Newstalk: Jonathan Healy talks to Karl Deeter about the new Code of Conduct on Mortgage Arrears (CCMA) 27th June 2013

Jonathan Healy asked for for some thoughts on the new code of conduct for mortgage arrears which came out on the 27th of June. We made a submission on the proposed changes but think that they went beyond what was a reasonable trade off, the use of autodiallers are still allowed, and taking people off trackers (as opposed to changing margins) is also going to be allowed but it hinges on ‘sustainability’ which is an undefined word.

The closing comment that the ‘most toxic bank in the country has the word ‘central’ in front of it’ is not a lightly made charge, in light of the disastrous financial bailout of our banks the weight of responsibility on the people who should have been keeping watch is immeasurable.

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FLAC thoughts on new CCMA, are they well thought out?

I can’t help but feel disappointment when I hear that FLAC are calling for banks to be highly limited in their ability to make unsolicited contact to resolve issues with debtors. This was widely reported (audio clip here), but doesn’t go on to state why it’s good, bad, or why it may need to be changed, the suggesting isn’t coming out of thin air.

Our thoughts are that pragmatism must win out, a level of limiting power along with a corresponding engagement and non- harassment policy is possible. Our submission to the Central Bank (below) attempts crudely to consider this.

The TD Stephen Donnelly reported in the Sunday Independent that he had constituents who were being harassed by the banks and that the use of auto-diallers was a part of that. This didn’t count as unsolicited contact because under the precise rules of the Code of Conduct on Mortgage Arrears calling a person then not leaving a message doesn’t count as ‘contact’.

At the same time it …

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Short Sale Loans or Negative Equity Loans

We were asked to make a presentation to the Department of Finance’s ‘Expert Group on Mortgage Arrears’ which is made up of the main interest groups and representative bodies in finance and housing. This firm has long been an advocate of market oriented solutions (short sales, moving paper etc.). However, in Ireland there are several issues.

Firstly, short-sales are not possible because of the manner in which recourse to the loan exists, it is on the person and not just the asset, this gives no incentive to lenders to accept a short sale except for people who are already financially strong, our debt laws also work against the borrower.

Secondly, as a shareholder in the banks it may not be in the interest of the shareholder (taxpayer) to bail out the individual, personally I don’t want to continue to shoulder costs for anybody, not our banks, borrowers or anybody else, I want taxes to go toward vital services and not much else. Any scheme should be revenue neutral or profitable.

That is where the idea …

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Difficulties with mortgage repayments?

The Irish Bankers Federation has produced a guide for people who may be having difficulty in servicing their mortgage. This is a timely publication and relevant to many consumers. We previously published our Repossession Guide in early 2009 but it doesn’t cover the new Code of Conduct for Mortgage Arrears 2010 and the IBF one does.

Ultimately much of the information is common sense with some of the Code of Conduct being applied, having said that, it is vital to understand and utilise the information contained in the guide if you find yourself in difficulty, as this may be the only thing standing between you and a pointless repossession. Losing your home is one thing, doing it unnecessarily is another.

There is a wider question in Ireland about how we are going to solve our mortgage mess, the figures of houses in serious arrears continue to increase and forbearance cannot become a long …

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Synopsis of the ‘Code of Conduct on Mortgage Arrears’ February 2010

The Financial Regulator recently brought out a new code of conduct for mortgage arrears, the full length eight page document is here.

The code applies to: all of the regulated mortgage lenders in the state (this includes the sub-prime lenders), as well as all mortgage lenders operating here via other EU states (eg: Leeds Building Soc.)

It applies to consumers only, and only in respect of their principle private residence in the state. The code should be treated as an extension of the Consumer Protection Code.

Scope: The code covers finance for primary homes, lenders must adopt flexible procedures that aim to assist the borrower as far as possible. It sets out what the lenders must do in an arrears case but allows repossession where the code is not appropriate (fraud, breach of contract, abandonment). It doesn’t relieve the borrower from their duties to repay

Legal Background: S117 of the Central Bank Act 1989

Avoiding an arrears problem: Once …

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