Ask The Expert: Week 9 Show Notes - Best Bits
Personal Insolvency Practitioner’s and MABS staff cover a variety of topics on week 9 of our Ask the Expert series. Listed below are questions taken from each interview. If you’d like to hear more of a specific interview, scroll to the bottom of the page where the full recordings are listed for playback.
If a borrower has fallen into arrears and can no longer afford the original mortgage repayments, what should they do?
Eugene McDarby on LMFM:
“The Central Bank has what's a code of conduct called the MARP (Mortgage Arrears Resolution Process). Every bank in the country must abide by this mortgage resolution process. If somebody is getting into difficulty, for whatever reason, they should go straight to their bank, and their income has dropped, here's my new income. The bank will ask them to fill out what's called a Standard Financial Statement. The borrowers send that into the bank, and the bank will typically come back with options.
That could be a reduction in the payment by extending out the term on the mortgage. For example, if you currently have a ten-year term or 15-year term and that’s the reason why you're paying €1500 a month. There's no reason why the bank couldn't extend that out to 20-25 years*, reducing the borrower's payments over the term. The key thing is to get onto the bank ASAP.
If the bank says no, we're not doing that, then a borrower would need to see a Personal Insolvency Practitioner because they would go a different route, a more formal route that may force the bank into accepting that reduction of payments.”
*It must be noted every case is different and will be assessed on each unique situation.
Do borrowers have legal and statutory rights, even if they are in mortgage arrears?
Brian MacGabhann on GB FM:
“They do! At the start of the process, maybe even before they've gone down the legal route, there are codes of conduct out there. There's the Consumer Protection Code and the Code of Conduct on Mortgage Arrears (CCMA) . The Consumer Protection Code sets out that a person can instruct the lender not to contact them by phone, they can instruct the lender not to make personal contact with them, they can nominate any third party to act on their behalf and they can instruct the lender that they must deal with that third party and the lender has no option to have to deal with the third party.
In relation to the CCMA, it specifies that the lender must assess the person's financial circumstances, that they must revert to them in writing with a decision on whether or not they're going to grant them an arrangement, and as part of that they must set out in writing details of every option they considered and why they considered each option to be suitable or not suitable. The person then has the opportunity of appealing that decision if they're not happy with it. If they're not happy with the results of the appeal, they then have the option of referring that matter to the Financial Ombudsman.
Even before the legal action starts, there are a lot of rights and protections that a borrower has now. Once the person is in the legal process, there are also pieces of legislation that offer protection to the borrower. For example, there are various practice directions; these are issued by the Circuit Court.
Their instructions as to how Courts are to carry out various operations and one of them is Practice Directions EC 17. That specifies the proof that a lender must produce to the court before they can get a repossession order. These include an original copy of the mortgage deed and original copy of the mortgage contract. But it also sets out for example, that they must produce a detailed breakdown of the manner in which arrears have been calculated, and they must include copies of any documents that they're relying on to make those calculations.”
What is ‘The Land and Conveyancing Law Reform (Amendment) Act 2019’ Bill , and what impact will it have for borrowers in mortgage arrears?
James Quinlan on WLR FM:
“It is a Bill that focuses on the Principal Private Residence (PPR). The Court is going to have to take different criteria into the equation when they're looking at putting in a repossession order. They're going to have to look at the borrower's circumstances; what are their family circumstances, what are the dependents circumstances? Do they have young children? Will they be able to secure alternative accommodation if a possession order is granted and they have to leave home?
The lender has now got to say they've looked at the situation and they're offering alternatives. They're now obliged by the Courts. The Courts will have to look and see if the lender has analysed the whole situation. For example, when they looked for the possession originally, was the market value above what was outstanding on the mortgage? Are the circumstances just too tough on the people?
It is very important to note, you can only avail of those new protections and new defences, either if you've engaged with the Abhaile scheme in good faith, or you've engaged with a Personal Insolvency Practitioner.”
What is the Mortgage to Rent (MTR) scheme and how does it work?
Maurice Lenihan on Live 95:
“Mortgage to Rent is a Government scheme that's been in place for quite a number of years, but it was modified quite extensively about three years ago. It recognised there were some tricky eligibility criteria that made it very inaccessible for many people. But in essence, what it involves is surrendering your home to the bank, but the bank in turn then sells it on to an Approved Housing Body. That Approved Housing Body then rents the property back at an affordable rent on a long term tenancy.
It's a very effective way of keeping your home when you don't have a sustainable mortgage. On the one hand, you lose ownership, legal ownership of the property, but you have tenancy rights, and those rights are equivalent to a local authority tenancy.
There are four key eligibility criteria:
• The value of the house can't exceed a certain amount. This varies across the country.
• You can't have any other assets in excess of €15,000.
• You must be eligible for social housing.
• The property must be suitable for your needs; it must have an adequate number of bedrooms for the number of people living there.”
In light of the recent high-profile mortgage arrears cases in the papers, does the profile of a borrower’s case affect their eligibility for Abhaile and their potential arrangements?
Gwen Harris on Q102:
“What I would say - if anybody is listening at the moment who is in mortgage arrears, this same service [Personal Insolvency Arrangement - PIA] that has been in the papers so much now; the arrangements you are reading about, whatever [the arrangement] has been achieved for these households, is available to you. The same service is available to you. Same services, same processes, same supports, same arrangements are available to anybody in mortgage arrears, and they're available for free under Abhaile.”
Read about the Abhaile eligibility criteria in full here .
Dublin’s Q102 – Mornings with Liam and Venetia Episode 9 (28th August 2019)
WLR FM - Déise Today with Damien Tiernan Episode 9 (3rd September 2019)
Galway Bay FM - Galway Talks with Keith Finnegan Episode 9 (4th September 2019)
LMFM - The 11 – 1 Show with Sinead Brassil Episode 9 (12th September 2019)
Limerick’s Live 95 FM - Limerick Today with Joe Nash Episode 9 (24th September 2019)
If you or someone you know is affected by some of the topics raised in the above discussion, call the MABS dedicated Helpline on 0761 07 2000, or visit mabs.ie/contact to find your local office and to learn more about how Abhaile may help.