Keep a roof over your head in the recession
Homeowners who fall into mortgage arrears could benefit from new rules aimed at giving them more protection against penalty charges.
As part of its move to treat borrowers fairly, City watchdog, the Financial Services Authority (FSA), is proposing a crackdown on the excessive fees
lenders levy on those who fall behind on mortgage payments - and has stressed that repossession must only be considered as a last resort.
According to the latest figures, at the end of September, there were around 194,600 mortgages in arrears by 2.5 per cent or more. (*)
Review of the mortgage market
The package of measures is part of the regulator's ongoing Mortgage Market Review, and follows research which showed some lenders were charging
unacceptably high fees and moving too quickly to repossess properties.
"These proposals will help to ensure that homeowners in financial difficulties are treated fairly," said the FSA's Lesley Titcomb. "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
Package of measures
A new consultation paper published at the end of January proposes that no early repayment charges should be added to arrears charges and interest,
and that no monthly arrears charges should be levied where the lender and homeowner have agreed to a new repayment deal.
Firms will also be required to consider all options for borrowers, with repossession as the last resort, while payments must first be allocated to clearing
the missed monthly payments - rather than to arrears charges - which can be repaid later.
Lenders must also record all arrears handling calls, and keep records for three years.
The new proposals were welcomed by Citizens Advice, which reports that a third of lenders are still failing to comply with existing rules, making court
action against borrowers a last resort.
"The strengthening of these existing rules will help p