Homeowners with arrears could soon get a better deal if the proposal by the Financial Services Authority (FSA) goes ahead. The proposed changes aims at cracking down on the fees that lenders charge if a customer is in arrears. They also stress that repossession of homes should be used as a final option in extreme circumstances
Last summer the FSA came across problems with the manner in which persons who were having difficulties making their mortgage payments were deal with. It specifically looked at third party administrators and specialist lenders.
Lenders have had a lot of criticism concerning the charges they impart on homeowners who have fallen behind in their mortgage payments. Some lenders charge as much as £150 for any visit debt counsellors have to make, and £300 for engaging the services of a solicitor.
To add more pain, those with arrears may also have to pay a fee of £60 each month by lenders even if they reach some sort of arrangement concerning the repayment of the existing arrears. The new proposal tries to eliminate this fee hence giving those with repayment difficulties extra breathing space.
The proposals also aim to stop lenders from adding arrears charges on to early repayment charges. Lenders will also not be allowed to charge interest on any outstanding fees, and if customers with arrears make a payment it must be used to satisfy any arrears first prior to being used to pay the fees.
Firms have also been called on to keep a record of all telephonic conversations about what is owing on a mortgage between them and the borrower. They will also need to keep these records for at least three years.
Currently there are close to 200,000 people who have arrears of over 2.5% of what is left on their mortgage, according to the latest figures of the Council of Mortgage Lenders.
The proposals also set out the obligations of lenders to their customers. These are to be quite clear and easily understood. It also sets out certain standards firms will need to meet to guarantee homeowners fair treatment when they find themselves in financial difficulties.
In other news, as most of you know it was this recent weekend that we moved down south, and I cannot even begin to tell you what a disaster it truly was. Other then the rainstorm when we were loading the truck, half of my things being forgotten at the old flat, and the loss of just about all the fasteners for my flat pack furniture, it was seamless! Oh well, the point is that it is done now, Dan and Mia I can’t begin to thank you enough for all the help.