29 November 2019
By Elaine Murphy
Fianna Fáil Spokesperson on Finance Michael McGrath TD has called on the banking industry to put in place an industry-wide policy on how to address the issues that arise for mortgage customers who have experienced relationship breakdown.
Deputy McGrath commented, “The breakdown of a relationship, including marital separation, is extremely stressful on those involved. This can be made all the worse when the couple concerned have a joint mortgage on their home and there is no agreement as to the best way forward.
“A lot of problematic issues can arise in relation to a mortgage in the case of the joint mortgage holders separating. Sometimes couples believe that removing someone from a mortgage is a straightforward process only to discover this is not the case. Removing a joint mortgage holder from a mortgage essentially involves a new mortgage application. In reality, the person who wishes to remain on the mortgage may not qualify for a mortgage in their own right.
“The situation is complicated further if the mortgage has slipped into arrears. Both parties need to agree on the restructuring arrangement and if there is any disagreement, the result is often a prolonged period of uncertainty. One party can simply walk away leaving the other in almost permanent limbo.
“In the case where only one person remains in the home and the joint mortgage and joint ownership of the home continues, the person who left the home continues to have joint and several liability for the mortgage. On the one hand, this entitles them to a half share in the home even though they may be making no contribution towards the mortgage repayments. On the other hand, their ability to move on with their life and perhaps buy another home for themselves is seriously impaired because of the debt they are still a party to.
“Communication between the bank and the separated parties can also be very difficult. I have certainly encountered situations where someone who is still a joint mortgage holder has ceased receiving further correspondence from the bank.
“There is no easy solution to these problems. However, it is my view that an effort should be made across the banking system for an agreed set of principles as to how to approach these and other issues that arise in the case of a relationship breakdown.
“I have raised this issue with the Banking and Payments Federation and with the new Banking Culture Board. I believe that progress can be made in addressing this issue and I will continue to follow up in order to bring about a coordinated approach across the industry.”