Central Bank Outlines Additional Measures on Mortgage Arrears 

Press Release 13 March 2013

  New Mortgage Arrears Targets and Consultation on

Review of the CCMA Published

The Central Bank today (13 March 2013) announced new measures to address mortgage arrears, including the publication of performance targets for the main mortgage banks and proposed changes to the Code of Conduct on Mortgage Arrears (CCMA).

The new approach is aimed at ensuring banks offer and conclude sustainable solutions for their customers in arrears by setting specific performance targets and proposing revisions to provisioning standards. The Central Bank is also proposing to update the CCMA so that it continues to provide protection to customers who cooperate with their bank while facilitating and promoting the resolution of arrears cases.

Deputy Governor of the Central Bank, Matthew Elderfield, said: “The resolution of mortgage arrears is a key priority for the Central Bank and is important for the restoration of the banking system and economic and financial stability, as well as the fair treatment of borrowers.  We are therefore setting performance targets for the banks to end the impasse on arrears and to ensure that sustainable solutions are put in place for borrowers.  These targets will be backed by rigorous new provisioning standards and the possible imposition of higher capital requirements.  Now is the time to see real delivery from the banks’ on this critical issue.”

The Bank has set out specific performance targets for banks to ensure borrowers in arrears will be put on more sustainable solutions, suitable and tailored to their individual situation. Banks will be required to meet specific targets for proposing and concluding sustainable solutions for borrowers in arrears over 90 days. The targets will include:

  • Quarterly targets will be set in relation to the number of sustainable solutions proposed to customers.  These will become progressively more demanding over time.  The first targets will apply for the quarter ending 30 June 2013, and will be enhanced in subsequent quarters, with 2014 targets to be set in due course;
  • Progressively more demanding quarterly targets will be set for the conclusion of sustainable solutions. These will be set in due course and will apply for the quarter ending 31 December 2013 onwards; and
  • In addition specific and more detailed targets will be set for individual banks, based on their capacity, systems, and processes, principally focusing on the handling of early arrears.

The framework applies to ACC, AIB, Bank of Ireland, KBC Bank, permanent tsb and Ulster Bank in relation to both principal dwelling homes (PDH) and buy to let (BTL) mortgages. The Central Bank will audit each bank’s performance against the targets periodically, with regular reporting requirements established.

The Central Bank is also setting out its plans to require more prudent provisioning for mortgage loans in arrears greater than 90 days which have not been subject to a sustainable solution.

A consultation paper on the review of the CCMA has also been published detailing proposed changes to strengthen the Code’s protections for borrowers, while ensuring it allows for effective and timely resolution of individual arrears situations. Issues being considered for review include:

  • New safeguards to ensure borrowers are given sufficient warning before being classified as ‘non cooperating’;
  • Changes to the contact levels permitted, while ensuring consumers are not subject to harassment;
  • Transparency on resolution options so borrowers have a full understanding before making a decision; and
  • Consideration on whether there is merit in allowing a lender to move a borrower in arrears off a tracker rate where the lender has offered an alternative arrangement which is more advantageous in the long term.

A copy of the full consultation document is available here and submissions can be made until 10 April 2013.

Notes to editors

A copy of the Mortgage Arrears Resolution Targets document is available here