Mortgage Arrears Resolution Process (MARP)
Under the Code of Conduct on Mortgage Arrears (CCMA), lenders must operate a Mortgage Arrears Resolution Process (MARP) when dealing with arrears and pre-arrears customers. This requirement was introduced in January 2011, but the rules changed in July 2013 with the introduction of the Personal Insolvency Legislation.
There are 4 steps involved in the MARP:- Communication, Financial Information, Assessment and Resolution.
The area of Communication sets out the information that the lender is required to inform you of in writing and includes details on:
- The status of the mortgage account.
- 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 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
- 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.
- 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.
Financial Information and Assessment
In order for lenders to identify the best course of action for a mortgage holder in arrears, they must get and assess the financial position of the borrower. You will be given a “Standard Financial Statement” (SFS) to complete. When you get the financial statement to complete, the lender must make sure that you understand the MARP process. They should offer to help you to complete the SFS as well as let you know about where you can get independent advice. You should be given enough time to gather the information you need to complete the SFS and they must give you a copy of the completed statement. You may need to provide supporting documentation to verify the information in the SFS.
Assessment
The SFS is then passed on to its own Arrears Support Unit (ASU) for assessment. The ASU must assess the completed SFS in a timely manner and examine your case on its individual merits. The ASU must base its assessment of your case on your full circumstances. When the assessment is complete, the lender must consider all options for alternative repayment arrangements.
These options may include:
• Paying interest only, or interest and part of the capital, for a period
• Permanently or temporarily reducing the interest rate
• Deferring repayments (or part) for a period
• Extending the mortgage term
• Changing the type of mortgage
• Adding arrears and interest to the principal
• Equity participation (reduction of principal, with transfer of part of your equity)
• Warehousing part of the mortgage (including through a split mortgage)
• Reducing the principal
• A “deferred interest” or other voluntary scheme
The lender may require you to change from an existing tracker mortgage to another mortgage type if it concludes that none of the options that include keeping your tracker are appropriate or sustainable for you.
Information and advice on alternative arrangements
As part of the 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. CACM Accountants are on this panel of Accountants.
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.
What happens of an alternative arrangement is not agreed
In some circumstances, it may not be possible to for you and the lender to reach an agreement on an alternative repayment arrangement. A lender may not be willing to offer an alternative arrangement or they may offer you an alternative arrangement, but you may choose not accept it.
If this happens, you will now be outside the MARP, and repossession proceedings can start after three months. The three months will give you time to consider other options, such as voluntary surrender, voluntary sale or a Personal Insolvency Arrangement. You can also appeal the lender’s decision under the CCMA’s appeals process. Independent financial and legal advice should be sought.
The information contained above is intended as a general guide to the subject matter, it should not be used as a basis for decisions. For this purpose advice should be obtained which takes into account all the individual’s circumstances from suitably authorised professionals. Every effort has been made to ensure the accuracy of the information. We are unable to accept liability for any errors or omissions which may arise.