Mortgage problems? Here’s what to do if you’re in arrears or facing repossession

They say that a person’s home is their castle but it’s easy to feel like you’re under siege when you fall behind on your mortgage payments.

At the end of September 2018, there were 64,510 private residential mortgage accounts in arrears across Ireland, with 45,178 of those accounts in arrears by more than 90 days. It can be hard to see a way out if you’re struggling to pay your mortgage but help is at hand in the form of Abhaile.

This state-funded mortgage arrears support service works with people in mortgage arrears to help them stay in their own homes. You can get advice, support and practical assistance from Abhaile by contacting Money Advice & Budgeting Service (MABS).

The free, confidential service was set up to aid homeowners in home mortgage arrears so you don’t need to go through this alone.

Talking to an expert about your situation can help you to weigh up your options. If you’re in mortgage arrears, this handy guide will take a closer look at your options and offer practical tips on what to do.

Mortgage Arrears Resolution Process

Under the Mortgage Arrears Resolution Process (MARP), your lender is obliged to notify you by letter if you go into arrears and to provide you with information on MARP. This system is there to protect the homeowner and help you to negotiate your arrears with your lender, who cannot initiate legal proceedings during the process.

If you’re in mortgage arrears or worried about losing your home, it can be tempting to bury your head in the sand. The key to finding a resolution to your mortgage difficulties is engaging with your lender.

This is where Abhaile comes in. They can allocate you a dedicated mortgage advisor to assess your case, walk you through your options, advise you on potential resolutions, assist with the necessary documentation, and help you to negotiate with your lender.

You can contact Abhaile on the MABS helpline from 9am until 8pm from Monday to Friday.

Your lender will look for a standard financial statement to assess your situation and supporting documentation like payslips or social welfare slips. Based on this information, it may be possible to negotiate a short-term repayment arrangement. This can ultimately form the basis of a restructured mortgage resolution over time if you can continue to meet your obligations.

The MARP framework gives homeowners an opportunity to find a solution, if this is possible in the circumstances. If no solution can be found under MARP, and the lender deems the mortgage to be unsustainable, a borrower exits MARP and the lender can commence legal proceedings. Other cases end up in court simply because homeowners have not engaged with their lenders and have been deemed as non-cooperative under MARP.

However, if your mortgage is deemed to be unsustainable, there are still options available to you for example Mortgage to Rent or a Personal Insolvency Arrangement.

Dealing with court proceedings

Many people in mortgage arrears are fearful of losing their homes. However, receiving a summons for court does not mean that you’ll have to hand over your keys on the day.

The County Registrar will consider your case and look for signs of cooperation.

The best thing you can do is turn up to every court hearing as this shows that you are willing to engage in the process, and can be looked upon in a positive way by the County Registrar. It’s never too late to engage, even if you’ve already received a court summons.

Making contact with Abhaile is often the first step to getting real help.

As part of the Abhaile scheme, there are MABS court mentors assigned to County Registrar possession hearings nationwide to offer support. So even if you haven’t talked to them ahead of a court appearance, there may be an option to get advice or a referral to a MABS office on the day.

MABS mortgage arrears advisors can also refer borrowers to the Abhaile duty solicitors who attend the circuit court possession hearings if some on-the-spot advice is needed.

Subject to eligibility, Abhaile can provide borrowers with a voucher entitling them to a free legal consultation with a panel solicitor ahead of a court appearance. Abhaile can also provide eligible borrowers with a voucher entitling them to a free financial consultation with a PIP (personal insolvency practitioner) and/or an accountant.

So Abhaile provides the advisors you’ll need at any stage of the process. We talked to an Abhaile court mentor to discuss what to do if you find yourself facing court proceedings.

Personal Insolvency Arrangement

If you’re unable to settle all your mortgage debts, a Personal Insolvency Arrangement (PIA) allows you to restructure your loans, write off certain debts and get back on track. The Personal Insolvency Act offers people three options.

A Debt Relief Notice (DRN) allows for the write-off of debt (generally unsecured) up to €35,000, subject to a three-year supervision period.

The Debt Settlement Arrangement (DSA) is a five-year repayment plan to get you back on track and write off debts that you cannot repay that aren’t mortgage-related or secured against any asset.

Finally, a PIA deals with secured debt up to €3million and focuses on restructuring your mortgage and writing down surplus debt so that you can stay in your family home. The term of a PIA arrangement is generally six years.

A homeowner can secure the services of a personal insolvency practitioner (PIP) through the Abhaile scheme, through the ISI or by contacting a PIP directly. The PIP will discuss your options with you and you can then decide if insolvency is a good option for you.

As part of the PIA, a protective certificate will be issued to you and the PIP will work with you to come up with a feasible repayment plan that lets you consolidate your debts and stay in your home. You can then negotiate a bespoke arrangement with your creditors that is based on your debts, your means and your repayment ability.

Check out our conversation with a PIP to find out more about personal insolvency.

Mortgage to Rent

If your mortgage is deemed to be unsustainable, the Mortgage to Rent (MTR) scheme offers you a way to stay in your own home as a social housing or local authority tenant.

Under the MTR scheme, you voluntarily surrender your home to your lender so that it can be sold to an approved housing body or a designated private company. The proceeds will go towards your outstanding mortgage debts and you get to remain in the property as a social housing or local authority tenant.

Abhaile can look at a homeowner’s circumstances, advise them whether MTR is an option, and work with the lender to try to put this solution in place. The lender will sometimes recommend the scheme to homeowners but you can also approach your lender and ask to be considered for it.

The biggest advantage of MTR is that it minimises the disruption to your home life. You don’t have to move out of your home, you get to stay in the same community, you can maintain your local support network and you can potentially write off your outstanding mortgage debts.

If you have children, they don’t have to move schools. Plus, the fact that your rent is income-based means that you’ll always have affordable rent, which is not always a guarantee in the private rental market. You can also transfer to another social housing area if you want to move at a later date.

There is also the option to buy your house back after five years if your circumstances change.

To qualify for MTR, you must be:

• In mortgage arrears on your home

• Insolvent

• At risk of losing your home

• Eligible for social housing support

• Living in a property that’s proportionate to your needs

We talked to a senior executive with the Housing Agency to find out everything you need to know about MTR.

What to do if you find yourself in mortgage arrears

Always engage with the process: Engaging with the MARP is the first step to a resolution and it gives you more time to consider your options, seek help and come to an agreement with your lender.

Talk to somebody: It’s OK to ask for help. Abhaile can offer free, independent advice and help you to navigate the process and negotiate a resolution.

Keep your options open: Abhaile can offer you professional advice on a range of different options that may be available to you. Considering all of your options can give you a better perspective on your situation and help you to find the resolution that’s right for you.

If you or somebody you know is in mortgage arrears, or you fear you are at risk of losing your home, you may be eligible for free face-to-face financial or legal advice under the Abhaile scheme. For information, call the MABS dedicated helpline on 0761 07 2000, or visit the website.