Family homes to be seized from October

Legal proceedings to take repossession of the family home could start as soon as Oct 1 under a new code of conduct on mortgage arrears, being released by the Central Bank today.

The move will have huge implications for the 95,554 mortgage holders in arrears over 90 days and a further 46,564 in arrears under 90 days.

Under the new code, which comes into effect on Jul 1, if a bank can prove it has offered a sustainable payment arrangement to a customer in mortgage arrears but the new terms have not been met, or if the customer has rejected the offer, then the bank just has to issue notification it intends to start legal proceedings in three months to take repossession.

For any customer that falls into arrears after Jul 1, a bank has to wait a minimum of eight months before it can issue a three-month notice period that intends to start legal proceedings — provided the customer cooperates with the bank.

Ross Maguire from the lobby group New Beginning said the new code of conduct is irrelevant and will not solve the massive mortgage arrears crisis: “The banks are just playing with customers in mortgage arrears. These customers are in limbo and this code only prolongs that limbo.”

A provisional draft of the code released last week had a two-month notice period for legal proceedings.

Constantin Gurdgiev, from the Irish Mortgage Holders Organisation, says the increase from two to three months is an improvement but it is not sufficient for the most distressed borrowers: “The most distressed borrowers will not have the resources to get professional help and three months is not enough time for them to fully understand their options. I would prefer to see a six-month notice period for legal proceedings.”

Mr Gurdgiev had no other major concerns with the new code.

Even though legal proceedings on repossessions can start as early as October, the Government still has to fix the legal loophole known as the Dunne Judgement, which has made it extremely difficult repossess the family home.

Under the old code, a bank could only contact a customer in arrears three times in a calendar month. Under the revised code, there is no limit to the amount of times a bank can contact a customer once the communication is reasonable and doesn’t constitute harassment.