The bill pertaining to mortgage prisoners was introduced by Martin Docherty-Hughes MP today with no objections. It is set to have a second reading on 14 June.
MPs Alison Thewliss, Liz Saville Roberts, Claire Hanna, Stewart Hosie, Ben Lake, Amy Callaghan, Sammy Wilson, John McDonnell, Duncan Baker and Caroline Lucas also backed the bill.
Docherty-Hughes said the proposal set out to “finally end the unfair 16-year financial injustice and address the failures of successive Conservative and Labour governments”.
He said it was “scandalous” that a policy to help mortgage prisoners was not brought in during last week’s Spring Budget and said it “ignored the plight of tens of thousands of individuals and families unfairly trapped on crippling mortgage rates”.
Docherty-Hughes said the government had made billions from the sale of closed mortgage books, pointing to 2019, when the state’s financial holding asset UK Asset Resolution (UKAR) sold a tranche of loans to Citi for £5bn. In 2019, Citi appointed Topaz Finance to manage the loans under its subsidiary Heliodor Mortgages.
Docherty-Hughes said one borrower saw the amount they owed rise by nearly £10,000 in a few years. This led to them falling into negative equity as the amount owed exceeded the value of their property.
He added: “The bill seeks to end evictions for mortgage prisoners. Let us do what we can to lift the burden that they have carried over the years.”
He said anyone whose house had not already been repossessed “must necessarily have kept up with their payments”.
A spokesperson for Topaz Finance, the holding company of Heliodor, said: “Topaz is not a lender. It is a regulated loan administrator – it did not buy any tranches of loan books from UKAR. Instead, the books were sold to investors who then appointed Topaz to provide the ongoing administration of the loans. The sale did not impact customers’ terms and conditions, with Topaz continuing to service every loan in line with the terms and conditions that borrowers signed-up to.
“As an administrator, Topaz works hard to support customers who are experiencing financial difficulties, particularly in the present economic climate, and frequently liaises with mortgage holders to help them better understand their options and switch to other products.”
‘The government owe it to mortgage prisoners’
Docherty-Hughes also said it was “natural” to cap the standard variable rates (SVRs) offered to mortgage prisoners and said people had been dealing with high interest rates for more than a decade, adding: “We gain nothing from pushing them further into debt.”
“The government owe it to mortgage prisoners to find a way for them to help themselves out of this mess. They should look into providing a vehicle that allows our constituents who are mortgage prisoners to pivot back into the mainstream market.
“The first suggestion of the report published by the London School of Economics (LSE) is that there should be free, comprehensive financial advice for all victims—that is what they are. Almost 200,000 people who are victims should be contacted individually to help them navigate their way out of the quagmire that they find themselves in,” he added.
The UK Mortgage Prisoner Group said it was looking forward to continued communication at the second reading and said the limited modified affordability introduced in 2019 “helped so very few”.
The group said it also hoped its mortgage reform policy proposals could be incorporated into the bill.
The UK Mortgage Prisoner Group recommended the end of sales to inactive lenders, giving borrowers a right of access to fixed rates, and offering transparency in mortgage ownership.
It also asked to introduce a measure to base affordability on the history of payments, and bring in a grandfather policy for interest-only mortgages from before 2008 to allow borrowers to access new products and remain in their homes.
