Friday 17 January 2020

Banks want legal changes to deal with separated couples in mortgage arrears

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Brian Hayes
Charlie Weston

Charlie Weston

Banks have called for legislative changes to allow them to better deal with mortgage holders who are separated.

One in 10 of those behind on their home-loan payments are couples who have split up, and these are among the most difficult arrears cases to resolve, according to the banks.

Banking and Payments Federation Ireland (BPFI) has called for new laws that would allow a court to impose a debt resolution on a non-cooperating borrower who is part of a couple.

It also wants a change in legislation to allow banks to pursue a borrower who will not sign up to a debt deal when the partner has reached a deal with the bank.

Often it is the ex-wife who is co-operating and still in the home with the children while the husband has left, according to mortgage arrears campaigners.

Legal and regulatory complexities around dealing with separated couples in arrears meant lenders currently adopt a case-by-case approach, the BPFI said.

Potential new solutions could include treating each party as a single borrower with the repayment capacity assessed on an individual basis, but with both borrowers remaining liable for the outstanding debt.

Another option is to offer short-term alternative repayment arrangements if only one party is engaging.

Brian Hayes, chief executive of the banking lobby group, called for regulatory and legal changes to help separated borrowers who are in arrears.

Central Bank regulations could be changed to help the engaging party and the one who is not co-operating to find a workable solution.

The banking body also suggested the personal insolvency legislation could be changed to allow a lender to pursue a co-borrower who refuses to co-operate or sign up for a deal.

Changes should be made, the banks suggest, to allow court-approved agreements to be put in place that override the current scope non-cooperating borrowers have to veto an agreement.

The BPFI said consideration should be given to amending the provisions of the Mediation Act 2017 to oblige solicitors in family law cases to also include the issue of the mortgage as part of the mediation stage in a separation. The solutions have been prompted by queries to the banks by Fianna Fáil finance spokesman Michael McGrath.

Mr Hayes said he had written to the Central Bank, the Insolvency Service, the Department of Finance, the Department of Justice and Equality as well as MABS with the proposed suggestions.

"We all wish to see the outstanding level of mortgage arrears reduced as effectively and quickly as possible which is why we will be hoping for a constructive response," he said.

Irish Independent

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