Central Bank publishes expectations on charging costs in arrears cases

Brendan Burgess

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The Central Bank has written to the industry today. I attach the annex to their letter. Here is the most important bit:

The Central Bank's expectations in relation to applying the costs and charging interest on the costs


I. Application of the costs


General Principle 2.1 of the Consumer Protection Code 2012 ("the Code") provides that in all dealings with consumers, a regulated entity must act "honestly, fairly and professionally in the best interests of its customers and the integrity of the market."

The Central Bank is of the view that the application of the costs prior to the conclusion of repossession proceedings and prior to the decision by a Court to award the costs associated with the legal process to the regulated entity is not in borrowers' best interests and is therefore not in accordance with the Code. Additionally, the Central Bank is of the view that it is not in a borrower's best interests or in accordance with the Code to apply the costs prior to settlement between the parties concerned or prior to a borrower being in a position to redeem the mortgage and requesting to do so.

For clarity, regulated entities must not apply the costs to a mortgage account until:

a. the Court has awarded the costs to the regulated entity;
b. a settlement has been agreed between the parties; or
c. the borrower is in a position to redeem the mortgage and has requested to do so.
 

Attachments

  • Central Bank expectations on legal costs.pdf
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I am trying to understand this.

The current legal position as I understand it is as follows:

The mortgage contract allows the lender to charge the legal costs in pursuing arrears. So if a lender's solicitor writes a letter, they can charge the borrower for this.

But once legal proceedings are issued, the lender cannot impose costs on the borrower unless they are awarded by the court.

So the Central Bank "expectations" only confirm this.

Where a settlement has been agreed e.g. the lender will capitalise the arrears and withdraw the legal action. The Central Bank seems to be saying it's ok to include legal fees in this settlement.

I don't understand c. at all.

It seems to mean that if the bank incurs legal costs which have not been approved by the court, it's ok to charge them if the borrower sells the house?

Brendan
 
I am in court for the past five years. And all leagle cost up to 2016. Where added to my mortgage.
 
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