Tue, 26 Jan 10
The Financial Services Authority has proposed new measures to protect mortgage holders in arrears.
The measures, outlined as part of the financial regulators review of the mortgage sector propose, are particularly aimed at specialist mortgage lenders.
Specialist mortgage lenders were highlighted in a report by charities including Shelter last year as being among the quickest to start repossession proceedings against borrowers who are struggling to make repayments – see Home News 18 Dec 2009.
The main points of these latest FSA’s proposals are:
- Make plain that firms must not add early repayment charges on arrears charges and interest levied on those charges.
- Clarify that firms must not apply a monthly arrears charge where the firm and the customer have agreed an arrangement to repay the arrears.
- Compel firms to consider all options for borrowers. Repossessions should always be the last resort.
- Confirm that payments by customers in financial difficulties must first be allocated to clearing the missed monthly payments, rather than to arrears charges, which can be repaid later.
- Oblige firms to record all arrears handling telephone calls and to keep all records for three years.
Lesley Titcomb, the FSA director responsible for the mortgage sector, said: "Today’s proposals underline the standards that firms must meet and will help to ensure that homeowners in financial difficulties are treated fairly.
“Lenders need to be in no doubt of their obligations to customers who fall behind with payments and must realise that such circumstances are not an opportunity to create further profits."
By Joe LepperSee also: Mortgages, Life Insurance and Mortgage Protection Guide
Back to: News Index