Written answers

Tuesday, 27 May 2014

Department of Finance

Mortgage Resolution Processes

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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17. To ask the Minister for Finance in view of the varying approaches of different banks to dealing with mortgage distress, and particularly the stated intention of some banks to pursue mortgage holders for the full amount of their mortgage, even after they have been required to give up their family home, in cases of voluntary surrender, the measures he is considering to ensure greater fairness and consistency for mortgage holders; and if he will make a statement on the matter. [22281/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Central Bank Code of Conduct on Mortgage Arrears, or CCMA, applies to the mortgage loan of a borrower which is secured by his/her primary residence.  The CCMA sets out a common framework - the Mortgage Arrears Resolution Process, or MARP, - which all lenders must use for mortgage borrowers in or facing arrears.  The steps in this MARP process are:

Step 1 - communication with borrowers,

Step 2 - financial information

Step 3 - assessment and

Step 4 - resolution.

In seeking to resolve a mortgage difficulty, the CCMA also requires lenders to explore all of the options for alternative repayment arrangements offered by that lender and provision 39 of the CCMA sets out a schedule of possible alternative repayment arrangements.  The Central Bank, however, does not have the power to compel lenders to offer specific products.  It is at the discretion of each lender as to which alternative repayment arrangements it offers to borrowers in arrears.  Nevertheless, in this context, the CCMA requires lenders to handle cases in a sympathetic and positive manner, with the objective at all times of assisting the borrower to meet his/her mortgage obligations.  It also requires a lender to document its considerations of each option examined, including the reasons why the options(s) offered to the borrower is/are appropriate and sustainable for his/her individual circumstances and why the option(s) considered and not offered to the borrower is/are not appropriate and not sustainable for the borrower's individual circumstances. 

If a lender does not offer a borrower an alternative repayment arrangement, for example, where it is concluded that the mortgage is not sustainable and an alternative repayment arrangement is unlikely to be appropriate, the lender must provide the reasons, on paper or another durable medium, to the borrower. In these circumstances, the lender must inform the borrower of the following:

- other options available to the borrower, such as voluntary surrender, trading down, mortgage to rent or voluntary sale and the implications of each option for the borrower and the importance of seeking independent advice in relation to these offers;

- the borrower's right to appeal the decision of the lender not to offer an alternative repayment arrangement to the lender's Appeals Board;

- that legal proceedings may commence three months from the date the letter is issued or eight months from the date the arrears arose, whichever date is later, and that, irrespective of how the property is repossessed and disposed of, the borrower will remain liable for the outstanding debt, including any accrued interest, charges, legal, selling and other related costs, if this is the case;

- that the borrower should notify the lender if his/her circumstances improve;

- the importance of seeking independent legal and/or financial advice;

- the borrower's right to consult with a Personal Insolvency Practitioner;

- the address of any website operated by the Insolvency Service of Ireland which provides information to borrowers on the processes under the Personal Insolvency Act 2012; and

- that a copy of the most recent standard financial statement completed by the borrower is available on request.

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