Homeowners in arrears offered more protection

New proposals by the Financial Services Authority (FSA) would mean that mortgage holders facing up to their arrears will be better protected.

Lenders are being requested by the FSA to guarantee they will refrain from undertaking repossession proceedings when possible, only using this avenue as a last resort. In addition to this, they will not be able to add on early repayment charges onto the arrears charges, and interest imposed on those charges.

Lesley Titcomb, the FSA’s director responsible for the mortgage sector, commented; “Today’s proposals underline the standards that firms must meet and will help to ensure that homeowners in financial difficulties are treated fairly.”

She added: “Lenders need to be in 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.”

These new measures came as a result of research carried out by the FSA which found a high number of mortgages moving straight into arrears, potentially breaching responsible lending rules. The new proposals will also affect mortgage advisers and those who arrange non-advised sales, making them individually accountable to the FSA.

Source: homemove.co.uk

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