Welcome Central Bank intervention for Borrowers in arrears
The Central Bank has made a welcome intervention directing that mortgage lenders can no longer impose legal fees and other charges on borrowers who are in arrears but who are cooperating with their bank to try and resolve their repayments.
The Banks had a practice of front loading legal charges to borrowers in arrears by charging them for legal correspondence sent regarding those arrears. This was adding to the arrears and in addition interest was being charged on these costs.
The Central Bank have made it clear that they are of the view “that the application of the costs prior to the conclusion of repossession proceedings and prior to the decision to the Court to award costs associated with the legal process to the regulated entry is not in Borrowers’ best interest and is therefore not in accordance with the consumer protection code”.
The regulator has warned lenders that imposing such legal charges in a front loaded way equates to a financial gain as it is greater than the cost occurred and is contrary to the regulations and should cease. This is a welcome clarification in relation to this issues.
For advice on any matter relating to personal insolvency please contact Brendan Dillon on 01-2960666 or firstname.lastname@example.org