagearrears/Pages/releases.aspx.
With regard to restructuring of mortgage loans, the CCMA requires lenders to explore all of the options for alternative repayment arrangements offered by that lender, for each particular case. There are many types of restructure available for borrowers including interest only mortgages, reduction in the payment amount, temporary deferral of the payment, term extensions and capitalising arrears.
In their most recent release, the Central Bank restructures data shows that split mortgages, term extension and arrears capitalisation are the most common types of arrangement and amount to over half of the total restructures in place. This shows that engagement works and is delivering results.
If the lender does not offer the borrower an alternative repayment arrangement, for example, where it is concluded that the mortgage is not sustainable, the lender must provide the reasons, in writing, to the borrower. The lender must also inform the borrower that a copy of the most recent Standard Financial Statement (SFS) is available on request, and provide the borrower with details as set out in Para 45 of the CCMA, in writing.
The same information must be given to the borrower if he/she does not accept the alternative repayment arrangement offered by the lender.
Under the CCMA, a lender may only commence legal proceedings for repossession of a borrower's primary residence, after the failure of all reasonable efforts to agree an alternative repayment arrangement and in accordance with the timeframes set out in the CCMA.
If a borrower is not happy with the way that the lender is dealing with his/her case or believes that the lender is not complying with the CCMA, the borrower can make a complaint to the lender.
Borrowers can also make an appeal to the lender's Appeals Board if they are not happy with the alternative repayment arrangement offered or if they believe they have been wrongly classified as not co-operating.
If the borrower is not happy with the outcome of the appeal/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 strong view of the Government is that, in respect of co-operating borrowers under the Mortgage Arrears Resolution Process(MARP), repossession of a person's primary home should only be considered as a last resort. Every effort should be made to agree an acceptable arrangement as an alternative to repossession. Regretfully, however, it must also be accepted that due to the individual circumstances, not all mortgages can be made sustainable and that in these limited circumstances, it will be in the best interests of both parties to resolve the situation in a fair manner.
