A FINANCIAL statement to be filled in by homeowners in arrears with their mortgage will include extensive questions on monthly household expenditure.
Borrowers in arrears will be asked what they spend on utility bills, food, clothing and footwear. The cost of school transport for borrowers’ children as well as costs associated with their education must be listed.
Lifestyle expenses such as birthdays and eating out are also included. Applicants will also be asked about the value of their cars.
The statements are being rolled out as part of the Mortgage Arrears Resolution Process.
The initiative was announced as part of the Financial Regulator’s updated code of conduct on mortgage arrears in December and should be in place for all lenders by July 1st.
The process requires lenders to carry out five steps before attempting to repossess borrowers’ homes through the courts.
The steps outline how lenders should communicate with borrowers once they begin falling behind with payments.
They include the collection of financial information on the borrower, how an assessment of that information should be carried out and what options should be offered to resolve the problems.
They also require that an appeals process be set up for borrowers unhappy with decisions made by the lenders’ appeals support unit.
As part of the resolution process, a standard financial statement, to be completed by borrowers in difficulty, has been agreed between the Irish Bank Federation, the Money Advice and Budgeting Service and the Financial Regulator.
The detailed statement will be used by all lenders to assess the income and expenditure of borrowers in arrears.
It will replace a variety of income and expenditure forms used by lending institutions to assess borrowers’ means.
Information to be supplied by struggling homeowners on the new statement form includes details of any savings, shares, redundancy payments, investments or other assets. They will also be asked the value of any motor vehicle they own.
As part of the expenditure questions, struggling borrowers are asked to provide details of steps already taken to reduce expenditure and the savings they have achieved. They are also asked for details of steps they propose to take to reduce expenditure.
Details of all debts are also required on the form and borrowers are asked to sign a declaration saying the statement represents their financial situation and that they will inform their borrower if their circumstances change.
All information is covered by the Data Protection Acts.
Felix O’Regan, director of public affairs with the bank federation, said lenders were working flat out to ensure all of the elements of mortgage arrears resolution process are in place for July 1st. He said the new financial statements would give lenders a complete picture of borrowers’ capacity to pay, including what assets may be realisable. The aim was to match repayments to the capacity of the borrower to pay.
