Rules for how lenders deal with people who can't pay their mortgage

If you are having trouble paying your mortgage, you should contact your mortgage lender as soon as possible. They want to help you find a way to continue making your payments. They do not want to repossess your home, if possible.

The Money Advice and Budgeting Service (MABS) can help you if you are struggling to pay your mortgage. MABS provides supports as part of the Abhaile scheme to help people in mortgage arrears. Read more about these services.

There are rules about how lenders deal with you, if you are in mortgage arrears or pre-arrears. Pre-arrears is where you are at risk of falling behind on your mortgage repayments.

Lenders must:

• Handle your case sympathetically and positively, with the goal of helping you meet your mortgage obligations
• Operate a Mortgage Arrears Resolution Process (MARP) when dealing with you if you are in mortgage arrears or pre-arrears

These rules are set out in the Central Bank's Code of Conduct on Mortgage Arrears (CCMA) (pdf), and lenders are legally required to comply with it.

Read more in our page about the CCMA. You can also find information explaining the CCMA and how it works on the Central Bank’s website.

The CCMA states that lenders must operate a Mortgage Arrears Resolution Process (MARP) when they are dealing with you if you are in arrears and pre-arrears.

The MARP protects you from being immediately evicted from your home if you get into mortgage difficulty. It sets out a specific amount of time before legal proceedings to repossess your property can start. This gives you and your lender time to try and work out an alternative arrangement to repay your mortgage and keep your home.

There are 4 steps to the MARP:

1. Communication
2. Financial information
3. Assessment
4. Resolution

Note: If your lender sells your mortgage to an unregulated firm, MARP and the other CCMA protections must still be followed, as these protections stay with the loan.

Initial communication from your lender about your arrears

A mortgage arrears problem happens if you:

• Don’t make a full mortgage repayment when your payment is due
• Only make a partial mortgage repayment on the date your payment is due

If your arrears are still not paid 31 days from this date, your lender must tell you the status of your mortgage account in writing.

This letter must include:

• The full details of any payments you have missed
• The total amount you are in arrears
• An explanation that your arrears are now being dealt with under the MARP
• Information highlighting the importance of cooperating with your lender and the consequences of not cooperating
• Information on how missed repayments or repossession can impact your credit rating

Your lender must also send you an information booklet that includes:

• Details on the MARP
• Relevant contact points for arrears issues
• Details of websites with mortgage arrears information, such as mabs.ie

Ongoing communication from your lender about your arrears

Your lender must give you a written update of the status of your account every 3 months for as long as you are in arrears.

If an alternative repayment arrangement has not been set up, and you miss or only repay part of your third repayment, the lender must tell you this in writing:

• The potential for legal proceedings and the loss of your property, and an estimate of how much legal proceedings will cost you
• The importance of taking independent advice from MABS or an appropriate alternative
• That even if your property is sold, you are still responsible for any outstanding debt, including any accrued interest, charges, legal, selling and other related costs

Level of communication

As part of the CCMA, each lender’s Board must agree on a communications policy that ensures:

• The level of communications with borrowers is proportionate and not too frequent.
• Communications are not aggressive, intimidating or harassing
• Borrowers get enough time to complete agreed actions (with help if needed) before any further communication
• Steps are taken to agree on future communications

Can my lender visit my home?

Your lender can only visit your home without being asked if:

• Other attempts to contact you have failed
• You are about to be classified as not cooperating

You must get at least 5 business days’ notice of the planned visit, and you can opt to meet at your lender’s office instead. You can choose to have a third party with you. The lender’s letter announcing the visit must explain the implications of not cooperating.

Your lender must use the Standard Financial Statement (SFS) (pdf) to get your financial information. They use this to assess your financial position and find the best course of action.

The Central Bank has a consumer guide (pdf) on how to complete a standard financial statement (SFS).

When your lender gives you the financial statement, they must:

• Ensure that you understand the MARP
• Offer to help you complete the SFS
• Mention sources of independent advice, such as MABS
• Give you enough time to get the information together and complete the SFS
• Give you a copy of the completed statement

You may need to provide supporting documents to verify the information in the SFS.

The Arrears Support Unit (ASU) assesses your completed SFS. They must do this in a timely manner and examine your case on its individual merits.

The ASU must base its assessment of your case on your full circumstances including:

• Your personal circumstances
• How much debt you have
• The information you gave in your standard financial statement
• Your current repayment capacity
• Your previous payment history

The ASU may agree to give you a temporary alternative repayment arrangement while they are completing your assessment, if a delay would make your situation worse.

When the assessment is complete, your lender must explore all options for alternative repayment arrangements.

These options may include:

• Paying interest only, or interest and part of the capital on your mortgage, for a period of time
• Permanently or temporarily reducing the interest rate on your mortgage
• Deferring repayments (or part) for a period
• Extending the mortgage length of the mortgage
• Changing the type of mortgage
• Adding arrears and interest to the principal
• Equity participation (reduction of principal, with transfer of part of your equity)
• Warehousing part of the mortgage (including through a split mortgage)
• Reducing the principal
• A "deferred interest" or other voluntary scheme

You may need to move from an existing tracker mortgage to another mortgage type if none of the options that include keeping your tracker are appropriate or sustainable for you.

Information and advice on alternative arrangements

When your lender offers you an alternative repayment arrangement, they must give you a clear written explanation of the arrangement including:

• The details of the new repayment amount
• The term of the arrangement
• The impact of the new arrangement on your mortgage term
• The outstanding balance
• The existing arrears, if any
• How interest will be applied to your mortgage loan account as a result of the arrangement
• That the arrangement will be reported to the Central Credit Register and the impact of this on your credit record
• Information on your right to appeal the lender’s decision, including how to submit an appeal

Your lender must also advise you to take appropriate independent legal and financial advice.

