< Back to previous page

New mortgage litigation rules to ease borrower stress

Published on 27 Jan 2010 under category: legal

Homeowners in mortgage debt will be treated more fairly by lenders, according to new proposals from the Financial Services Authority (FSA).

The Financial Services Authority (FSA) found that borrowers in the specialist sector were most likely to be disadvantaged by lenders.

Under the proposed new regulation, lenders would not be able to charge customers for arrears repayments on top of a repayment plan; initial repayments would be strictly allocated to clearing missed monthly payments; and interest and charges should not be levied on early repayments.

In addition to this, firms will be obligated to record all phone conversations regarding arrears and keep all related records for three years.

Repossession must be the absolute last option in all cases with firms offering indebted customers as much choice as possible, the report said.

Leslie Titcomb, the director of the FSA's 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."

If you require information on Insolvency and Bankruptcy please call us on +44 (0)207 7831 0101 and ask for Katherine Sillett.