All mortgage lenders have been banned from taking legal action against borrowers in arrears for one year after the householders have missed their first home loan repayments.
The lenders were written to by the Financial Regulator, informing them the new measures will come into effect from 17 February this year.
The measures now cover sub prime lenders, which had not been covered by a voluntary code of conduct.
In a statement, the Regulator said ‘the 12 month requirement does not apply where the borrower is deliberately not engaging with the lender.’
It added ‘The Financial Regulator is of the view that lenders should only seek repossession in less than 12 months in very exceptional circumstances and when all reasonable attempts to encourage engagement by the borrower have failed.’
Companies which fail to comply face the threat of fines of up to €5 million.
