The Financial Services Consumer Panel has warned that many consumers could lose their homes because lawyers and householders are largely unaware of the FSA rules that lenders much follow before repossessions can be commenced.
The FSA recently said in its Finanical Risk Outlook that 1.4m home owners could have problems meeting mortgage repayments.
The FSCP says that lenders must make reasonable efforts to reach an agreement on repaying any arrears; adopt a reasonable approach to the timescale; not put excessive pressure on the customer and repossess the property only where all other attempts to resolve the position have failed.
It says that in circumstances where a mortgage was mis-sold, it understands that the court can decide to stay possession proceedings whilst the Financial Ombudsman rules on the case.
FSCP chairman John Howard says: “We have heard that some less scrupulous lenders are rushing to repossess properties without the courts considering the FSA rules on repossessions. And despite appalling stories of the misselling of mortgages, the sales tactics used are rarely taken into account in the court case. Clearly if a lender or mortgage broker has acted irresponsibly by persuading someone to take out a mortgage they cannot afford, a much more lenient view ought to be taken of the householder’s case.”