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The Central Bank of Ireland published a revised Code of Conduct on Mortgage Arrears (the "Revised CCMA”) today which will provide some comfort to lenders. The key changes to the CCMA are as follows: Greater clarity is provided in the Revised CCMA for lenders as to whether a borrower is considered to be cooperating or not cooperating. The Revised CCMA also introduces a new provision requiring lenders to notify borrowers when there is a risk they could be classified as not...
The Central Bank of Ireland published a revised Code of Conduct on Mortgage Arrears (the "Revised CCMA”) today which will provide some comfort to lenders. The key changes to the CCMA are as follows: Greater clarity is provided in the Revised CCMA for lenders as to whether a borrower is considered to be cooperating or not cooperating. The Revised CCMA also introduces a new provision requiring lenders to notify borrowers when there is a risk they could be classified as not cooperating. Such borrowers are to be provided with at least 20 business days’ notice of the implications for not cooperating and with information on how to avoid the classification. Fundamentally, the twelve month moratorium on issuing legal proceedings has been reduced to a period of 3 or 8 months depending on the particular circumstances of the case. Legal proceedings can issue either 3 months after a letter is issued to the borrower indicating that an arrangement will not be offered or 8 months after the arrears first arose, whichever is the later. The previous restrictions on contacting borrowers have been removed. However, the lender must ensure that all contact made with a borrower is proportionate and not excessive. A board-approved communications policy for such communications with borrowers must be implemented by the lender. This replaces the previous limit of three unsolicited communications with borrowers per month. As a last resort where no other arrangement can be reached and the only other option is possession of secured properties, lenders can offer an arrangement to borrowers which provides for the removal of tracker rates. Lenders will be required to provide the Standard Financial Statement (SFS) at the earliest opportunity to borrowers and must offer assistance in its completion. While the SFS is being completed, lenders can enter into a temporary arrangement with a borrower to prevent the arrears from increasing further. The Revised CCMA will come into effect from 1 July 2013. Mark Woodcock is a Partner and Head of the Insolvency and Restructuring Unit at McDowell Purcell.