Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The Central Bank has now concluded a review of the Code of Conduct on Mortgage Arrears, CCMA, following a public consultation process, with in excess of 230 submissions received. The revised CCMA was published on 27 June 2013 and came into effect on 1 July 2013. The submissions made, as well as a feedback document outlining the Central Bank's response to some of the main issues raised, have been published on the Central Bank's website, www.central bank.ie.

The CCMA provides an integrated and cohesive package of consumer protection measures for borrowers facing or in mortgage arrears. It reflects the current mortgage arrears situation and seeks to deliver on the following principles: to ensure appropriate resolution of each borrower's arrears situation; ensure that lenders deal with borrowers in a fair and transparent manner; support and facilitate meaningful engagement between lenders and borrowers; and ensure borrower awareness of the benefits of co-operating with their lender, and the consequences of not co-operating. With regard to the moratorium, to clarify, the 12 month moratorium applied from day 31 after arrears first arose and did not take into account any time taken by the lender to gather information from the borrower, complete an assessment or make an offer. The revised CCMA requires a lender to wait at least eight months from the date the arrears arose before legal action can commence against a co-operating borrower.

Separately, regardless of how long it takes the lender to assess a case, and provided that the borrower is co-operating, the lender must give three months' notice to the borrower before they can commence legal proceedings where the lender does not offer an alternative repayment arrangement or the borrower does not accept an alternative repayment arrangement offered by the lender.

This will give co-operating borrowers time to consider other options that may be available to them, such as voluntary surrender, voluntary sale or a personal insolvency arrangement, PIA. The combined effect of the protection period and the requirement for a notice period is that, for a co-operating borrower, legal proceedings must not commence until three months from the date the letter is issued - where the lender declines to offer an arrangement or where the borrower does not accept an arrangement offered - or eight months from the date the arrears arose, whichever date is later.

Additional information not given on the floor of the House

With regard to the Dunne judgment, the Government has taken steps to address a lacuna in the law arising from the High Court decision in July 2011 which created uncertainty in the law relating to the exercise by lending institutions of their repossession rights. A Bill which will ensure that statutory provisions in force prior to implementation of the Land and Conveyancing Law Reform Act 2009 on 1 December 2009 will continue to apply to mortgages created prior to that date was published at the end of March. The Bill has recently completed Committee Stage and will move to Report Stage shortly. However, one of the important provisions in the Bill is that it will give a discretionary power to a court to adjourn a repossession hearing in respect of a principal private residence - if it considers this to be appropriate - in order to allow the debtor to propose, and the secured creditor to consider, the possibility of a PIA as an alternative to repossession. In preparing a PIA, there is an onus on a personal insolvency practitioner to formulate a proposal, in so far as is reasonably practicable, on terms that will not require the debtor to dispose of an interest in or cease to occupy a principal private residence.

The Deputy will be aware that the Personal Insolvency Act 2012 provides new statutory insolvency frameworks to allow debtors - through the utilisation of professional personal insolvency practitioners - and creditors to consider an arrangement to resolve unsustainable mortgage and personal debt. It also provides a legal framework for the resolution of mortgage arrears as well as other personal debt. It will also provide certainty for borrowers and lenders alike regarding the consequences of non-payment and failure to reach agreement. The effect of this legislation is to rebalance the relationship between debtors and creditors and to offer more accessible and effective options to debtors to deal with debt difficulty. The Insolvency Service of Ireland, which will oversee the operation of the new insolvency frameworks, has been established and will shortly begin accepting applications for the new personal insolvency processes.

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