Explainer – How does the Central Bank protect people in mortgage arrears?

Mortgage ArrearsIf you have missed a payment on your mortgage, or think you may miss a payment in the near future, you are in, or facing, mortgage arrears.

Being in mortgage arrears is a serious situation for you and your family.

If you find yourself in mortgage arrears, you should speak to your lender and continue to talk to them until your situation is resolved.

To protect people in mortgage arrears, the Central Bank has a statutory Code of Conduct on Mortgage Arrears (CCMA) that lenders must follow.

It means lenders must treat your case sympathetically and positively, with the aim of getting you back on track with your mortgage.

What obligations do lenders have under the CCMA?

The CCMA requires lenders dealing with people in mortgage arrears to:

  • Follow the Mortgage Arrears Resolution Process (MARP)
  • Establish a dedicated Arrears Support Unit to manage your case under the MARP
  • Have an appeals process in place so you can appeal certain decisions of your lender
  • Set up an Appeals Board to rule on any appeal you may make.

What is the MARP?

Central to the CCMA is something called the Mortgage Arrears Resolution Process.

The MARP details how your lender must treat you if you are in mortgage arrears or facing arrears.
It has the following four components:

  • Communication
    This sets out how your lender must communicate with you. For example, your lender can only communicate with you in a way that is proportionate and not excessive.
  • Financial Information
    This is where your lender’s Arrears Support Unit obtains information from you about your financial circumstances, using a Standard Financial Statement.
  • Assessment
    This is where the Arrears Support Unit assesses your case and decides whether to offer you an alternative repayment arrangement on your mortgage.
  • Resolution
    This is the point at which your lender either offers you an alternative repayment arrangement or does not. If your lender does not offer you an alternative repayment arrangement, it must explain the reasons why. You can appeal this decision to the lender’s Appeals Board.

Another important feature of the MARP is that you must be given at least eight months from the date your mortgage arrears arose before your lender can take legal proceedings against you.

This only applies provided you co-operate with your lender.

Can I lose the protection of MARP?

Yes.

If you are in mortgage arrears and you do not co-operate with your lender, you risk being classified as “not co-operating”. 

If you this happens, your lender will notify you that you have lost the protections of the MARP.

This means your lender can commence legal proceedings immediately, which could result in you losing your home.

For this reason, it is very important that you always engage and co-operate with your lender.

What happens if my lender sells my mortgage?

If your lender sells your mortgage to an unregulated loan owner you continue to be protected by the CCMA.

Any unregulated loan owner that buys your mortgage must appoint a Credit Servicing Firm, regulated by the Central Bank, to act on its behalf.

This Credit Servicing Firm must comply with the CCMA as a matter of law – including the MARP – in the same way as a regulated lender.

Your protections under the CCMA, including your right of an internal appeal, do not change.

Is the CCMA the only mechanism for resolving mortgage arrears?

No.

Outside of the CCMA and the Central Bank’s remit, other supports and mechanisms are available.

These include the Mortgage Arrears Resolution Service (Abhaile) operated by the Money and Budgeting Service, and the Insolvency Service of Ireland.

You may also be eligible for the Mortgage to Rent scheme.

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