Central Bank streamlines form for struggling borrowers

Official figures show some 24,000 homeowners are in serious mortgage arrears

Financial watchdogs have streamlined a key form for struggling borrowers bidding to do a deal with their banks, but consumer activists say the move will make no difference.

About 24,000 homeowners are in serious arrears with mortgage repayments in the Republic, according to official figures.

The Central Bank has published a new, simplified version of the standard financial statement that troubled borrowers must fill out when seeking to agree deals on debt repayments with lenders.

Lenders and borrowers must use the new form from January 1st, 2022, according to the regulator.

The bank has cut the form’s length almost in half, to 13 pages, while it has simplified the language used and has published a consumer guide to aid those filling it out.

Regulators decided to streamline the document following a review last year which highlighted the difficulty that borrowers had with completing the statement.

However, David Hall, chief executive of the Irish Mortgage Holders' Organisation, predicted that the changes would make "no difference" to borrowers.

“It changes nothing,” Mr Hall said. He pointed out that borrowers can fill out simpler forms detailing their income and spending, on which lenders rely when they are considering settlements with debtors.

Mr Hall believes the number of those in serious mortgage arrears may now be higher than the 24,000 assessment, partly due to the impact of Government Covid-19 restrictions.

Pandemic

However, he acknowledged that State efforts to combat the pandemic have not had as much impact on homeowners’ debts as was predicted when the virus first struck almost two years ago.

Mr Hall pointed out that a Central Bank statement dating back to autumn 2020 estimated that up to 16,000 of those in serious mortgage arrears were at serious risk of losing their homes.

He noted that as formal personal insolvency settlement tied debt repayments to the values of the homes involved, recent property price rises could rule this option out for many borrowers.

The Central Bank pointed out that protecting borrowers in financial difficulty was a key priority.

“The existing regulatory framework provides a significant number of protections and supports for borrowers in or facing mortgage arrears,” said its statement.

It added that the regulator has reviewed and strengthened these rules when needed to ensure the framework continues to protect consumers in their dealings with lenders.

“The amendments to the standard financial statement will further enhance those protections,” the Central Bank said.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas

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