Council of Mortgage Lenders Issued Industry Guides in Fair Practices
The Council of Mortgage Lenders announced that its members are fully committed to helping borrowers who get into mortgage difficulties keep their homes and that repossession was a very last resort.
The position on fees and charges for those in arrears (as set out by the FSA) is that they must reflect the actual work carried out without a profit element and that they should be transparent.
It is important to recognise there is a cost to the lender for the additional work when managing mortgages that go into arrears and it is fair to charge for that work. Lenders need to employ staff to liaise with borrowers, to monitor the ongoing situation, and they may also incur legal costs. If lenders do not charge the borrowers who are in difficulty for these costs, they would be borne by all customers. Each firm’s cost base will differ so it is not straightforward to say a specific figure is “fair” or that higher charges are “unfair”.
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