Keeping your home in difficult times.
Your mortgage on your home is probably the biggest and most important financial commitment that you have. If you are in arrears or concerned about making repayments, contact your mortgage lender as soon as possible. You should also contact your solicitor who will offer you every assistance and guidance through this difficult time. You can also get help from the Money Advice and Budgeting Service (MABS).
There are two statutory codes of conduct for mortgage lenders when dealing with mortgage arrears. They are the Financial Regulators’ Consumer Protection Code and the Financial Regulator’s Code of Conduct on Mortgage Arrears.
The Financial Regulator’s Consumer Protection Code applies to all home loan providers operating in Ireland. The code provides that the lending agency must contact you as soon as it becomes aware that your mortgage account is in arrears and must have in place a procedure for handling accounts, which are in arrears. The lenders are required to agree your remedial plan with you as soon as it detects arrears starting to emerge and will try to assist you to manage your financial commitments. This Consumer Protection Code also applies to personal loans and credit cards, as well as mortgages.
The Financial Regulator’s Code of Conduct on Mortgage Arrears came into effect in its amended form on the 17th February 2010. The code builds on the Financial Regulator’s Consumer Protection Code and on a voluntary code developed by the IBF(Irish Banking Federation) . It applies to all mortgage lenders, not just banks. Its main requirement is that lenders must wait for a specified period from the time mortgage arrears arise before taking any legal action. Since the 17th February 2010, mortgage lenders must wait at least 12 months from the time the arrears arise. However, the twelve months requirement does not apply for borrowers deliberately not engaging with the lender and it is for this reason that one cannot stress enough the importance of contacting your mortgage lender as soon as possible.
In addition to this code, the two banks which were re-capitalised, namely AIB and Bank of Ireland, agreed in 2009 not to start court proceedings for repossession of your home until after 12 months of arrears, provided you continued to cooperate with the bank. In addition, the IBF has formally stated that its members will not initiate legal action against customers who engage with their lenders and keep to an agreed arrangement, subject to a 6-monthly review.
In a worst case scenario situation the lender may enforce the Mortgage Agreement and ultimately repossess the property. Your property may be repossessed by either voluntary agreement or by Court Order. However, in today’s property market, even if the property is sold, the sale price may not cover the amount you owe and you are still liable for the rest of amount you owe. If you attempt to “hand back the key” remember that you will remain liable for the outstanding debt including all interest and charges.
My advice is to seek legal advice at an early stage. Contact your mortgage lender as soon as possible and keep a record of allespondence preferably in writing. Continue to pay what you can afford. Don’t ignore communications from your mortgage lender or their solicitors. Your best chance of keeping your home in difficult times is to take positive action.
There is help and advice available to you and you are not alone.
Call the MABS (Money Advice and Budgeting Service) helpline low call 1890 238 438 or www.mabs.ie
The National Consumer Agency website: www.itsyourmoney.ie and the Citizens Information phone service low call 1890 777 121 or www.citizensinformation.ie are also helpful.
10th November 2010.
Joan Byrne
Solicitor
MLB Solicitors
Melbourne House
Model Farm Road
Cork
