New rules that make mortgage advisers personally accountable are to be introduced by the FSA.
The FSA began a review of the UK mortgage market in October last year and they published new rules at the end of last week. The agency has stated that as from 30 June all staff selling contractor mortgages and their firms must be approved by them.
It also wants to protect people who had to sell their homes and then rent them back by giving them tenure of at least 5 years. Selling and then renting back is common amongst people who need to sell quickly in order to stay in their home. Therefore it is essential that they have better protection during their period of financial difficulty said Lesley Titcomb from the FSA.
The FSA’s new rules will also help home owners who are late with their mortgage payments. As from the end of this month, mortgage lending companies will not be allowed to charge monthly arrears if an agreement for repayment has already been made. Customers’ payments must be used to settle the overdue balance and not for late fees. Firms must also record all telephone calls relating to mortgage arrears and retain those records for at least three years.
The total number of mortgages in arrears dropped by 4% in the first quarter of 2010, whilst the amount of new arrears fell 2%. There are now 3.23% of all mortgages in arrears according to the latest figures from the FSA.
A decline in the number of mortgage arrears has to be good news; however there is a note of caution from the Bank of England. If the economy performs worse than expected or interest rates rise, large numbers of mortgage holders might default on their loans, it said.
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