Lending institutions such as banks and building societies are bound by two statutory codes of conduct in relation to mortgages. These are the Central Bank's Code of Conduct on Mortgage Arrears (CCMA) and its Consumer Protection Code 2012.
Local authorities operate under similar rules. For people having difficulty repaying local authority loans, two pieces of legislation, along with a set of guidelines, provide for the local authority to make arrangements to deal with the situation - (see ‘Local authority loans’ below).
If you are having difficulties paying your mortgage, you should talk to the lending institution as soon as possible. Your lender must take certain steps to deal with any problems you have in paying your mortgage. Repossessing your home should be the lender's last resort.
The Central Bank's Code of Conduct on Mortgage Arrears (pdf) is the main code of relevance to people whose mortgage is in arrears or in danger of slipping into arrears. It requires lenders to wait 12 months before taking legal action about mortgages in arrears. However, this requirement does not apply if a borrower is deliberately not engaging with the lender.
The CCMA requires mortgage lenders to adopt specific procedures when dealing with borrowers experiencing arrears and financial difficulties. Such procedures must be aimed at helping you as far as possible in your own particular circumstances.
Recent developments: The Central Bank has published a consultation paper (pdf) on proposed revisions to the CCMA. It will issue a revised version of the Code, based on the outcomes of the consultation, by the end of May 2013. In the interim, it has published clarifications and interpretations of some provisions of the CCMA as it stands – see “Clarifications of CCMA” below.
Scope of CCMA
The CCMA applies to mortgages on primary residences only. It defines primary residence to include “a residential property in this State which is the only residential property owned by the borrower” as well as the more common definition of “the residential property which the borrower occupies as his/her primary residence in this State” (your main home).
The purpose of this wider definition is to apply the protections of the CCMA to people who are trying to maximise their income to help pay the mortgage on their main residence or home, whether or not they actually live in it.
The Code also covers borrowers in pre-arrears. It defines pre-arrears as follows: "A pre-arrears case arises where the borrower contacts the lender to inform them that he/she is in danger of going into financial difficulties and/or is concerned about going into mortgage arrears".
The CCMA applies to all mortgage lenders operating in the State, apart from credit unions and local authorities (see ‘Local authority loans’ below).
Requirements of CCMA
The CCMA sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or in pre-arrears. It requires lenders to handle all such cases sympathetically and positively, with the objective at all times of helping people to meet their mortgage obligations.
Under the CCMA, lenders must have the following:
Lenders must also:
Lenders must not:
In general, if you feel that your mortgage lender has failed to follow the CCMA, and if you have exhausted the appeals process, you can complain to the Financial Services Ombudsman.
However, since 7 February 2013, the Financial Services Ombudsman cannot pursue complaints against the Irish Bank Resolution Corporation (IBRC) without the consent of the High Court.
The Central Bank has published a booklet for consumers 'Mortgage Arrears – A Consumer Guide to Dealing with your Lender' (pdf) along with a set of FAQs (pdf).
The Free Legal Advice Centres (FLAC) have published a guide to the CCMA (pdf).
The Central Bank has published 2 documents which clarify the provisions of the CCMA. They are a set of interpretations on contact provisions (pdf) and a set of clarifications on contact and other issues (pdf). The contact provisions of the Consumer Protection Code 2012 (see below) are also clarified.
The Central Bank's Consumer Protection Code 2012 applies to the regulated activities of regulated entities operating in the State. (These terms are explained in the 'Definitions' chapter of the Code.)
The Code includes requirements setting out how regulated entities must deal with and treat consumers who are in arrears on a range of loans including credit cards, personal loans and buy-to-let mortgages. It does not apply to mortgages on a primary residence – these are covered by the Code of Conduct on Mortgage Arrears, described above.
The Consumer Protection Code requires lenders to seek to agree an approach that will assist a consumer in dealing with an arrears problem.
The Code also provides that the lender must:
Lenders must not:
The Consumer Protection Code 2012 replaces the original Consumer Protection Code, which came into effect in 2007.
The Central Bank has published a consumer guide to the Consumer Protection Code (pdf).
Section 11 of the Housing (Miscellaneous Provisions) Act 1992 provides that the local authority may make such monetary arrangements with you as it considers equitable to take account of your particular circumstances. In effect, this means that, if you are having problems making your repayments, you should approach the local authority to see if you can make an arrangement to facilitate you paying over a longer term or to restructure the repayments in some other way.
Detailed guidelines (pdf) have been issued to local authorities on how to deal with such cases. These guidelines are based on the Central Bank’s Code of Conduct on Mortgage Arrears, described above.
The Housing (Miscellaneous Provisions) Act 2009 provides that where you owe money to a local authority either for rent or loan repayments and the local authority is satisfied that you would otherwise suffer undue hardship, it may make an arrangement with you to repay by instalments. This section (Section 34) is in effect with respect of loan repayments since 14 June 2010 but not in respect of rent.
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.