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Mortgage lenders pledge no more repossessions until April

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  • 14/01/2021
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Mortgage lenders pledge no more repossessions until April
Mortgage lenders have backed the Financial Conduct Authority’s (FCA) move to extend the ban on repossessing homes until April.

 

They also called on government to reduce the time that borrowers must wait for a Support for Mortgage Interest loan from the current 39 weeks to 13 weeks.

In a joint statement, UK Finance and the Building Societies Association (BSA) supported the regulator’s approach which will mean the measures have been in place for a full year.

The extension would still apply to both residential and buy-to-let mortgages and follows the extension of the moratorium on private tenant evictions in England until 21 February 2021.

Wales and Scotland have banned rental evictions until 31 March 2021.

“The extension will help provide reassurance to both residential and buy-to-let borrowers that they will not have their homes repossessed at this difficult time,” the trade bodies said.

“Under the extension, members of UK Finance and the Building Societies Association will agree not to seek, or enforce, a warrant for possession before 1 April 2021, unless there are exceptional circumstances such as a customer requesting proceedings to continue or when the property is in vacant measures.”

Lenders will contact customers already in arrears before Covid-19 and who continue to be unable to make payments to work towards resolving their case.

The statement noted this could include customers choosing to go ahead with possessions.

“It will always be in the long-term interest of customers who are able to do so to resume making payments, but for anyone who is still struggling, ongoing support will be available,” the lenders added.

 

Full support

UK Finance managing director of personal finance Eric Leenders said the industry was committed to providing ongoing support to those facing financial difficulty as a result of the pandemic.

“The industry is fully supportive of a moratorium on possessions remaining in place until 1 April 2021 to ensure customers do not lose their home at this difficult time,” he said.

“This is part of a package of support provided by lenders for those who need it, including payment deferrals and tailored assistance.

“It is vital that customers who are concerned about their finances go online or contact their lender to understand what options and support are available to them.”

BSA head of mortgage and housing policy Paul Broadhead added: “Mortgage lenders recognise the unique circumstances which are affecting some borrowers during the pandemic, a situation which can only be exacerbated by the current lockdown and the need for some businesses to temporarily close.”

 

Debt advice needed

Debt support charity Step Change also welcomed the further extension on property repossessions but called for the regulator to strengthen the requirement on firms to refer people to holistic debt advice services.

Step Change head of policy Peter Tutton said: “We called last week for mortgage repossessions to be halted until after the pandemic lockdown has ended, so we’re pleased to see today’s proposal from the FCA to implement this until April.

“However, we’re concerned about the potential impact of the FCA’s proposal to allow repossession of goods and vehicles in some circumstances after 31 January – customers affected tend to be more vulnerable and some creditors have historically pursued repossession prematurely, which may not square entirely with the FCA urging firms to treat this as a last resort.

“It’s vital that the FCA not only sets out strong protections, but also monitors the response of creditors and uses its supervision powers to enforce the guidance. For people experiencing debt during the pandemic, the consequences may create real and ongoing hardship even after the public health crisis ends.”

 

 

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