Lenders are not prohibited from charging higher interest rates to borrowers in arrears

[Brendan Burgess]

n other words any decision on what policy actions you take now comes down to a choice between a favouring a cohort of existing borrowers at the cost of future borrowers or vice versa.

Update: I got this completely wrong as the following discussion shows.

The CCMA is clear. You cannot charge someone a higher rate because they are in arrears or because they have been restructured.

These borrowers are paying more because they were restructured.

The Vulture Funds knew the rules when they bought these mortgages.

You call it "tinkering with the system". I call it "protecting borrowers from predatory lending rates".

Brendan

 

[skrooge]

Well it would benefit them from the position they are currently in.

If the wording of the CCMA is as you say then the previous posts raising issues/concerns don't matter.

However, having looked up various versions of the CCMA - I confess it's not on my coffee table - I can't see anything as clear cut as you suggest. Can you point me to the version of the (latest) CCMA that covers the specific points.

 

[Brendan Burgess]

 

[NoRegretsCoyote]

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But Brendan that doesn't really apply. The above refers to penalty interest and charges on top of the contractual rate for the arrears.

It is a big leap of logic to claim that this means that the contractual terms of the loan originator must be applied forever more for the non-arrears part of the outstanding mortgage balance, whether or not the loan is in arrears and/or has been sold to a third party.

I've never read the CCMA and maybe I'm missing something else. But what you're quoting above does not say what you are claiming it does.

 

[Brendan Burgess]

The above refers to penalty interest and charges on top of the contractual rate for the arrears.

Hi Coyote

I have always interpreted that as a ban on charging customers in arrears a higher rate. But you are quite correct. It does not say what I thought it says.

This clause stops the Irish Nationwide practice of charging interest on the amount in arrears, but it would seem to leave lenders free to charge a higher rate to customers in arrears as long as they charge the higher rate on the whole mortgage and not just on the arrears.

I will need to see if there is something else in the CCMA on which I based my assumption. None of the Irish banks ever charged a higher rate on the whole mortgage as a result of it being arrears or restructured.

I remember at the time of the introduction of the CCMA, KBC was taking people off trackers as a condition of restructuring their mortgage and I was under the impression that the CCMA outlawed this practice. But maybe it hasn't.

Brendan

 

[Brendan Burgess]

OK, I have studied the CCMA in more detail and it does not do as I thought it did.

I always assumed that it prohibited lenders from charging higher mortgage rates to loans which were in arrears, and by implication, those which had been restructured.

But there is no such prohibition.

As no lender upped the rates for borrowers in arrears, I had assume that this was what it meant and never had to study it.

But it's clear now that the CCMA does not stop Pepper from what it is doing, charging customers higher rates because their mortgages were restructured.

Having said that, the fact that the CCMA does not prohibit it, does not mean that it's ok to do it. I still think that it's wrong and I will continue to try to challenge it with the Central Bank, the government, and ultimately the Ombudsman.

Brendan