Proposed Legislation for Homeowners in Default

The drafting of the Courts and Land and Conveyancing Law Reform Bill, 2018 (the “Bill”) was recently approved by the Government and will be aimed at giving additional protection to homeowners with mortgage difficulties. The Bill originates from and expands on the principles of the Keeping People in their Homes Bill 2017. The Bill will require the courts to take into account a number of factors when considering an application for a possession order. These factors include... The drafting of the Courts and Land and Conveyancing Law Reform Bill, 2018 (the “Bill”) was recently approved by the Government and will be aimed at giving additional protection to homeowners with mortgage difficulties. The Bill originates from and expands on the principles of the Keeping People in their Homes Bill 2017. The Bill will require the courts to take into account a number of factors when considering an application for a possession order. These factors include:

• the overall proportionality of the application;
• the circumstances of those resident in the property;
• the details of and responses to any proposals put forward by either party which would enable the borrower to remain in the property;
• where the mortgagee is not the original mortgagee that granted the loan or mortgage to the mortgagor, the amount paid for the purchase of the loan or mortgage by reference to the amount of debt outstanding in respect of the loan or mortgage.

If the Bill is implemented, such provisions are likely to have significant implications for lenders enforcing security, and for purchasers of loan portfolios containing principal private residents. Such implications may include;

• added time and expense for proceedings for repossession;
• disclosure of details of prior proposals put forward by borrowers which may result in additional time and expense to internal escalation processes and procedures;
• disclosure of the purchase price of loans may require the public disclosure of commercially sensitive information in enforcement proceedings.

While the objective of the Bill is consumer protection and the protection of the family home, there is little acknowledgment for the commerciality adding these considerations to an already protracted process which is usually only commenced after compliance with the Code of Conduct on Mortgage Arrears. The Bill is to be debated in the Houses of the Oireachtas in the coming months.