Mortgage arrears proposals welcomed

Plans to offer further help to homeowners who fall behind on their mortgage payments have been roundly welcomed by lenders.

Under the proposals put forward by the Financial Services Authority (FSA), a number of key measures will be introduced in a bid to lend a hand to borrowers in arrears and thereby reduce the likelihood of their having their homes repossessed.

These include barring lenders from adding early repayment charges on arrears charges and requiring them to keep records of any correspondence relating to arrears for a minimum of three years.

According to John Charcol, given that home repossessions are bad news for both lenders and borrowers, these latest proposals are good news all round.

Roy Boulger, senior technical manager at the mortgage lender, explained: “The FSA proposal is very reasonable on that basis and obviously does avoid putting further pressure on people who have gone into arrears.

“The lack of a right for lenders to impose early repayment charges is a “key” element of these measures, he added.

Mr Boulger’s comments come soon after Shelter reported that more than one million UK households have used their credit cards to pay their mortgage or rent on at least one occasion in the past year.

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