Joint Borrowers & Separation

[selenak]

Hello,

I've just come accross a line in the Central Bank Code of Conduct on Mortgage Arrears which says

"In addition, lenders must apply the protections of the Code to borrowers in the following circumstances:
(1) Borrowers in arrears and pre - arrears; and
(2) In the case of joint borrowers, who notify the lender in writing that they have seperated or divorced, the lender should treat each borrower as a single borrower under this code."

Am I missing something here? Could it be possible to split a negative equity mortgage in the case where one party won't pay , leaving the other party to cover the entire amount?

 

[Brendan Burgess]

Hi Selena

Well spotted. I had not noticed this before.

I don't think it gets around the joint and several liability of both borrowers.


In practice, I am not sure that it means much other than an encouragement to the lenders to be sympathetic.

For example, if one borrower is not cooperating, then they would facilitate the one who is. If a borrower cooperates and facilitates the sale of the property, the lender would be encouraged to deal sympathetically with the one who is cooperating.

 

[frostie]

I've come across this a few times, and Brendan is right, the liability remains for both, but one of the other questions it also raises in the case of family separation, is maintenance payments. It's surprising the % of people who seek help in this situation who receive no maintenance payments, or have not even sought them, either amicably or by court order.