Code of Conduct on Mortgage Arrears

The Code of Conduct on Mortgage Arrears (CCMA) (pdf) is the main code of relevance to people whose mortgage is in arrears or in danger of slipping into arrears. The original CCMA came into effect in February 2009 and required lenders to wait 6 months before taking legal action about mortgages in arrears. This was extended to 12 months in February 2010 (the 12-month requirement does not apply if a borrower is deliberately not engaging with the lender).

The Expert Group on Mortgage Arrears and Personal Debt reported in August 2010. Its recommendations included extensive changes to the CCMA. The code was revised in the light of these recommendations and the revised code came into force on 1 January 2011.

(Some mortgage lenders have signed up to one of the Expert Group's recommendations that was not incorporated in the Code. The Group recommended that a Deferred Interest Scheme should be introduced for borrowers who can pay at least 66% of the interest. This would give borrowers up to 5 years to get back on their feet. Several lenders set up such schemes in 2011.)

The CCMA builds on the Consumer Protection Code and on a voluntary code developed by the Irish Banking Federation. It applies to all mortgage lenders operating in the State, apart from credit unions.

If you feel that your mortgage lender has failed to follow either of these codes, and if you have exhausted the appeals process, you can complain to the Financial Services Ombudsman.

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) .

Scope of Code of Conduct on Mortgage Arrears

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/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 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.

Requirements of Code of Conduct on Mortgage Arrears

The Code 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:

• A Mortgage Arrears Resolution Process (MARP) to be used when dealing with arrears and pre-arrears customers. The 5 steps for the MARP are: communication; financial information; assessment; resolution and appeals. You can read more in our document on the Mortgage Arrears Resolution Process
• An Arrears Support Unit (ASU) to assess arrears and pre-arrears cases
• An internal Appeals Board to consider appeals from borrowers in relation to ASU decisions and the lender’s treatment of the borrower’s case under the MARP. This appeals process replaces the complaints process under the Consumer Protection Code.

Lenders must also:

• Ensure that communications with borrowers are presented in a clear and consumer-friendly manner
• Make an information booklet available to borrowers in arrears (or pre-arrears) including details on the MARP, relevant contact points for arrears issues and details of websites with mortgage arrears information, such as mabs.ie and keepingyourhome.ie
• Provide a dedicated section on their website for borrowers who are in or facing financial difficulties. This section must include the above booklet and links to the above websites.

Lenders must not:

• Initiate more than 3 unsolicited communications with a borrower, by whatever means, in a calendar month other than correspondence required by the CCMA or other regulatory requirements
• 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.