Expert group calls for arrears help scheme for homeowners
A report by a government-appointed expert group charged with examining the problem of mortgage arrears in Ireland has recommended that a new Mortgage Arrears Resolution Process (MARP) should be introduced across the financial industry in order to offer help to homeowners struggling to make their mortgage payments.
The Expert Group on Mortgage Arrears and Personal Debt, which is headed by Hugh Cooney and also includes the Financial Regulator Matthew Elderfield, has recommended that all lenders develop an industry-wide standard Mortgage Arrears Resolution Process (MARP) and calls for improved communication from lenders for homeowners who are in arrears in their mortgage.
It also recommends banning penalty interest or arrears charges for those borrowers who are taking part in MARP and for arrears statistics to include the number of rescheduled mortgages.
Financial Regulator to act ‘swiftly’
The Financial Regulator pledged that it would act “swiftly” to address the immediate priorities outlined in the report.
Head of Financial Regulation at the Central Bank Matthew Elderfield also called on the banks and lenders to take immediate steps to implement the recommendations relevant to them.
He also urged encourage consumers who feel they are in financial distress to contact their lender at an early stage before an arrears problem gets out of hand. “Lenders must treat you fairly,” he said.
‘Pragmatic’ recommendations on arrears
The Finance Minister Brian Lenihan TD also welcomed the report’s recommendations noting that it supports significant reforms of the Mortgage Interest Supplement Scheme approved by Cabinet yesterday which will allow an eligible couple where one person is in full-time employment to qualify for the Mortgage Interest Supplement and also allow the payment of the supplement while a house is up for sale.
“These recommendations are pragmatic and capable of speedy implementation,” the Minister said, adding that they would be “of real help to those in difficulty”.
The Minister for Communications, Energy and Natural Resources Eamon Ryan also welcomed the interim findings: “The people of Ireland stood by the banks in their hour of need for the benefit of the whole population. It is incumbent on the banks to similarly stand by vulnerable people in our society who find themselves in difficulty through no fault of their own.
“We do not want the recovery stifled by a legacy of the boom years. These measures will go a considerable distance to help in this regard,” he added.
‘Very disappointing’ report – Labour
The Labour Party has criticised the expert group’s report on mortgage arrears, describing it as a “very disappointing” document which is “long on aspiration and short on detail”.
“The report contains 41 recommendations, but in truth few if any of them go beyond what should be happening anyway, at a time when tens of thousands of mortgages are stressed and when hundreds of thousands of homeowners have fallen into negative equity. Most disappointingly perhaps, one of the only specific proposals is that the moratorium on repossessions should not be extended,” said Labour spokesperson Ciaran Lynch on housing and local government.
“These recommendations could best be summed up by saying that lenders should be nicer to borrowers, and borrowers should be nicer to lenders. If everybody make an effort to could get along, then sure everything will be just great,” he added.
“If the recommendations are to have any impact whatsoever, they will have to be backed by legislation, but in the week when the Dail is going into recess there can be no progress in this regard until autumn at the earliest.”
Labour is recommending the introduction of a mortgage rescue scheme whereby the moratorium period would be extended to two years, along with dealing in a legislative way with matters such as penalty interests on arrears and reform of bankruptcy laws.
“It is almost two years since the financial markets went into meltdown, and while the Government has rescued builders, bankers and developers, it is clear that ordinary home owners are still at the back of the queue as far as Fianna Fail and the Greens are concerned,” Lynch said.
“This document does nothing to resolve the imbalance of power between borrowers and lenders, particularly when it comes to dealing with arrears.”