Several firms told Mortgage Solutions that the response so far had been underwhelming with a lack of awareness cited as a key issue.
The deadline for administrators to contact the 170,000 eligible mortgage prisoners has been extended from 1 December to 31 January 2021 and because lenders require a letter of evidence to proceed with the switch, affected clients are unable to receive help as soon as first thought.
Where brokers have had enquiries come in to help mortgage prisoners switch onto an active lender’s books, the interaction is often minimal and slow to take off.
Rowena Chowdery, mortgage adviser at Financial Moves, said she had one enquiry where the client was yet to respond, while Lilla Dilliway, mortgage adviser at Bluewing Financial received her first mortgage prisoner in the last week of November.
Other brokers Mortgage Solutions spoke to said they were yet to hear from anyone who could be helped.
As for John Carter, mortgage adviser at Abode Mortgages, just two of the eight mortgage prisoner queries he received responded to his further requests to provide documentation including one who misunderstood their situation and actually turned out to be a buy-to-let borrower.
Lack of information
Carter suggested that since the mainstream reporting on mortgage prisoners had not been widespread, many who were able to be helped did not know of the solutions that were open to them or where to go for help.
He said: “I don’t think the Financial Conduct Authority (FCA) have got the message across when you compare it to the shenanigans around missold payment protection insurance (PPI), which was also a terrible scandal. There has hardly been any media coverage.
“I don’t think it was conveyed properly in the same way missold PPI was.”
Carter also said there was an issue when he requested documents as some clients were reluctant to provide them and even questioned the importance of doing so.
“Many are under the impression that it is possible to self-certify ‘like we did when we took the mortgage out’.
“The way things were done before were haphazard, to put it nicely,” he added.
Excluding the borrower who turned out to be a buy-to-let case, only one of Carter’s mortgage prisoner clients have provided him with the necessary documents to progress the case to the initial review stage.
He said: “When you ask for bank statements and ID and they ask, ‘what for?’, it’s a bit disheartening. They don’t appreciate what they need to do to get themselves out of the situation.
“They also haven’t been told what needs to be done.”
Awareness seemed to be a problem among brokers too, as following the FCA’s call for firms to put themselves on a directory to be signposted to mortgage prisoners, Dilliway said she was not informed the directory had gone live.
Carter was more fortunate in that his network Stonebridge kept him updated.
As for how inactive lenders were informing clients of their options, Northern Rock seemed to have one of the more effective communication strategies as all of Dilliway and Carter’s cases came from the former bank.
Potentially wider net
While some advisers are concerned that mortgage prisoners do not know of the help available or what information to provide to progress, others have noticed they have been able to assist those who fall outside of the FCA’s remit.
Kevin Duffy, managing director of Mortgage Force, has been working with the mortgage prisoners for a few months and said the volumes of clients he had suggested the regulator’s sampling and estimates were off.
“There are people that can be helped that they clearly didn’t think could be,” he added.
Although Duffy said more than half the mortgage prisoners he had seen were not yet eligible to switch due to income or age, some lenders were not making the process easier by applying a modified affordability assessment that did not “keep to the spirit of the scheme”.
He said instead of looking at borrowers who were up to date with payments and simply wanted to switch onto a better rate, lenders were “essentially underwriting the case according to the credit score, the salary multiple or the applicant’s job condition.”
Considering the complexities faced by mortgage prisoners over the years, the process of placing a case was expected to be the same as a standard mortgage and the brokers confirmed the proc fee was also the same.
Carter said: “I haven’t begun the process so I’m not sure how it differs from a standard mortgage but from what I can tell, looking at the various lenders, the support is there and they are geared up for it so it shouldn’t be too difficult.”