What is the Code of Conduct on Mortgage Arrears (CCMA)?
4 Things to Know About the Code of Conduct on Mortgage Arrears (CCMA)
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What is the CCMA? It’s the Code of Conduct on Mortgage Arrears. How does it affect me? The code sets out a framework allowing mortgage lenders and borrowers in mortgage difficulties to engage with one another in a structured way. The code is issued by the Central Bank of Ireland.
Here are four important points borrowers in mortgage arrears should know about the CCMA.
- The CCMA applies to mortgages on the home a borrower lives in or a may not live in, as long as it is the only residential property that the borrower owns in Ireland. The CCMA applies to all regulated mortgage lenders (and their collection agents) operating in the State but does not apply to credit union mortgage loans or local authority mortgages (although local authorities now have their own Mortgage Arrears Resolution Process – further information on this is available from your local authority housing department or by contacting MABS).
- If a lender sells a borrowers mortgage to a capital fund/unregulated loan owner, the borrower is still protected by the CCMA and their rights under the code do not change.
- Under the CCMA, lenders are required to have a Mortgage Arrears Resolution Process (MARP) which is the procedure for dealing with cases of mortgage difficulty according to rules set out in the Code, an Arrears Support Unit (ASU) where cases of pre arrears and arrears are dealt with using the Central Bank’s Standard Financial Statement (SFS) and also an internal Appeals Board to consider disputes between borrowers and the Arrears Support Unit. The steps involved with the MARP are as follows:
- a. Communication with borrowers – this sets out how the lender will communicate with the borrower. Communications from the lender should be clear and easy to understand and should also be proportionate and not excessive. The lender must inform the borrower if the mortgage account is going to be passed to a debt collection company
- b. Financial Information – The lender must gather financial information from the borrower in the form of a standard financial statement (SFS). The lender may also seek supporting documentation such as bank statements and income verification. The lender must provide the borrower with the SFS and the borrower can complete this with the help of the lender, with MABS or with another debt advice agency.
- c. Assessment – the completed SFS is sent to the lender and is used to assess the borrower’s situation on the basis of personal circumstances, overall debt, completed SFS, ability to repay and previous payment history.
- d. Resolution – once the lender has assessed the SFS they may offer, in writing, an alternative repayment arrangement (ARA). Examples of some alterative arrangements include interest-only payments, reduced interest rate, arrears capitalisation, split mortgage and term extension. Where the lender deems the mortgage to be unsustainable and does not offer any ARA, they must offer other options such as mortgage to rent, trading-down and voluntary sale or surrender. The lender must also inform the borrower of the Appeals process. Where a borrower turns down an option offered by the lender, or if the lender is not willing to offer an alternative option, the lender can commence legal action within 3 – 8 months.
- Engagement from borrowers is key for the CCMA to work. It is important that the borrower stays in regular contact with the lender, is honest, provides relevant information as requested and makes payments as agreed. It is also recommended that the borrower keeps copies of all letters sent, keeps a note of all telephone calls made and received and sends a follow up letter to the lender summarising what was discussed during the phone call.
The Central Bank have created a helpful infographic. If you’re in mortgage arrears, Abhaile can provide a Dedicated Mortgage Arrears Adviser who will support you at every stage of the MARP and CCMA journey. For more information call the MABS dedicated Helpline on 0761 07 2000 Monday to Friday 9am -8pm or visit www.mabs.ie/en/Abhaile/