New Rules Finalised For Mortgage Lenders

A list of new rules to curtail aggressive behaviour by mortgage lenders are to come into force in January, according to the Central Bank this morning.

The Central Bank of Ireland today issued its revised Code of Conduct on Mortgage Arrears (CCMA) for all regulated mortgage lenders, which the bank said have been revised under the recommendations of the Government’s Mortgage Arrears and Personal Debt Group.

Under the new rules, those borrowers who notify their lender that they are facing financial difficulties and may be at risk of heading into mortgage arrears will be able to claim some protections under the CCMA.

Lenders must first establish a Mortgage Arrears Resolution Process (MARP) with mortgage holders and under which they will be limited to than three unsolicited communications with a borrower, by whatever means, in a calendar month.

The lending institutions will also be barred from forcing Mortgage holders to change from existing tracker mortgages to other mortgage types.

Also under the new rules, lenders must ensure that communications with borrowers are presented in a "clear and consumer-friendly manner" and must make available to borrowers an information booklet, which provides details on the MARP requirements.

Commenting on today's publication Bernard Sheridan, Assistant Director General, Consumer Protection, said: "The revised CCMA published today introduces new measures to protect people in arrears. It aims to ensure that all lenders use a fair and more consistent approach when dealing with customers in arrears or facing the possibility of arrears.

"It also recognises the importance of lenders working with borrowers to meet their mortgage obligations and for borrowers, who co-operate and engage with their lender, to be protected when they are trying to address their situation."

Last month, the Mortgage Arrears and Personal Debt Group, who advised the Central Bank on its CCMA scheme, attracted criticism after saying they would not be recommending a formal 'debt forgiveness' scheme for mortgage holders in serious arrears.

The announcement came after figures from the Central Bank revealed one in 20 Irish mortgages have been in arrears for over 90 days.

The worrying data showed 40,472 mortgages were in arrears for over the 90-day period at the end of September, equating to over double that of last year's figure.

The Mortgage and Personal Debt Group, said repossession levels in Ireland remain substantially lower than those seen in the UK and that restraint among those in difficulty was having a beneficial effect.

Following the announcement, the Labour party's spokesperson on Housing Ciarán Lynch said the report was almost "entirely devoid of any concrete solutions", and described the report as "ultimately a further deferment of the mortgage arrears problem" and "a huge disappointment to the thousands of families across to the country."

Mortgage defaults and the accrual of arrears are expected to sky rocket under the Government's upcoming austerity budget while unemployment levels remain at record levels.

(DW)