Consumer protections for people with mortgage problems

Lending institutions like banks and building societies must follow certain rules when dealing with you if you are struggling to pay your mortgage.

The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) applies if you are in difficulty on a mortgage on your primary residence.

Local authorities must follow similar rules if you are struggling to repay a local authority home loan.

The Consumer Protection Code 2012 applies to other types of loans, such as credit cards, personal loans or buy-to-let mortgages.

The Money Advice and Budgeting Service (MABS) also has information on engaging with your lender.

Contact your lender as soon as possible

If you are finding it difficult to pay your mortgage, you should talk to your lender as soon as possible. They have to take certain steps to deal with problems you have paying your mortgage. Repossessing your home should be your lender's last option.

The Code of Conduct on Mortgage Arrears (CCMA) is a set of rules and procedures that mortgage lenders must follow if:

• You are behind on your mortgage payments
• You are at risk of falling behind

These procedures are aimed at helping you as much as possible.

Who does the CCMA apply to?

Mortgages on primary residences

The CCMA only applies to mortgages on primary residences. The CCMA defines a primary residence as a residential property in the State which is the only residential property owned by the borrower. You don’t have to live in the property for the protections of the CCMA to apply.

People in arrears and pre-arrears

The CCMA covers borrowers in arrears and pre-arrears. Pre-arrears is where the borrower contacts the lender to inform them that they are at risk of going into mortgage arrears.

Mortgage lenders

The CCMA applies to all regulated mortgage lenders when they are dealing with borrowers at risk of or in mortgage arrears on their primary residence. This includes any mortgage lending activities outsourced by these lenders.

There have been changes to the protections that are available to you if your mortgage is sold on to a third-party. For more information, see ‘What rules apply if my mortgage is sold’ below.

The CCMA does not apply to credit unions or to local authority home loans. See ‘What are the rules about arrears if I have a local authority home loan’ below.

What are the CCMA rules lenders must follow?

The CCMA sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or pre-arrears. Lenders must handle these cases sympathetically and positively, with the goal of helping people to meet their mortgage obligations.

Under the CCMA, lenders must have:

• A Mortgage Arrears Resolution Process (MARP). This must be used when dealing with customers in arrears and pre-arrears.
• An Arrears Support Unit (ASU) to assess arrears and pre-arrears cases
• An internal Appeals Board to consider appeals

Lenders have the following responsibilities to borrowers

Use clear communications

Lenders much ensure that communications:

• Are clear and consumer-friendly
• Are proportionate and not excessive
• Are not aggressive, intimidating or harassing

Lenders much also give you enough time to complete an action you have agreed to before attempting any follow-up communication.

Provide an information booklet and website information

Lenders must make an information booklet available to borrowers in arrears or pre-arrears. This should include details on:

• The MARP
• Relevant contact points for arrears issues
• Details of websites with mortgage arrears information, such as mabs.ie

Lenders must provide a dedicated section on their website for borrowers who are in or facing financial difficulties.

Not rush legal action

Lenders must wait at least 8 months from the date the mortgage arrears began before applying to the courts to start legal action to repossess a property. (This does not apply if the borrower is not co-operating with the lender, see below.)

CCMA and tracker mortgages

If you are in arrears or pre-arrears, your lender must not make you change from an existing tracker mortgage to another type of mortgage as part of an alternative arrangement. However, this may be allowed if none of the options that would allow you to keep the tracker interest rate are appropriate and sustainable for you.

You should get independent financial or legal advice if you have a tracker mortgage and your lender is offering you an alternative repayment arrangement that means you will have to change to another mortgage type.

How does the CCMA work if I am not co-operating with my lender?

If you are classified as not co-operating, you lose the protections of the MARP. Your lender can start legal proceedings immediately which could result in you losing your home.

You may be classified as not co-operating with your lender if you:

• Do not fully and honestly disclose (tell) significant information
• Do not provide relevant information within a reasonable time
• Are in arrears for 3 months and haven’t contacted your lender or responded to their communications, or your response did not provide enough information for a complete assessment of your circumstances
• Have entered an alternative repayment arrangement, but after 3 months you have not made the alternative repayments in full
• Have not entered an alternative repayment arrangement, and after 3 months you have not fully paid your mortgage or cleared your arrears

Before your lender classifies you as not co-operating, they must write to you, giving you 20 business days to take specific actions so they can assess your circumstances.

