Mortgage arrears

Your circumstances can change and you may have difficulty making your mortgage repayments because of events that you have no control over such as losing your job, illness or relationship breakdown.

Being in arrears on your mortgage means that you have missed some or all of  your mortgage loan repayment. This is a serious situation and your lender will act quickly and contact you to alert you and to find out why you have missed a repayment. Missing a mortgage repayment could have a negative effect on your credit rating.

Take action if you are having difficulty making your mortgage repayments
How the mortgage arrears code of conduct works?

Take action if you are having difficulty making your mortgage repayments

If you find you are unable to pay your mortage, or you think this might happen soon, then it is vitally important that you take action.

What to do:

1. Read our debt action plan for our three-step plan to tackling your debts. This will help you to get a clear picture of all your current debts as well as helping you set out a new budget to help you prioritise your spending. Before talking to your lender, make a new budget and check your entitlements. Have all of your facts and figures to hand - including your list of debts, interest rates, how much you still owe etc. If you have serious debt problems, you can contact the Money Advice and Budgeting Service (MABS) which provides free, independent and confidential debt advice and money management services. You can also telephone the MABS helpline on 1890 283 438.
2. If you have a mortgage repayment protection insurance policy, check if your policy will cover your mortgage repayments for a time.
3. Remember, you must act quickly - once you have a clear list of all  your debts and all your income/entitlements, you should contact your lender to discuss your options. If you miss a payment and your lender contacts you by letter or phone, do not ignore this. It is important that you co-operate with your lender as much as you can. Read every letter your lender sends you and ask them to explain anything you do not understand.
4. The Central Bank’s Code of Conduct on Mortgage Arrears clearly sets out how your mortgage lender will deal with you if you are in arrears or think you may go into arrears. Get more information on how the Code of Conduct on Mortgage Arrears works.

How the mortgage arrears code of conduct works?

Communication with your mortage lender is key. Your lender must follow the rules set out under the Code of Conduct on Mortgage Arrears if you are in arrears, or you think you may go into arrears.

If you are in arrears on your mortgage or think you will soon have problems making your repayments, the Central Bank’s Code of Conduct on Mortgage Arrears (PDF), sets out rules and procedures for how your lender must deal with you. The Code came into effect on 1 January 2011. It is also sometimes called the CCMA.

Under the Code, lenders must have a process in place for dealing with mortgages in arrears or mortgages that may soon be in arrears. This process is called the Mortgage Arrears Resolution Process (MARP). Your lender must have an information booklet on their MARP available on their website and must send you a copy if you are 31 days late making a mortgage repayment. Once you contact your lender and inform them that you think you will soon have problems making repayments or if you are 31 days late making a mortgage repayment, you are considered to be within your lender’s MARP.

Read the Central Bank’s Frequently Asked Questions (PDF) and booklet on Mortgage Arrears – A Consumer Guide to Dealing with Your Lender. (PDF)

• Does the Code apply to all mortgages?
• If you are separated/divorced and have a joint mortgage with your partner how does the Code apply to you?
• Can your home be repossessed?
• Making contact with your lender
• Can someone contact your lender on your behalf?
• Can your lender charge any penalties?
• Could you lose my tracker mortgage?
• What if your lender will not offer you an alternative repayment arrangement?
• How often can your lender contact you to discuss your mortgage?
• What happens if you cannot keep up repayments under the agreed alternative repayment arrangement?
• How do you make a complaint under the Code?
• Who else can you contact for help?

Does the Code apply to all mortgages?

It is important to note that the Code relates to the mortgage payments on your main property. It does not cover mortgages from Credit Unions, buy-to-let mortgages or mortgages on holiday homes.

If you are separated/divorced but have a joint mortgage with your partner, how does the Code apply to you?

If you have notified your lender in writing that you are separated or divorced, your lender must deal with you individually under this Code. This means that only your financial circumstances are relevant.

Can your home be repossessed?

Under the Code, your lender must wait 12 months from the date you enter their Mortgage Arrears Resolution Process (MARP) before applying to the courts to start repossession proceedings against you.

