New Code of Conduct on mortgage arrears good news for homeowners in difficulty

Senator Maria Corrigan has welcomed a new revised code of conduct on Mortgage arrears announced by the Central Bank following the recent recommendations made by an expert group set up by the Government to look into the issue.

“I am happy to see that this new Code of Conduct on Mortgage Arrears (CCMA) is putting a firm focus on under pressure homeowners.”

“The Code contains workable solutions that will assist homeowners under threat of losing their homes while also ensuring that all payment obligations are met.”

 “It is vital that borrowers engage with their lenders and as part of this new Code, arrears charges or surcharge interest will not be imposed on borrowers who are in arrears and who are co-operating with the new Mortgage Arrears Resolution Process (MARP) with effect from 1 January 2011.”

“Lenders are now obliged to engage with borrowers in a consumer friendly manner and make information available to them.”

“Another important new term in the Code is that lenders cannot contact borrowers more than three times in a calendar month relieving serious pressure on some borrowers.  I am particularly pleased to see this measure included.  I am very aware of the enormous pressure that frequent contacts from lenders have put individual and their families under and the impact that this has had on their wellbeing.  This is something I raised on a number of occasions in the Seanad as an example of unacceptable behaviour from lenders that boarded on harassment.”

“As part of the new measures those on Tracker mortgages can now also be assured that lenders cannot change them to another type of mortgage just because they are in arrears.”

“In South Dublin in particular I know that there are many families who are struggling but they should be reassured that if they are willing to engage with their lender that Fianna Fáil has now put in place practical measures to help them to safeguard the family home.”

“Already, almost 18,000 families are being assisted with the Mortgage Interest Supplement and banks must also wait for 12 months before they can apply for repossession.  I am hopeful that the new Code of Conduct on Mortgage Arrears will further help families in difficulty,” concluded Senator Corrigan.

The revised CCMA includes more detailed requirements for lenders when dealing with borrowers experiencing arrears and financial difficulties.

These include:
        the CCMA will now apply to borrowers who notify their lender that they are facing financial difficulties and may be at risk of mortgage arrears i.e. pre-arrears cases;

        lenders must establish a Mortgage Arrears Resolution Process (MARP) and use this framework when dealing with arrears and pre-arrears customers;

        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;

        lenders cannot initiate more than three unsolicited communications with a borrower, by whatever means, in a calendar month other than correspondence required by the CCMA or other regulatory requirements;

        a lender must not require a borrower to change from an existing tracker mortgage to another mortgage type, as part of an alternative arrangement offered to the borrower in arrears or pre-arrears.