The 12-month moratorium on house repossession that applies to AIB and Bank of Ireland should be extended immediately to all lending institutions, according to a report prepared by an Oireachtas committee.
The Government should see how it can help lenders extend the moratorium to 24 months by providing bondholder with the assurances they need, the report on high levels of indebtedness in Irish society says.
The Joint Committee on Social and Family Affairs says lenders should be required to explore alternative payment proposals before having a right to bring legal proceedings for debt recovery. Its report also calls for a ban on the charging of penalty interest on missed repayments, late repayments or accrued arrears.
The report also recommends: "Where lending has been reckless, all responsibility should not rest with the borrower but liability should be proportioned (sic) to the financial institution and, if necessary, the broker who arranged the loan."
It says lenders should also display prominently on their websites all relevant information to assist customers who might be in arrears and they should be required to explore alternative payment proposals before having a right to bring legal proceedings for debt recovery.
The Financial Regulator's Code of Practice on Mortgage Arrears should be issued as a Statutory Instrument in its own right, which would give consumers the right to directly take court action for alleged breaches of the code.
The committee says those who avail of the Code of Practice should not have their credit rating damaged as a result.
The Government should closely monitor new Circuit Court rules introduced in July 2009 to ensure that they do not inadvertently circumvent changes in conveyancing which were designed to slow down the process of repossession.
The report also suggests that lenders should engage in pre-emptive contact with their customers to identify those who might possibly fall into difficulty with their debts and to make arrangements with customers before problems arise.
Repossession orders sought by banks and mortgage lenders doubled last year and figures compiled by the Court Service show that 758 new applications for repossession orders were brought to the High Court in 2008, compared with 374 the previous year.