Council Of Mortgage Lenders Joins Battle Against Sale And Rent Back Schemes
We reported recently on the growing popularity of sale and rent back schemes, due to the financial difficulties being faced by many borrowers in maintaining the repayments on their mortgages and home loans, caused by the effects of the credit crunch.
A sale and rent back scheme allows a struggling home owner to sell their property to a company who will then allow them to rent the property back from the same company under a normal tenancy agreement. The theory behind this type of scheme is that the home owner gets to clear the debt of his mortgage loan, thus avoiding potential repossession, whilst being able to remain in the family home.
Many housing organisations and charities have already condemned these schemes, calling for regulation to be urgently introduced to a sector which preys on some of the most vulnerable members of society, those who are struggling with debt problems and are accumulating arrears on their mortgage and home loans, often facing the prospect of repossession.
The Council of Mortgage Lenders (CML) has now put its weight behind the argument against sale and rent back schemes, by warning consumers about the products and the low level of security which they offer. The CML, along with Shelter and the Citizens Advice Bureau, have pointed out that such schemes are currently not subject to any form of regulation and therefore home owners who take this option will not have the same level of protection as someone with a mortgage loan.
Michael Coogan of the CML said “The first step for anyone struggling to pay their mortgage is to contact their lender and get advice. There are a range of options your lender can consider to help reduce or reschedule your payments for a period of time while you get back on your feet. Lenders will treat you fairly and use repossession as a last resort. If you take positive action to contact your lender, pay what you can and show up to court and make your case, you are more likely to reach an agreement with your lender that allows you to stay in your home.”
