Extra Protection For Those With Loan Difficulties June 30th, 2010
Due to the effects of the credit crunch and recent recession and problems within the home owner loan and mortgage markets, a growing number of home owners in the UK have been finding it increasingly difficult to keep up with their loan repayments.
This has led to an increase in the numbers and level of home owner loan arrears, as well as a dramatic increase in the number of loan defaults and repossessions.
Although the government, the Financial Services Authority (FSA) and lenders introduced various measures and schemes in order to protect borrowers who were suffering problems with their loans, there are still many people who are still on the financial edge and facing growing loan arrears.
But now, new regulations are to be introduced which will offer borrowers an additional layer of protection when and if they are unable to manage their home owner loan repayments.
The FSA has used its rules under its “treating customers fairly” principles to ensure that banks and building societies, as well as other loan companies, do not take advantage of borrowers who may be in arrears with their loan.
The new rules state that lenders are unable to charge penalty fees on loan arrears where the borrower has already made arrangements with the lender to resolve the problem. And that any additional payments made by the borrower, must be allocated to the loan arrears first and not any charges which may have been incurred.
In addition to this, where repossession does take place, the lender must be able to demonstrate that this was an absolute last resort and that all other methods to save the loan had already been tried.
Lenders are now also required to record all loan arrears telephone calls and keep a record of these for at least three years.