Repossessing homes to be harder under new rule
BANKS and building societies will find it more difficult to repossess homes under new rules to be issued by the Financial Regulator, the Irish Independent has learned.
The regulations will allow those having difficulty repaying their mortgage to have the current one-year moratorium on repossessions rolled over for a number of years.
The new rules will form part of an updated statutory code on mortgage arrears to be introduced by the Financial Regulator. The changes are on foot of recommendations made last month by the government-appointed expert group on mortgage arrears.
However, some mortgage lenders are understood to be annoyed about the new code which they feel will make it virtually impossible to repossess a home when someone is not acting in good faith.
They are also upset about the fact that all lenders will have to adopt the same process when attempting to repossess a home.
The new code is set to be issued today as a consultation document.
Mortgage lenders and others with an interest in the area will be given just three weeks to comment on the new arrears code. The regulator plans to implement the new arrears code by the autumn.
As part of the code all lenders will have to put in place a uniform mortgage arrears resolution process (MARP).
Struggling homeowners who co-operate with this MARP will benefit from a one-year moratorium on repossessions.
If the homeowner continues to meet their agreed new repayments under the process, the moratorium on repossession will be rolled over for another year, and then another year.
All lenders, including sub-prime lenders, will have to abide by these new statutory rules if they are put in place. The ban on repossession will only apply to those who meet the revised mortgage repayments.
However, some lenders are concerned that unscrupulous mortgage holders will be able to "play the system" and hold out for up to five years before they are forced to give up their home.
At present there is a one-year moratorium on repossessions if the borrower is engaging with the lender.
"If after having broken the agreement, the customer makes a revised agreement (it could be bogus) and they break it again then the clock starts again and we have to wait another 12 months after that before going legal," one banker told the Irish Independent.
"A customer could theoretically have at least a half decade of not paying a single cent and still retain their home.
"This is a disgrace and an insult to all the customers who are genuinely in hardship and doing everything in their power to maintain repayments."
Copies of the revised code of conduct on mortgage arrears have been given to the Mortgage Arrears and Personal Debt Expert Group, whose members were given just a few days to comment on the updated code.
Most of the changes to the code were recommended by the expert group in its interim report issued in July.
The expert group had recommended that the moratorium should not be extended beyond one year, while also recommending that a ban on repossessions should not apply to those who refuse to co-operate with the arrears resolution process.
A spokeswoman for the regulator said: "We plan to implement the findings of the mortgage arrears group as quickly as possible. It is important for consumers that the recommendations are implemented as quickly as possible."