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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.
Mortgage Interest Supplement and MARP
Mortgage Interest Supplement (MIS) is a payment made by the Department of Social Protection. It provides short-term support to help with mortgage interest repayments.
Since 18 June 2012, new applicants for MIS must show that they have availed of an alternative payment arrangement with their lender for at least 12 months under the MARP. This approach is consistent with the reports of the Mortgage Arrears and Personal Debt Group and the Inter-Departmental Working Group on Mortgage Arrears (described in our document on Developments and proposals in relation to mortgage arrears and personal debt). This change does not affect people who were getting MIS before 18 June 2012.
Communication
A mortgage arrears problem arises as soon as you fail to make a full mortgage repayment or only make a partial mortgage 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 SFS.
The lender must pass the completed SFS to its Arrears Support Unit (ASU) for assessment.
You may be required to provide supporting documentation to verify the information in the SFS.
Assessment
The lender’s ASU must assess the completed SFS 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.
Information and advice on alternative arrangements
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.
Mortgage Arrears Information and Advice Service
As part of the new Mortgage Arrears Information and Advice Service, your participating lender will pay €250 for a consultation with an accountant of your choice drawn from a panel composed of members of recognised accountancy bodies including the Institute of Chartered Accountants Ireland, the Association of Certified Chartered Accountants and the Institute of Certified Public Accountants. You can find out more about this in the protocol document (pdf) and in our further information document on the panel of accountants. You can find a list of participating accountants on this website.
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 CCMA.
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 CCMA.
The lender must allow you a reasonable period to consider submitting an appeal. This must be at least 20 business days 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 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 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 least every 20 business days
- The appeal must be decided within 40 business days of being received. The lender must write to you within 5 business days 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 (but see note below) and must give you the Ombudsman’s contact details.
However, since 7 February 2013, the Financial Services Ombudsman cannot pursue complaints against the Irish Bank Resolution Corporation (IBRC) without the consent of the High Court.
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
