In a bid to provide some relief for borrowers, a new pre-action protocol (the set of procedures that must be followed before going to court) has been created which covers claims for possession based on arrears of residential mortgages.

The new protocol covers both first mortgages and second mortgages and applies to those regulated under the Consumer Credit Act 1974 and other mortgages. It provides that reasonable steps should be taken by the parties to discuss the reason for the arrears, the borrower’s financial circumstances and proposals for repayment of the arrears (including referral to independent debt advice). The lender is also required to write to the borrower within ten days to provide reasons for rejecting the borrower’s repayment proposals.

In addition, it includes a provision that consideration can be given to a postponement of the claim for possession if the borrower can show that they have taken reasonable steps to put the property on the market at a reasonable price in accordance with appropriate professional advice.