AIB Bank Centre, Dublin

The Irish Banking Federation (IBF) has today published a Statement of Intent as a further reassurance to homeowners who find themselves genuinely unable to maintain mortgage repayments on their principal private residence.

Agreed and supported by IBF mortgage lenders (see list below), the Statement of Intent reads as follows.

“All mortgage lenders who are members of the Irish Banking Federation (IBF) are fully committed to working with customers who are facing repayment difficulties in their principal private residence due to changed economic circumstances. While it is important to always make the distinction between customers who are unable to pay their mortgage and those who are unwilling to pay, IBF mortgage lenders have as their goal to work with their customers who face genuine difficulties in order to find solutions that do not involve legal action. The basis for such solutions is for the customer to talk to his/her lender at the earliest opportunity so that a mutually-acceptable arrangement can be agreed, implemented and reviewed thereafter on a six-monthly basis. Provided the customer maintains this arrangement, IBF mortgage lenders will not initiate any form of legal action against them in relation to their mortgage. An IBF Oversight Committee, with representation from the Money Advice and Budgeting Service (MABS), will monitor the application of this Statement of Intent.”

The IBF says this initiative comes on top of the existing protection provided to homeowners by the statutory Code of Conduct on Mortgage Arrears (which builds on the original IBF voluntary code). Under the Code:

• Lenders must adopt flexible procedures for handling mortgage arrears and assist the borrower as far as possible – whereby consideration can be given on a case-by-case basis to deferral of payments, extending term of mortgage, changing type of mortgage, or capitalising arrears and interest

• Lenders must wait at least 6 months (12 months for the two recapitalised banks- - AIB and Bank of Ireland) from the time of arrears first arising before applying to the court to commence legal action for repossession.

The IBF says house repossession remains at a low level here. The total number of houses repossessed by all mainstream mortgage lenders in the first half of 2009 was 70 - - of which 49 were voluntary or abandoned and 21 stemmed from the legal process. This is a fraction of the total number of mortgages issued.

“Our sector is acutely aware of the pressures facing some homeowners in the current economic environment”,said IBF’s chief executive, Pat Farrell. “Where repayment difficulties arise for some borrowers because of changed economic or social circumstances, the borrower should talk to his/her lender at the earliest opportunity. The importance and value of early communication between borrowers and lenders cannot be emphasised enough. Just as in the IBF/MABS Protocol on Debt Management, our members are saying that they want to explore all possible options with their customers; they want to find a mutually-acceptable arrangement as an alternative to legal action.”