Statutory code for mortgage arrears welcome

11 February 2009

FLAC (Free Legal Advice Centres) the legal rights organisation tonight welcomed the introduction of a statutory code for mortgage lenders as part of the Government's recapitalisation programme for AIB and Bank of Ireland. According to Minister Brian Lenihan TD, the proposed code will apply to all mortgage lenders.

"FLAC welcomes the suggested provision that will prohibit mortgage lenders from seeking repossession of a person's main home until every reasonable effort has been made to agree an alternative repayment schedule," said FLAC's Director General Noeline Blackwell. "We are pleased to see that there will be a moratorium on commencing legal proceedings for the two recapitalised banks of at least a year, though we see that a period of only 6 months from the date of first arrears applies to the other banks."

Expressing caution because the code will not be published until the end of this week, Ms. Blackwell commented, "We are really anxious to see the full text of the code. There has been no consultation with interested parties by the Financial Regulator and we are concerned that the code will not address mortgage arrears difficulties in a comprehensive way. We wonder, for instance, what the penalties will be on lenders who do not observe the code.

"We also need to see what the arrangements will be for people whose mortgages are secured on their businesses or farms. It appears to only apply to principal private residences."

You can download FLAC's submission on the draft code. You can also read FLAC's press release commenting on the draft code (issued 3 February).