Lenders Getting Tough On Loan Borrowers With Court Action
We have reported recently on the growing number of home owners who are being threatened with repossession by their lender for failing to keep up with the monthly repayments on their mortgage or home loan and also on the view taken by the Financial Services Authority (FSA), who expect lenders to take a more sympathetic approach towards customers than they currently are doing, under their “treating customers fairly” directive.
But, as we head into the second half of 2008, the number of possession claims brought to court by lenders has increased dramatically, as an ever increasing number of borrowers fall behind with their mortgage loan repayments.
There could be several reasons for this increase. Firstly, the level of unemployment has risen sharply over the past few months and if a borrower does not have payment protection on their home loan, they could be facing difficulties.
Secondly, a large number of home owners are now reaching the end of their initial cheap loan deal on their mortgage and many are unable to find a reasonable cost remortgage deal, due largely to irresponsible lending in the recent past by lenders offering large income multiples and high loan to value levels, leaving borrowers stranded with their existing lender, paying the standard variable rate of interest.
Often the mere threat of court action from the lender is enough to shock a borrower into taking action to remedy the situation and in many cases the problem is resolved before it ever gets to court. Of those cases which do end up in the courtroom, a high percentage do not end up in repossession, although the gap between possession orders and actual repossessions is closing frighteningly quickly.
The number of repossessions has risen by around 40 per cent during the last three months, against the same period last year, with a total number of 38,786 properties being repossessed. To put this figure into some sort of perspective, this equates to 430 families every day who are losing their homes…so much for treating customers fairly!
