By Andras Gergely
DUBLIN, Feb 13 (Reuters) - Ireland issued a new regulation on Friday giving borrowers a half-year grace period for arrears on mortgage payments before banks can start court proceedings to repossess their primary residence.
The move follows a similar requirement built into the deal setting out a 7 billion euro ($9 billion) state bailout of the two biggest banks Allied Irish Banks Plc and Bank of Ireland earlier this week.
At the time of the agreement with Allied Irish Banks and Bank of Ireland, which stipulated a 12-month waiting period for the two lenders, the government signalled it would later also issue a code for the whole financial system.
'This new mandatory code builds on the existing voluntary Code of Practice issued by the Irish Banking Federation and incorporates a requirement for the lender to wait at least six months from the time arrears arise before taking legal (action),' the finance ministry said in a statement.
Like the deal with the two leading banks, the new code does not require a waiting period unless the problem that prevents the borrower from paying is deemed genuine.
'All genuine cases must be handled sympathetically and positively by the lender,' said the text of the code, which was published on the regulator's website.
The finance ministry said statistics do not bear out what it described as recent 'media speculation of large-scale repossessions.'
'Mainstream mortgage lenders have been at pains to point out that they will go to great lengths to avoid repossession in arrears cases,' it said.
'The Minister for Finance also notes that the government has measures in place to assist those who get into difficulties with their mortgages.'
The global credit crisis coincided with the bursting of Ireland's decade-long property bubble, burdening Irish banks with rising loan losses, especially in the property and construction sectors.
Bank of Ireland said on Thursday it expected its loan loss impairment charge for the three years to March 31, 2011 to hit 4.5 billion euros from a previous estimate of 3.8 billion euros given in November. Bank of Ireland also warned the revised forecast had a downside risk of up to 1.5 billion euros if economic conditions deteriorate further. ID:nNDUB00082
Ireland also published on Friday a new code of conduct for business lending to small and medium enterprises to ease their access to credit.
(Editing by Andre Grenon) ($1=.7742 Euro) Keywords: IRELAND BANKS/MORTGAGES (andras.gergely@reuters.com +35315001518; Reuters Messaging: andras.gergely.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
DUBLIN, Feb 13 (Reuters) - Ireland issued a new regulation on Friday giving borrowers a half-year grace period for arrears on mortgage payments before banks can start court proceedings to repossess their primary residence.
The move follows a similar requirement built into the deal setting out a 7 billion euro ($9 billion) state bailout of the two biggest banks Allied Irish Banks Plc and Bank of Ireland earlier this week.
At the time of the agreement with Allied Irish Banks and Bank of Ireland, which stipulated a 12-month waiting period for the two lenders, the government signalled it would later also issue a code for the whole financial system.
'This new mandatory code builds on the existing voluntary Code of Practice issued by the Irish Banking Federation and incorporates a requirement for the lender to wait at least six months from the time arrears arise before taking legal (action),' the finance ministry said in a statement.
Like the deal with the two leading banks, the new code does not require a waiting period unless the problem that prevents the borrower from paying is deemed genuine.
'All genuine cases must be handled sympathetically and positively by the lender,' said the text of the code, which was published on the regulator's website.
The finance ministry said statistics do not bear out what it described as recent 'media speculation of large-scale repossessions.'
'Mainstream mortgage lenders have been at pains to point out that they will go to great lengths to avoid repossession in arrears cases,' it said.
'The Minister for Finance also notes that the government has measures in place to assist those who get into difficulties with their mortgages.'
The global credit crisis coincided with the bursting of Ireland's decade-long property bubble, burdening Irish banks with rising loan losses, especially in the property and construction sectors.
Bank of Ireland said on Thursday it expected its loan loss impairment charge for the three years to March 31, 2011 to hit 4.5 billion euros from a previous estimate of 3.8 billion euros given in November. Bank of Ireland also warned the revised forecast had a downside risk of up to 1.5 billion euros if economic conditions deteriorate further. ID:nNDUB00082
Ireland also published on Friday a new code of conduct for business lending to small and medium enterprises to ease their access to credit.
(Editing by Andre Grenon) ($1=.7742 Euro) Keywords: IRELAND BANKS/MORTGAGES (andras.gergely@reuters.com +35315001518; Reuters Messaging: andras.gergely.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.