Central Bank revises mortgage arrears code of conductThursday 27 June 2013 22.34
The Central Bank has published a revised code of conduct on mortgage arrears, setting out how banks and other mortgage lenders should deal with customers in arrears.
Among other changes, it abolishes the previous limit of three contacts per month from banks to customers in arrears and introduces a three-month notice period before a bank moves to seek a repossession order.
The Code of Conduct on Mortgage Arrears is designed to protect bank customers who are in arrears.
But the Central Bank also wants the lenders to get on with the process of dealing with the huge arrears problem that has built up by offering permanent mortgage solutions to customers who are unable to meet their current mortgage terms.
Following a consultation with banks and consumer groups, the Central Bank has changed the code to allow lenders to make more than three contacts per month with customers in arrears, but they will not be allowed to harass customers.
Borrowers in arrears who are co-operating with their lender will be given a three-month notice period to review their options before the bank can seek a court order to repossess.
The period for new arrears cases is eight months.
There is more transparency in the process, including an obligation on banks to explain the process to customers and help them to fill in forms, such as the standard financial statement.
Banks will also be permitted to remove tracker contracts from distressed mortgage holders, according to the new code.
The tracker can be removed "where there is no other sustainable option available" and "only as a last resort, where the only alternative option is repossession of the home", the Central Bank said.
"Lenders must be able to demonstrate that there is no other sustainable option that would allow the borrower to keep the tracker rate, and the arrangement offered must be a long-term, sustainable solution that is affordable for the borrower," the bank added.
"The protection of borrowers who are facing or are currently in mortgage arrears, and the resolution of those cases, remains a top priority for the Central Bank,'' the Director of Consumer Protection Bernard Sheridan said as the code was launched.
"We carried out this review to strengthen consumer protections where necessary and to ensure the code is facilitating the resolution of each arrears case in a fair, sustainable and transparent way," he added.
Group says code fails to help those in arrears
An advocacy group for people in debt has said the new code will have no meaningful impact.
Speaking on RTÉ's Morning Ireland, New Beginning spokesperson Vincent P Martin described the code as "mere window-dressing" and said it failed to help those in arrears.
However, Mr Martin said the code was a "stop-gap measure" and an attempt by banks to delay dealing with the issue of mortgage arrears.
He said: "Action is what we need. We need to face up; stop talking about codes, tinkering with issues, face up to the issue and fix it.
"Living in suspense, kicking the can down the road, old codes, new codes, moratorium replacing moratorium, stop-gap measures is mere window-dressing," he said.
Mr Martin said that while the new code may not lead to any deals being made between banks and homeowners, reports the code will lead to a rise in home repossessions were still "over-hyped".
The new code comes into effect from 1 July.