The House of Commons Treasury Committee has published a report on mortgage arrears and access to mortgage finance. The report is part of the Committee’s enquiry which was launched on 17 June 2009 to look at households affected by the recession and struggling with mortgage arrears and/or at risk of repossession, as well as problems in accessing finance for first time buyers.  

Findings in the report include:  

  • Mainstream lenders are, broadly speaking, complying with the FSA’s mortgage conduct of business rules.
  • The Committee is extremely concerned by evidence of a lack of flexibility and forbearance in the sub-prime, specialist and second charge sectors to homeowners in arrears.
  • The Committee recommends that the FSA monitors the forbearance policies of mortgage lenders to ensure that repossession is only a tool of last resort.
  • The Committee has a serious concern that some lenders are charging high and excessive mortgage arrears fees to customers who fall into mortgage difficulties.
  • The Committee is concerned that the FSA’s principles-based approach in the area of mortgage arrears has given far too much flexibility to lenders to interpret the rules as they wish.
  • The Committee states that the “seemingly leisurely approach of the FSA in terms of completing its mortgage arrears review and enforcing possible breaches in the rules in the area of mortgage arrears is a matter of grave concern.” The Committee calls on the FSA to spell out clearly in its mortgage market review how it will improve its performance in terms of bringing miscreant firms to book.
  • On the naming and shaming of miscreant firms the Committee has concerns that the balance between disclosure to the public and the need to protect firms before they have been found guilty of wrong doing has tilted too far towards the interests of industry.

The Committee calls on the FSA to move quickly to ensure that securitisation agreements already in place do not act as an obstacle to treating consumers in mortgage difficulties fairly.  

View House of Commons Treasury Committee - Mortgage arrears and access to mortgage finance, 8 August 2009