New measures to protect UK mortgage borrowers
The Treasury has announced new measurers aimed at protecting UK mortgage borrowers.
The move follows the Government’s analysis of the causes of the financial crisis, as set out in its Reforming Financial Markets paper published earlier this year.
Under the proposals, borrowers whose mortgages are sold on to third parties will be protected by Financial Services Authority (FSA) regulations, which require fair treatment of customers.
Prior to the credit crisis it was common for lenders to sell their mortgage books as a means of raising new capital for lending, but the practice has been blamed for encouraging unscrupulous operators to expand sub-prime lending and fail to complete adequate checks on the ability of borrowers to make repayments.
In addition, Ministers intend to expand the FSA’s remit to include the regulation of buy-to-let and second-charge mortgages.
Exchequer Secretary, Sarah McCarthy-Fry, says: “Our focus has been to do all we can to make sure people can stay in their homes and to limit repossessions as much as possible.”
She adds: “We are determined to reform the system for the future, to offer both stronger protection for consumers and greater stability in the housing market.”
The Treasury’s consultation period closes on 15th February 2010, after which changes will be enshrined in the new Financial Services Bill.
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