A surge in the number of home repossessions is on the cards after the Central Bank decided to change the rules.
Debt-ravaged homeowners will no longer have one year's protection from having their houses repossessed.
The 12-month ban on banks taking back properties from homeowners in arrears is being cut to two months.
The move and other changes to regulatory rules for how struggling borrowers should be treated by lenders have been condemned by David Hall, of the Irish Mortgage Holders Organisation, as a "banker's charter" that will lead to a spike in repossession.
He claimed: "The banking dogs are set to be unleashed on mortgage holders in arrears."
The move to change the Central Bank's code of conduct on mortgage arrears – a rule book for how banks are to treat borrowers behind on their payments – is to be radically changed.
The revised code is set to come into operation from next Thursday with a number of changes that banks have lobbied to have put in place.
The most controversial change is the dropping of the 12-month moratorium on repossessions of homes if borrowers are in arrears but are co-operating with their lender.
Distressed
The one-year period starts 31 days after the homeowner goes into arrears.
Instead, the moratorium will effectively be just two months.
Homeowners who are in arrears and are made an offer by the bank but turn it down will be given just two months' protection from legal proceedings.
And distressed homeowners who have no offer made to them by their bank – because the lender feels they can no longer afford the mortgage – will also get just two months' protection from repossession proceedings being issued.
Those who have an arrangement in place with their bank will have nothing to fear, a regulatory source said.
Other changes to the revised code include giving banks the power to take trackers off homeowners who are given a debt write-off.
Banks will no longer be restricted to three unsolicited contacts to those in arrears, according to Mr Hall, who attended a briefing on the new code.
Banks will also get to define who is an uncooperative borrower – allowing lenders to take repossession action against these homeowners.
The grounds for appealing a restructuring offer from the bank will also be restricted.
The move to lift the 12-month moratorium on home repossessions was advocated by Brendan Burgess of Askaboutmoney.com. "Some people will use the 12-month moratorium to bury their head in the sand and not face up to their responsibilities," he said.
The Central Bank had no comment yesterday.
The moratorium was extended from six to 12 months for those in arrears early in 2011.
Report by CHARLIE WESTON - Irish Independent