Your lender must also:

• Tell you what steps you need to take to avoid being classified as not co-operating
• Warn you about the implications of not co-operating and suggest that you seek appropriate advice
• Explain what happens if you still owe money after repossession or sale

You can appeal the decision to classify you as not co-operating.

What are the CCMA timeframes?

Lenders must wait 8 months before taking legal action about mortgages in arrears. However, this does not apply if you are deliberately not co-operating with your lender.

You must be given 3 months’ notice before they can begin legal proceedings in either of these situations:

• You are co-operating with your lender but they do not offer you an alternative repayment arrangement
• You do not accept an alternative repayment arrangement they offer

This notice period applies no matter how long your lender takes to assess your case.

It will give you time to consider other options, such as:

• Voluntary surrender
• Voluntary sale
• A Personal Insolvency Arrangement

Can I complain?

Yes, you can complain to your lender if:

• You are not happy with your lender’s treatment of your case
• You feel they have not complied with the CCMA

How your lender deals with your complaint is set out in the Central Bank’s Consumer Protection Code 2012.

Refer it to the Ombudsman

If you are not happy with the outcome of an appeal or complaint, you can refer it to the Financial Services and Pensions Ombudsman. The Financial Services and Pensions Ombudsman cannot deal with complaints against the Irish Bank Resolution Corporation (IBRC) without the consent of the High Court.

Where to find more information about the CCMA

The Central Bank has information explaining the CCMA and how it works. The Free Legal Advice Centres (FLAC) has published a guide to the Code of Conduct on Mortgage Arrears 2013 (pdf).

The Central Bank's Consumer Protection Code 2012 describes how regulated lenders must treat consumers who are in arrears on loans including

• Credit cards
• Personal loans
• Buy-to-let mortgages

The Consumer Protection Code 2012 does not apply to mortgages on a primary residence. These are covered by the Code of Conduct on Mortgage Arrears, described above.

What are the rules of the Consumer Protection Code?

The Consumer Protection Code means that lenders must work with you if you are having difficulty repaying a loan.

The lender must:

• Have written procedures for handling arrears and make information available to you to help you deal with your arrears
• Contact you immediately if your account is in arrears for 10 business days to find out why you haven’t made your repayment
• Ensure that the level of contact and communications from them, or from any third party acting for them, is proportionate and not excessive

Lenders must not:

• Contact you more than 3 times a month, if you did not request the contact. This is apart from other correspondence required by the CCMA or other regulatory requirements. This limit does not include missed calls or engaged numbers.

Can I make a complaint about my lender?

The Consumer Protection Code 2012 has rules about how your lender must handle any complaints you make about how they are dealing with you.

These complaints must be handled speedily, efficiently and fairly.

There are detailed rules about how often a firm should contact you to keep you updated on your complaint.

The Central Bank has published a consumer guide to the Consumer Protection Code (pdf).

Since 21 January 2019, if your lender sells your mortgage to another company, the new company must be regulated by the Central Bank. So, the protections of the CCMA and Consumer Protection Code continue to apply to your mortgage.

However, before this the rules were different. From 2015 to 21 January 2019, if an unregulated firm bought your mortgage loan they had to appoint a credit servicing firm to act on their behalf. Credit servicing firms were regulated by the Central Bank and needed to adhere to the CCMA and Consumer Protection Code, just like the original lender.

Before 2015, if your lender sold your mortgage to a third-party firm who was not regulated by the Central Bank, you could lose the protections under the CCMA and Consumer Protection Code.

If you are struggling to pay your local authority home loan, local authorities have a Mortgage Arrears Resolution Process similar to the CCMA. This sets out how local authorities must deal with people struggling to repay their local authority home loan.

The local authority can make monetary arrangements with you that it thinks are fair and take account of your particular circumstances. For example, they may let you pay the loan back over a longer term or restructure the repayments in some other way.

They may also let you repay any outstanding payments by instalment, if they think you will otherwise suffer undue hardship.

So, if you are in difficulty, you should contact your local authority to see if they can make an alternative repayment arrangement with you.