The Central Bank of Ireland has announced new measures to address the increasing levels of mortgage arrears. The proposed changes include the imposition of performance targets for ACC, AIB, Bank of Ireland, KBC Bank, permanent tsb and Ulster Bank, as well as changes to the Code of Conduct for Mortgage Arrears (CCMA).
The Central Bank estimates that approximately 94,500 mortgage accounts are currently in arrears over 90 days. Specific performance targets are being imposed on the Banks in situations where customers are in arrears over 90 days. These targets will relate to principal dwelling homes and buy to let mortgages and include:
- Quarterly targets regarding the number of sustainable solutions offered to customers
- Progressively more demanding quarterly targets for the completion of the sustainable solutions that have been offered to customers
- Specific and more detailed targets for individual banks, based on certain factors laid down by the Central Bank
If these performance targets are not met, the Central Bank can exercise its power of supervision which includes directing the banks to set aside further capital to meet mortgage arrears balances. The Central Bank will also have powers of inspection and audit to confirm that the performance targets are being met.
Changes to the CCMA
The CCMA was first published in 2009 and was designed to provide appropriate and effective consumer protection measures and to ensure that customers who are experiencing, or are concerned about, mortgage arrears are treated in a fair and transparent manner. The Central Bank has consulted on changes to the CCMA which should be implemented to further strengthen the protections already afforded to customers. These include:
- The introduction of new safeguards to ensure borrowers in arrears are given sufficient notice before being classed as non-cooperating
- Amendments to the rules regarding contact between the lender and the borrower to ensure that borrowers are not being harassed
- Further transparency on the various options open to borrowers
- The possibility of allowing a lender to move a borrower in arrears off a tracker rate in circumstances where the lender has offered an alternative solution which is more advantageous to the borrower overall
A revised CCMA is due to be published by the end of May 2013.
It was also recently announced that the terms of a new EU mortgage credit directive designed to give further protection to borrowers has been agreed at EU level. This directive is likely to come into force in 2015.