CONSUMER groups have won a minor concession which will mean banks will have to wait three months before starting moves to repossess homes from distressed mortgage holders.
However, despite the change, the groups said it would lead to a surge in repossessions as early as the start of next year.
The new moratorium dropped from 12 months to three months after the Central Bank revised its code of conduct on mortgage arrears – a rule book that sets out how lenders must treat those in arrears.
Up to last week, the Central Bank was planning to amend its rules to allow banks to start legal action to take back a home in just two months.
But a storm of protests from groups campaigning on behalf of distressed mortgage holders forced the regulators to give homeowners an extra month's protection.
Some 54,000 homeowners are a year or more behind on their home-loan payments and risk losing their homes.
The alteration to the moratorium is among a raft of changes to the mortgage code that have been described as a "banker's charter" by David Hall of the Irish Mortgage Holders' Organisation.
The new code takes effect from Monday and will allow banks more scope to chase people who are behind on their payments.
Changes to the code mean:
* Banks will now be able to strip a homeowner of their tracker if the only alternative is to repossess the house. If they do this, banks must offer what is called a "sustainable solution", which may involve writing off debt.
* Lenders will be able to decide a homeowner is not co-operating and write to them within 20 days. If someone is not co-operating they will have no protection from repossession.
* The limit of just three successful contacts from a bank to someone in arrears has been dropped. Banks will be free to make multiple contacts with those in arrears. They will also be able to call to the door of a homeowner, but will have to write in advance to say they are going to do this at some stage.
* Banks will be banned from harassing borrowers.
Central Bank director of consumer protection Bernard Sheridan, who has overseen the changes to the mortgage code, denied regulators were making massive concessions to banks.
"We are not being naive and I don't agree that we are handing loads of extra powers to the banks," he said.
But instead of getting a year's protection from a bank initiating legal action to repossess a home, borrowers in arrears will now get three months. New cases of mortgage arrears will have at least eight months' protection from repossession.
This will mean that anyone a bank decides is not co-operating, or who has a mortgage the bank regards as so big they will never be able to meet the repayments, can be hit with a claim for repossession after three months.