Revised Code of Conduct on Mortgage Arrears

Key points:
The revised Code of Conduct on Mortgage Arrears provides robust protection to consumers in mortgage difficulty

  •       The new Code specifies the concrete actions lenders must take in the fair treatment of their customers in order to deal with their mortgage arrears situation as part of a resolution (or MARP) process; it also specifies the series of steps which borrowers need to take in order to engage with their lender;
  •        In providing a practical roadmap for borrowers in distress, the Code ensures that, at a minimum, eight months will have passed between arrears arising and any legal action being taken on repossession.  Of course, a longer period is allowed if that is necessary to complete the MARP (resolution) process.
  •         For the first time, lenders will be obliged to give 3 months notice before they are allowed to commence any legal action on crisis arrears cases, and can only take this course after they have exhausted all other options
  •         The revised Code requires both lender and borrower to engage in focused activities during the vital first twelve months of mortgage arrears, facilitating the MARP process, rather than allowing the situation to deteriorate, as occurred in the past.
  •         The Government is eager for borrowers in difficulty to fully engage in the MARP process as independent research by the Central Bank earlier this year showed that over 70% of borrowers who availed of the MARP process were broadly positive. 
  •         The Code of Conduct is focused on ensuring early engagement with customers in difficulty so as to prevent the problem getting out of control.
  •        The tools are now in place, with a broad framework of supports to help borrowers towards a sustainable solution to their mortgage difficulty. For example:
  •        the new Code incorporates a distinct MARP resolution – phase which can take several months; in the event of ultimate failure to resolve the case, an obligatory 3 month notice period applies to any proposal for legal action;
  •         the Code also incorporates an appeal phase if the borrower is unhappy with the offer by the lender, with set timelines for respective engagements;
  •         in the new Code, the borrower will be equipped with full information on what the lender’s offer of an alternative repayment arrangement means; what supports are available to him, including mortgage advice and the new personal insolvency services;
  •        the Personal Insolvency framework is now underway, providing alternative, non-judicial mechanisms, to resolve consumers’difficulties with mortgage and other debts;
  •         lenders will also be required to provide a MARP booklet containing information on the suite of solutions being offered to the borrower by that institution.
  •         This Government has been putting in place a system to deal with the large mortgage arrears problem that was allowed to develop without any remedial actions by the previous Govt