Loan Companies Breaching Repossession Regulations
Due to the recent credit crunch and recession, there have been a growing number of individuals facing financial difficulties, particularly when it comes to keeping up with the repayments on their home owner loan or mortgage.
As a result of this, more and more borrowers have been building up loan arrears and many have even faced the prospect of repossession by their lender. In an attempt to protect homeowners and ensure that repossession is a last resort for loan companies, the government have introduced a new set of rules known as the “pre action protocol” which are designed to offer protection to borrowers with loan arrears and force lenders to look at every alternative before they consider repossession.
But a new report from three leading help and advice organisations claims that, although the government measures are having a benefit for people struggling with their home owner loans, there are still too many borrowers who are facing possession proceedings without having had the full benefit of the pre action protocol.
AdviceUK, Citizens Advice Bureau and Shelter have all called on the government to tighten the rules governing possession procedures, in an attempt to stop individual cases slipping through the net and to keep more people in their homes.
The survey found that in almost one third of the cases which were brought to court for loan arrears and potential repossession were in breach of the pre action protocol rules and this was only picked up by the judge in a very few cases. As a general rule, it would appear that those lenders specialising in sub prime and bad credit loans were the most likely to take court action early and these companies also had a much higher rate of arrears on their books, probably due to the type of borrower they have offered loans to. Mostly, the main high street lenders have a good record when it comes to handling arrears correctly.
