On the 27 June, 2013, the Central Bank published the Revised Code of Conduct on Mortgage Arrears (CCMA) setting out requirements for mortgage lenders dealing with borrowers facing or in mortgage arrears. The CCMA provides a strong consumer protection framework to ensure that borrowers struggling to meet mortgage repayments are treated in a fair and transparent manner by their lender, and that long term resolution is sought by lenders with each of their borrowers. The revised CCMA comes into force from 1st July 2013.

The key changes to the CCMA are:

  • greater clarity around when a borrower is considered to be cooperating and, in recognition of the serious impact of being classified as not cooperating, a new provision requiring lenders to provide a warning letter giving at least 20 business days' notice to the borrower, outlining the implications of being classified as not cooperating and providing specific information on how to avoid this classification;
  • requirement on lenders to have a board-approved communications policy that would protect borrowers against unnecessarily frequent contact and harassment, while ensuring that lenders can make the necessary contact to progress resolution of arrears cases. This replaces the limit of three successful, unsolicited communications per month and allows for an approach to lender and borrower communication that is suited to individual needs and circumstances;
  • a new requirement for lenders to provide the Standard Financial Statement (SFS) at the earliest opportunity, and to offer assistance to borrowers with completing it. In addition, lenders can now agree with the borrower to put a temporary arrangement in place to prevent the arrears from worsening while the full SFS is being completed and assessed;
  • where there is no other sustainable option available, lenders can now offer an arrangement to distressed mortgage holders which provides for the removal of the tracker rate, but only as a last resort, where the only alternative option is repossession of the home. Lenders must be able to demonstrate that there is no other sustainable option that would allow the borrower to keep the tracker rate, and the arrangement offered must be a long term sustainable solution that is affordable for the borrower;
  • cooperating borrowers must now be given at least 8 months from the date arrears first arise before legal action can commence and at the end of the MARP process, lenders will be required to provide a newly introduced 3 month notice period to allow cooperating borrowers time to consider their options such as voluntary surrender or an arrangement under the Personal Insolvency Act (before legal action can start);
  • finally there are new provisions enhancing transparency and improving increased information requirements for lenders including more detail in the MARP booklet on how alternative payment arrangements offered by the lender work and their key features.

The Central Bank recognises that compliance with the revised CCMA will, in some instances, require changes to systems and procedures as well as staff training. This will be allowed for the first 6 months, provided that lenders are actively progressing their transition to the new requirements.