According to statistics from the Central Bank, at the end of December 2013 there were 764,567 private residential mortgage accounts for principal dwellings held in Ireland, to a value of €107.4bn, and of these 136,564 accounts were in arrears, with 96,474 of them (12.6%) in arrears for more than 90 days.
Even though the numbers indicate a fall in mortgage arrears – down 4,705 over the quarter, to be exact – there is still an epidemic of mortgage arrears in Ireland, which is a reflection of the economy.
The mortgage on a house, flat or apartment is probably the biggest and most important financial commitment that most people make in their lifetime. When you get a mortgage, your lender, such as your bank, building society or local authority, gets a claim on your property. Ultimately, if you continue to fall into arrears with your mortgage repayments and you do nothing about it, your lender may seek to repossess your home.
But as a mortgagor (a person who takes out a mortgage with a mortgage provider) who is about to fall into arrears (pre-arrears) or who is in arrears already, there are a number of options at your disposal to help you out of difficulties in paying your mortgage.
If you are having any problems paying your mortgage, even if you are not actually in arrears, you should seek advice and then contact your lender’s arrears support unit immediately. Delaying and allowing mortgage arrears to build up will make the problems worse.
Once you fall into significant arrears, your lender would like to repossess your home as soon as possible in order to recoup their investment. However, lenders are now bound by Central Bank’s Code of Conduct on Mortgage Arrears (CCMA) in relation to people who are in mortgage arrears or pre-arrears.
Under the CCMA, lenders must operate a Mortgage Arrears Resolution Process (MARP) when dealing with arrears and pre-arrears. In line with this code, your lender must take certain steps to deal with any problems you have in paying your mortgage.
This requirement was introduced in January 2011 and the rules have changed under the revised CCMA, which came into effect in July 2013. Lending institutions have now been compelled by this code of conduct on mortgage arrears so that repossession is now the last resort.
The CCMA sets out the framework that lenders must use when dealing with mortgagors or 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.
Other loans and debts
Even if you are not in mortgage arrears, or have no mortgage at all, your home could be in danger of repossession if you have other debts. If you build up other debts and are unable to repay them, then the people to whom you owe money may register that debt as a ‘judgment mortgage’ against your home and seek to recover their money in that way.
As part of the MARP, your mortgage lender will ask you to list your other debts when documenting your financial situation on a standard financial statement.
The Resolution Process
There are four steps to the Mortgage Arrears Resolution Process (MARP): communication; financial information; assessment; and resolution. There is also an appeals process under the CCMA, but this is now outside the MARP.
If these steps have been exhausted and the lender intends to repossess your home, they must then adhere to the CCMA rules governing repossession proceedings.
Not co-operating
The revised CCMA expands the definition of ‘not co-operating’ with the lender. It contains strong provisions on the consequences of a borrower being declared ‘not co-operating’, which can include immediate commencement of repossession proceedings.
Requirement to have engaged in MARP
Under the personal insolvency system, people applying for a Personal Insolvency Arrangement (PIA) must declare that they have co-operated with their mortgage lender under the MARP for at least six months and have been unable to agree an alternative repayment arrangement.
If you are affected in any way by the issues raised in this article and would like advice, please get in touch with your local Money Advice and Budgeting Service (Mabs) branch, Free Legal Advice Centre (Flac) or Citizens Information centre, New Beginning, the Irish Mortgage Holders Organisation or the Phoenix Project Ireland.
Femi Daniyan is a barrister and founder/president of the Afro-Irish Organisation, a human rights organisation.
