Free Mortgage Advice Service: Poor take-up Prompts Revamp

The astonishingly low take-up of the Mortgage Arrears Information and Advice Service has led to Minister Joan Burton announcing a reorganisation of the service.
The Minister for Social Protection moved to implement the changes in the wake of a review which indicated a lack of awareness among the public regarding the service and how it operates. As of the end of September 2013, some 11,000 borrowers had been informed about the advice service. However, lenders had received less than 200 invoices from participating accountants – an acceptance rate of less than two per cent.

A helping hand

Ms Burton announced that the service will be divided into a two-stage process. The Minister told the seminar: “A key message to people who are experiencing difficulties with their mortgage payments is that engagement with their bank at an early stage is vital to securing a long-term resolution.” The Minister was addressing a stakeholder seminar to discuss the recommendations of the Review of the Independent Financial Advice Service held in Dublin. The Review was undertaken to ensure that the Independent Financial Advice Service is meeting its objectives.

She noted, however, that both the Central Bank and lenders have reported that significant numbers of borrowers in arrears have not yet engaged with their lender. “In order to address this very important issue, I am suggesting that the scope of the financial advice be broadened to become a two stage process,” said Minister Burton.

Two stages 

According to the Minister, Stage One would involve a borrower being able to avail of the assistance of an accountant, of the borrower’s choosing, to complete their Standard Financial Statement in their initial engagement with their lender to find a long term mortgage resolution. As well as assisting the borrower to complete this statement, the accountant would also assist the borrower in assessing their options.

Stage 2 would involve an independent and confidential follow-up engagement with an accountant following the receipt by the borrower of a long-term mortgage debt resolution offer. This engagement would include discussion of other mortgage debt resolution options now available.

The Minister said that the service would continue to be funded by the lender while remaining free to the borrower. 

“The Government’s continuing approach to tackling mortgage arrears is founded on one important premise – keeping a roof over peoples’ heads,” said the Minister. “Within the next twelve months, it is expected that the vast majority of those who cannot pay their mortgage will have concluded a sustainable solution. Already over 49,300 mortgage holders have agreed permanent mortgage restructures with their lenders.”