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CML calls for Govt view on safety net for borrowers

The Council of Mortgage Lenders has written to the Chancellor calling for a “clear statement” of its views on the potential reform of the safety net for borrowers.

The CML also outlined the steps that lenders are taking to minimise the potential problems that may face borrowers in the wake of the credit crunch.

These include analysing existing arrears management policies and implement any changes identified as a result of CML industry guidance and providing information for consumers on their own arrears management process.

The CML says lenders are also supporting the principle of a pre-action protocol for mortgage cases for use before court proceedings and informing borrowers when they are coming out of initial deals onto higher rates with increased monthly repayments.

The CML says borrowers can also help themselves by ensuring they make contact with their lender as soon as they realise they may face financial difficulties.

CML director general Michael Coogan concludes the letter to the Chancellor by saying: “We continue to expect the absolute level of mortgage arrears and possessions to remain low, as we forecast in October 2007. With a worsening economic environment, and an incomplete safety net for borrowers, we cannot be complacent about prospects and the challenges facing borrowers, lenders and public policy makers.

“We will continue to work closely with Ministers, and look forward to a clear statement of the government’s own position on the safety net for borrowers. The Department of Work and Pensions’ proposals to reform income support for mortgage interest and to implement improvements to state support remain urgent for those borrowers committed to staying in their homes who face a short term loss of income.”

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