The Central Bank (Code of Conduct Bill) 2015 expands the protection for borrowers facing repossession proceedings.
It was revealed in May of this year when the Supreme Court held that, although banks are legally obliged to abide by the Code of Conduct on Mortgage Arrears, the only basis on which the courts could reject an application for repossession was where the bank had failed to comply the length of time it must wait before initiating legal action.
Currently, this is set at three months after a warning letter is issued, or eight months after the arrears arose, whichever date is later. Crucially, failure to comply with other provisions of the Code cannot be cited by a borrower as grounds for the courts to turn down a repossession order.
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Fianna Fáil Finance Spokesperson Michael McGrath said: "It is absurd that a lender is legally obliged as a matter of law to comply with the Code, but is still entitled to a repossession order where they have flouted the provisions of the Code.
"The Code of Conduct on Mortgage Arrears was designed to provide essential protections to homeowners struggling to stay in their family home. It is now essentially redundant as a barrier to home repossessions.
"For example, the Code requires a lender to make 'every reasonable effort' to agree an alternative arrangement with a borrower before initiating repossession proceedings, but a Court can no longer use this as a reason for refusing a repossession order.
"In my view it is unacceptable that the Government has failed to introduce the necessary legislation to deal with this issue. In his ruling in May, Judge Clarke commented that the courts do not have a role in determining the reasonableness of a lender's mortgage arrears policies and the application of those policies to an individual case.
"Clear legislation would be needed for this. He effectively put it up to the Oireachtas to resolve the issue. This government has failed time and time again to rebalance the scales between the banks and borrowers. Fianna Fáil is now taking the initiative to bring forward legislation to bring clarity to the situation."
(CD/JP)