However, this 12-month period is not 12 straight calendar months. For example, the 12 months cannot include any periods of time during which you have agreed an alternative arrangement with your lender and you stick to the terms of that arrangement.  . If you request it, your lender has to tell you how much time is remaining before they can commence legal action for repossession of your home.

The Code also states that your lender cannot apply to the courts to start repossession proceedings until every effort has been made to agree an alternative agreement with you.

Making contact with your lender

If you are in arrears or think you will soon have problems making your mortgage repayments, contact your lender immediately.

You will have to give your lender information about your financial situation on a form called a Standard Financial Statement (SFS). This includes details of any income or social welfare payments you receive, as well as your spending commitments, other loans and your living expenses.  You must give your lender honest and complete information about your financial situation. If you do not give your lender information that has a significant impact on your financial situation or do not give the lender any information they need to assess your financial situation, you can be considered as not co-operating with the lender. If this happens, the 12-month moratorium on starting legal proceedings for repossession of your property will no longer apply to your case.

Once you make contact, your mortgage lender must consider all options contained in the Code for an alternative repayment arrangement in order to find out which option is the most appropriate for your situation.  Examples of alternative repayment arrangements are:

• an interest-only arrangement for a period of time
• extending the term of the mortgage, which will mean lower monthly repayments or
• capitalising the interest.

Can someone contact your lender on your behalf?

If you don’t feel confident dealing directly with your lender, you can ask someone for support, such as a relative, a friend you trust or an advisor. Ask them to go with you when you attend any meetings with your lender. You can also ask someone else to discuss your mortgage repayment problems with your lender on your behalf. This could be an advisor, a relative or a friend that you trust to help you deal with this important issue.  To do this, you will have to give your lender written permission to discuss your mortgage with this person. 

Can your lender charge any penalties?

Your lender cannot charge you penalty fees or charge you surcharge (extra) interest on mortgage arrears as long as you are co-operating reasonably and honestly with your lender. 

Could you lose your tracker mortgage?

Your lender cannot force you to move from an existing tracker mortgage to another mortgage type even if they are putting an alternative repayment arrangement in place.

What if your lender will not offer you an alternative repayment arrangement?

In these circumstances, your lender must give you the reasons in writing and notify you of other options available to you and of your right of appeal to its internal Appeals Board.  You will have 20 business days, from the date you receive the lender’s decision on your case, to make an appeal to the Appeals Board.  If you are still not satisfied with the decision of the Appeals Board, you can appeal your case further to the Financial Services Ombudsman (FSO).

How often can your lender contact you to discuss your mortgage?

Your lender cannot contact you more than 3 times a month to discuss your mortgage repayments or mortgage arrears, unless you have given them permission to contact you more than that. However, there are times when your lender must contact you under the Code. For example, they must write to you to tell you if you are in arrears and provide you with information on their Mortgage Arrears Resolution Process (MARP).

What happens if you cannot keep up repayments under the agreed alternative repayment arrangement?

If this happens, your lender must review your case immediately and try to agree another alternative repayment arrangement with you. If a new agreement is put in place, the lender cannot begin repossession proceedings while you stick to the terms of the agreement.

However, if a new agreement is not put in place, your lender cannot apply to the courts to start repossession proceedings until a 12-month period has passed. However, the calculation of this 12-month period can be complicated as, for example, any period of time where you have stuck to an agreed alternative arrangement is not included in the 12-month period.  

How do you make a complaint under the Code?

You can make a complaint on any of the following issues:

• The terms of any alternative repayment arrangement offered by your lender
• Your lender’s decision not to offer you any alternative repayment arrangement
• The treatment of your case under the Mortgage Arrears Resolution Process, or
• Your lender’s compliance with the Code of Conduct on Mortgage Arrears

You should first make an appeal to your lender’s Appeals Board.  If you are not happy with the decision of the Appeals Board you may make a complaint to the Financial Services Ombudsman (FSO). 

Who else can you contact for help?

If your lender has told you they are going to commence repossession proceedings through the courts, you should seek professional advice. The Free Legal Aid Centres (FLAC) offer basic, free legal services to the public. You should contact FLAC as soon as possible to discuss your case before it goes to court.

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