Mortgage Arrears Resolution Process (MARP)

Introduction

The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) (pdf) sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or in pre-arrears. It requires lenders to handle all such cases sympathetically and positively, with the objective at all times of helping people to meet their mortgage obligations.

Under the CCMA, lenders must operate a Mortgage Arrears Resolution Process (MARP) when dealing with arrears and pre-arrears customers. The 5 steps of the MARP are covered in detail below. They are: communication; financial information; assessment; resolution and appeals.

If these 5 steps have been exhausted and the lender intends to repossess your home, they must then adhere to the MARP rules governing repossession proceedings.

Communication

A mortgage arrears problem arises as soon as you fail to make a full repayment on the date it is due.

If the arrears remain outstanding 31 days from this date, the lender must inform you in writing of the status of the mortgage account. This letter must include full details of the payment(s) missed and the total amount now in arrears. It must also explain that your arrears are now being dealt with under the MARP; the importance of cooperating with the lender; the consequences of non-cooperation; and the impact of missed repayments/repossession on your credit rating.

The lender must also send you an information booklet including details on the MARP, relevant contact points for arrears issues and details of websites with mortgage arrears information, such as mabs.ie and keepingyourhome.ie. (You must also get this if you are in pre-arrears.)

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

If an alternative repayment arrangement has not been set up, and you miss a third repayment (full or partial), the lender must tell you the following in writing:

The potential for legal proceedings and loss of your property, and an estimate of the costs to you of such proceedings
The importance of taking independent advice from the Money Advice and Budgeting Service (MABS) or an appropriate alternative
That even if your property is sold, you will remain liable for any outstanding debt, including any accrued interest, charges, legal, selling and other related costs.

Financial information and assessment

Financial information

Lenders must provide a standard financial statement to obtain financial information from a borrower in arrears or in pre-arrears, so that they can assess your financial position and identify the best course of action. The Central Bank has developed an industry standard format (pdf) for the standard financial statement (SFS). Since 1 July 2011, all lenders must use this SFS. The Central Bank, together with MABS, has also developed a consumer guide (pdf) to completing an SFS.

When providing the financial statement, the lender must ensure that you understand the MARP process. They must tell you about the availability of independent advice (from MABS, for example) to help in completing the standard financial statement.

The lender must pass the completed standard financial statement to its Arrears Support Unit (ASU) for assessment.

Assessment

The lender’s ASU must assess the completed standard financial statement and examine your case on its individual merits. The ASU must base its assessment of your case on your full circumstances. These include your personal circumstances; overall indebtedness; information provided in the standard financial statement; current repayment capacity; and previous payment history.

Resolution

The lender must explore all options for alternative repayment arrangements. These options must include:

An interest-only arrangement for a specified period
An arrangement to pay interest and part of the normal capital element for a specified period
Deferring payment of all or part of the instalment repayment for a period
Extending the term of the mortgage
Changing the type of the mortgage, except in the case of tracker mortgages
Capitalising the arrears and interest, and
Any voluntary scheme to which the lender has signed up, e.g. Deferred Interest Scheme.

The lender must not require you to change from an existing tracker mortgage to another mortgage type as part of any alternative arrangement being offered.

When the lender is offering an alternative repayment arrangement, they must give you a clear written explanation of the arrangement. As well as the basic details of the new repayment amount and the term of the arrangement, the lender must explain its impact on the mortgage term, the balance outstanding and the existing arrears, if any.

The lender must also give details of: how interest will be applied to your mortgage loan account as a result of the arrangement; how the arrangement will be reported to the Irish Credit Bureau and the impact of this on your credit rating; and information on your right to appeal the lender’s decision, including how to submit an appeal.

The lender must also advise you to take appropriate independent legal and/or financial advice. The lender must monitor the arrangement on an ongoing basis and formally review its appropriateness for you at least every 6 months. This review must include checking with you whether your circumstances have changed since the start of the arrangement or since the last review.

If an alternative arrangement is not agreed

It may not be possible for you and your lender to agree on an alternative repayment. If the 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 both of these cases, the lender must inform you in writing about other options, including voluntary surrender, trading down or voluntary sale, and the implications for you of each option. They must also inform you of your right to make an appeal to their Appeals Board about the ASU’s decision, the lender’s treatment of your case under the MARP, or their compliance with the requirements of the Code.

The lender must also inform you that the 12-month moratorium on taking legal action will no longer apply to your case if you do not make an appeal.

If you breach an alternative arrangement

If you cease to adhere to the terms of an alternative repayment arrangement, the lender’s Arrears Support Unit must formally review your case, including the standard financial statement, immediately.

Appeals

The lender’s Appeals Board will consider any appeals that you submit and will independently review the ASU’s decision, the lender’s treatment of your case under the MARP and the lender’s compliance with the requirements of the Code.

The lender must allow you a reasonable period to consider submitting an appeal. This must be at least 4 weeks from the date you receive notification of the ASU’s decision.

The Appeals Board will be made up of three of the lender’s senior personnel who have not yet been involved in your case. At least one member of the Appeals Board must be independent of the management team and must not be involved in lending matters.

There must be a written procedure for handling appeals, to include:

Only written appeals will be considered
Appeals will be acknowledged in writing within a week of being received
The lender must give you the name of one or more people who will be your point of contact in relation to the complaint until the Appeals Board has ruled on it
The lender must give you written updates on the progress of the appeal at 4-weekly intervals or more often
The appeal must be decided within 8 weeks of being received. The lender must write to you within a week of this, to convey the decision of the Appeals Board and explain the terms of any offer being made. The lender must also inform you of your right to refer the matter to the Financial Services Ombudsman and must give you that Ombudsman’s contact details.

Repossession proceedings

The lender must not apply to the courts to commence legal action for repossession of your property until every reasonable effort has been made to agree an alternative arrangement. If you are cooperating with the lender, they must wait at least 12 months from the date your arrears were classified as a MARP case (31 days after the first missed repayment) before applying to the courts.

When a lender is calculating the 12-month period, it must exclude any period during which you are complying with the terms of an alternative repayment arrangement, appealing to the Appeals Board or complaining to the Financial Services Ombudsman under the Code. It must also exclude the period during which you can consider making an appeal.

For pre-arrears cases, the 12-month period must exclude the period between your first contact about the pre-arrears situation and the setting up of an alternative repayment arrangement.

The 12-month period does not apply if you do not cooperate with the lender; or if you perpetrate a fraud on the lender; or if there is a breach of contract by you other than the existence of arrears.

The lender must notify you in writing before it applies 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 document on repossession. Even if court proceedings are started, the lender must still try to maintain contact with you to seek an agreement on repayments, and must put legal proceedings on hold if agreement is reached.

The 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

Last Updated: 03/04/2012