New measures to protect mortgage holders in arrears

The Government has announced moves that will prevent any lender applying penalty interest to anyone in arrears on their mortgages once they enter a resolution process.

All banks will have to set up a mortgage arrears process which the Government says will ensure consistent treatment of people in difficulty.

The move follows the publication today of an interim report by an expert group set up to examiner the issues of mortgage arrears and personal debt.

The Central Bank and Financial Regulator today said that it will act swiftly to address the immediate priorities outlined in the report.

Regulator Matthew Elderfield, also called on the banks and lenders to take immediate steps

to implement the recommendations relevant to them.

"We intend to implement the report’s recommendations to provide more help to customers by banning arrears charges, improving lender communication with borrowers and implementing a standard industry-wide mortgage arrears resolution process," Mr Elderfield said.

"I call on lenders to implement now the recommendations to improve the position of those in arrears ahead of formal action by us.

"I would also like to 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.”

It is estimated that 30,000 people are in arrears of more than 90 days, with as many more in negotiation with their bank seeking 'forebearance'.

Finance Minister Brian Lenihan said no-one should now be afraid to talk to their banks, and that this is just the beginning of action by Government.

"I entirely refute the suggestion of 'too little, too late'," Minister Lenihan said.

"The Government already secured a substantial moratorium and extension of time for borrowers who have difficulties with the capitalised banks.

"This is an interim report - as soon as the report arrived on my desk the Government decided to implement all the recommendations.

"A further report will take place in the autumn and the Government will act on those recommendations as well."