New Rules Announced To Protect Homeowners

New guidance for the courts when dealing with mortgage repossession cases have been approved by the Master of the Rolls this week. The rules will help the courts ensure that the mortgage lender has explored all other opportunities before resorting to repossession.

Lenders will be expected to demonstrate that they have tried to discuss and agree alternatives to repossession, and if a case reaches court, they will need to tell the court precisely what they have done to comply with the new protocol.

The Council of Mortgage Lenders (CML) responded by issuing new guidance to its members on mortgage arrears and repossession, stating that the lenders must deal fairly with customers in arrears.

The guidance covers areas such as the timescale given to borrowers in which to repay any arrears should be feasible considering the customer’s circumstances, allowing the customer to change the date on which the payment is due (giving the customer a written explanation of its reasons if it refuses the request), and if no reasonable payment arrangement can be made, considering allowing the customer to stay in the property and sell it.

Commenting, Citizens Advice Director of Policy Teresa Perchard said "People facing payment problems worry about whether they will get fair treatment and may put off seeking advice as a result - but the earlier people seek advice the better.  We welcome this guidance, which acts as a good yardstick for borrowers and money advisers about the kind of practical treatment they might expect to see from responsible lenders."

The Government also proposes that companies engaged in sale and rent back schemes, which have recently received some unfavourable press coverage, should be brought under FSA regulation.

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