FSA defends home owners with mortgage arrears
Mortgage borrowers in arrears stand to get a better deal from lenders under new proposals published today by the Financial Services Authority (FSA).
The package is aimed at ensuring home owners in financial difficulties are treated fairly, by strengthen existing rules on arrears handling and promoting the regulator’s “tough stance” on mortgage fraud.
Under the proposals lenders will not be able to:
Add early repayment charges on arrears charges and interest levied on those charges;
Apply a monthly arrears charge where the firm and the customer have agreed an arrangement to repay the arrears;
In addition, lenders will have to:
Consider all options for borrowers; repossessions should always be the last resort;
Allocate payments from customers in arrears to clearing missed monthly payments, rather than to arrears charges, which can be repaid later;
Record all arrears handling telephone calls and keep all records for three years.
The new proposals also affect mortgage advisers and those who arrange non-advised sales, making them individually accountable to the regulator.
The FSA’s director responsible for the mortgage sector, Lesley Titcomb, says: “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.”