Advice from an accountant

Your lender will pay €250 for a consultation with an accountant of your choice drawn from a panel of members of recognised accountancy bodies. You can find the list of participating accountants (pdf) and more information about the Mortgage Arrears Information and Advice on mabs.ie.

The Abhaile scheme has a separate panel of accountants (pdf) that also provide free financial advice.

If you agree to an alternative arrangement

Your lender must monitor the alternative arrangement on an ongoing basis. They must formally review it at least every 6 months to make sure that it is still appropriate for you. This review must include checking with you about whether your circumstances have changed since the start of the arrangement or since the last review.

If you do not stick to the terms of an alternative repayment arrangement, your lender’s Arrears Support Unit (ASU) must formally review your case, including the Standard Financial Statement, immediately.

If you do not agree an alternative arrangement

You and your lender may not be able to agree on an alternative repayment arrangement. If your lender is not willing to offer you an alternative repayment arrangement, they must give the reasons in writing. If they do offer an arrangement, you may choose not to accept it.

In these cases, your lender must inform you in writing about other options, including:

• Voluntary surrender
• Trading down
• Voluntary sale

They must also tell you:

• The implications of each option for you
• That you are now outside the MARP
• That repossession proceedings can follow after 3 months
• What happens to any debt outstanding after the repossession or sale of your home
• About the personal insolvency options
• About the importance of taking independent advice
• About your right to appeal or complain

Mortgage-to-rent option

If you have worked through the MARP and you and your lender agree that you can no longer afford to pay your mortgage loan now or in the future, your lender may approve you for the national mortgage-to-rent scheme. This scheme allows people who cannot pay their mortgage to switch from owning their home to renting their home as a social housing tenant.

How to make an appeal

The appeals process is separate from the MARP.

You can appeal the decision to the lender’s Appeals Board under the CCMA if:

• You are not willing to accept the alternative repayment arrangement being offered
• You are not offered an alternative arrangement
• You are classified as not cooperating

You have at least 20 business days from the date you receive notification of the ASU’s decision to consider making an appeal.

How is your appeal decided?

Your appeal is decided by an Appeals Board. The Appeals Board is made up of 3 of the lender’s senior personnel who have not yet been involved in your case. There must be a written procedure for handling appeals, which includes that:

• Only written appeals are considered
• Appeals must be acknowledged in writing within 5 business days of being received
• The lender must give you the name of one or more people who will be your point of contact about the complaint until the Appeals Board has ruled on it

What happens after you have made an appeal?

The Appeals Board must make a decision on your appeal within 40 business days of getting it. Your lender must write to you within 5 business days of this, to tell you the decision and explain the terms of any offer being made.

Your lender must also inform you of your right to refer the matter to the Financial Services and Pensions Ombudsman and must give you the Ombudsman’s contact details.

Your lender must give you written updates on the progress of your appeal at least every 20 business days.

How to make a complaint

You can complain to your lender if:

• You are not happy with how your lender treated your case
• You feel your lender has not complied with the CCMA

This is set-out in the Central Bank’s Consumer Protection Code 2012

If you are not happy with the outcome of an appeal or complaint, you can refer the issue to the Financial Services and Pensions Ombudsman.

Your lender must not apply to the courts to begin legal action to repossess your property until:

• Every reasonable effort has been made to agree an alternative arrangement
• A specific amount of time has passed

How long must a lender wait before applying to repossess a property?

If you are cooperating with your lender, they must wait at least 8 months from the date your arrears were classified as a MARP case before applying to the courts to repossess your property.

This 8-month period does not apply if:

• You do not cooperate with the lender
• You perpetrate a fraud on the lender
• There is a breach of contract by you other than the arrears

In these cases, repossession proceedings can start immediately. However, before you can be classified as not cooperating, your lender must write to you and warn you that this might happen and tell you what steps you need to take to avoid being classified as not co-operating.

If you are co-operating but don’t agree an alternative arrangement

If you are co-operating and your lender does not offer you an alternative repayment arrangement, or if you do not accept the alternative repayment arrangement being offered, your lender must write to you as outlined above. For repossession, this letter must state:

• That you are now outside the MARP, and that its protections no longer apply
• That legal proceedings may start 3 months from the date that the letter is issued or 8 months from the date the arrears arose, whichever date is later

The 3 months will give you time to consider other options, such as voluntary surrender, voluntary sale (pdf) or a Personal Insolvency Arrangement. You can also appeal the lender’s decision under the CCMA’s appeals process, described above.

Communication during repossession

Your lender or its legal advisers must notify you in writing immediately before they apply to the courts to start any legal action on repossession.

Your property may be repossessed either by voluntary agreement or by court order - see our page on repossession.

Even if court proceedings have started, your lender must still try to maintain contact with you to look for an agreement on repayments, and must put legal proceedings on hold if agreement is reached.

Your lender must explain to you that, if the property is sold and the sale price does not cover the amount you owe, you are still liable for the rest of the amount you owe.

If your property is repossessed and sold, the lender must write to you promptly with the following information:

• Balance outstanding on your mortgage loan account
• Details and amount of any costs arising from the disposal which have been added to the account
• Interest rate to be charged on the remaining balance

You may still be able to get support from the Abhaile scheme at the repossession stage.