SOME virtue signalling last week from the Central Bank's head of financial conduct, Derville Rowland, to a group of banking insiders left the public in no doubt that while the current emergency forbearance measures in place on loans and mortgages will be extended to the end of September, normal service resumes thereafter.
No, you won't be on its credit register as a defaulter, but you'll be on your bank's own naughty step for a while.
While calling for "breathing space" and banks to "engage sympathetically and positively" with the 140,000 borrowers who availed of a payment moratorium on loans (including 78,000 on mortgages), there won't be any special action taken if anybody falls off a financial cliff thereafter.
Normal measures include the Code of Conduct on Mortgage Arrears (CCMA), the Mortgage Arrears Resolution Process (MARP) and the debt relief options under the insolvency regime, which is what I'm looking at this week.
Make no mistake, thousands of people will find themselves, perhaps for the first time, wrapping their heads around the T&Cs contained in banking culture when it comes to not being able to repay your debts.
This is the 'play nice' document issued to banks telling them how to behave with bad borrowers. Inherent in it is the process for treating mortgages falling into arrears.
For many facing a post-Covid-19 financial meltdown, their lender will make contact in September (for those who availed of the extension which, by the way, must be applied for by June 30), in a "proportionate but not excessive" manner. That means no midnight phone calls or harassment, but you'll be in no doubt they want to talk.
A dedicated unit in the bank will ask for detailed information about your financial status, called a standard financial statement. You can find one of these on the Central Bank's website (centralbank.ie) just to prepare yourself. It's 10 pages long and mandatory. In fact, it's an excellent budget tool for anyone.
Your application will be assessed to see if there's any way you can afford to pay your mortgage, and it will look at alternatives (resolution), involving different payment terms, and if not, you must be told why. The bank can then initiate legal action which can only be eight months after the arrears arose. MARP is a protective structure. If you are deemed as non-co-operating (ie ignore the bank's correspondence or refuse to furnish the information), you lose MARP. Like the old ad says, it's good to talk.
This is the MABS-based service offered for those in arrears and at risk of losing their home. It offers free vouchers to get a one-to-one advice session with a financial expert to go through your problem. It only applies where the issue is with your private home, not an investment property. The arrears helpline is 0761 07 2000 Mon - Fri, 9am - 8pm. See more on keepingyourhome.ie.
The Insolvency Service offers four debt-relief options to those in arrears of all kinds, not just mortgages. In terms of mortgages, the PIA (personal insolvency arrangement) is the one most likely to be employed. It doesn't mean you get a mortgage write-off however (although your other unsecured debts may well be dumped), but a measured, affordable set up is laid out over a number of years, under supervision, until your personal insolvency practitioner frees you up.
There are a number of charities offering mortgage help in dealing with your debts.
Do bear in mind, some of these are not free and in signing up you're agreeing a fee payable to them either up front or as part of any agreement reached.
One, notably, is free. That's the Irish Mortgage Holders Organisation (mortgageholders.ie), run by David Hall. It works in tandem with MABS and the ISI to see if solutions such as mortgage-to-rent (where your home is sold to an approved housing body and rented back to you), warehousing (a portion of debt is put on the long finger) or contract changes (eg lower interest rate, longer term) can be agreed.
Have you been on a mortgage moratorium since March? If so, can you revert to normal payments now? Do if you can.
If not you can request an extension (or one will be offered to you before June 30) until September 30. Your bank must outline how much extra this will cost you in interest and monthly repayments.
If, by October, you cannot meet the repayments, you will fall under normal arrears management. This is the time to contact one of the above organisations, and most importantly, engage with your lender. It is likely you will have other debts in addition to your mortgage, and they can be handled together.