Thursday, 12 December 2013
Department of Finance
Mortgage Repayments Issues
49. To ask the Minister for Finance the protection afforded to persons in mortgage difficulties due to sudden unemployment who request to have their mortgage put on an interest only payment plan, but instead their mortgage provider places them on a more expensive loan and cancels their mortgage protection without their consent; if the consumer protection code obliges banks to provide a full and transparent explanation for their decisions; and if he will make a statement on the matter. [53492/13]
The Deputy will be aware that the Code of Conduct on Mortgage Arrears (CCMA) sets out requirements for mortgage lenders dealing with borrowers facing or in mortgage arrears. The 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 CCMA sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or in pre-arrears. This framework is known as the Mortgage Arrears Resolution Process (MARP) which sets out the steps which lenders must follow:
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrowers circumstances; and
Step 4: Propose a resolution.
In order to determine which options for alternative repayment arrangements are viable for each particular case, a lender must explore all of the options for alternative repayment arrangements offered by that lender having assessed the borrower’s financial circumstances (through a Standard Financial Statement). Such alternative repayment arrangements may include:
- an interest-only arrangement for a period of time
- extending the term of the mortgage
- adding the arrears and interest to the mortgage, so that they are collected over the remaining term
- splitting the mortgage into an affordable loan and a remaining balance which is set aside to a later date
While lenders must consider such arrangements, they are not obliged to offer such an arrangement. If a borrower is offered an alternative repayment arrangement, the lender must give the borrower a clear explanation of the proposed arrangement and how it works, including the reason why the lender considers it to be appropriate for the borrower. The lender must also provide the borrower with the advantages of the offer and explain any disadvantages.
If the lender is not offering the borrower any alternative repayment arrangement, they must give the reasons why in writing. 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, in writing of:
- other options available
- borrowers right to make an appeal to the lender's internal Appeals Board
- the website of the Insolvency Service of Ireland
The same information must be given to the borrower if he/she does not accept the alternative repayment arrangement offered to by the lender.
If a borrower is not happy with the way that their lender is dealing with them or if they think they are not complying with the CCMA, the borrower can make a complaint to their 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.
Ultimately, if the borrower is not satisfied 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.
In addition, the Government has also provided an enhanced range of information and guidance services for mortgage holders including a dedicated information website www.keepingyourhome.ie, a mortgage arrears information and advice helpline (phone number: 0761 07 4050), and a dedicated "one to one" independent financial advice service from accountants for a borrower who has been provided a long term mortgage restructure offer by their lender.