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Square up to lending problems

If the Council of Mortgage Lenders does not think it has sufficient data for the sub-prime market, then it had better get a handle on it soon.

With fears of an increase in repossessions of as much as 50 per cent, there is clearly cause for some concern.
The CML believes this is the area where most repossessions will occur, hardly a surprise, given the nature of the sector.

But it is vitally important that trade bodies, lenders and mortgage IFAs and brokers prepare themselves for possible problems in the market.

Among other things, it may well be viewed as a test for regulation of mortgages by the FSA and many in the consumer lobby.

Repossession is where the clearest consumer detriment occurs, not exit fees – annoying as they may be.
But the fears of the CML and the admission by the trade body that it cannot comment with credibility on this market are serious.

In many ways, brokers have seen their role as securing a mortgage for someone wanting to borrow to buy a home, which is surely why many people use brokers in the first place.
It is also the case that in some cases, in particular, self-cert, there have been some abuses.

In addition, there are fears over interest-only mortgages, with some borrowers not putting enough into a repayment vehicle.

These issues need to addressed with urgency because they threaten to leave people without a home.

Place that alongside the problems with payment protection insurance or at least the mortgage payment protection insurance part of that market and it begins to look very worrying.

In the meantime, we hope the PPI market cleans up its act, the 200,000 people either have something squirreled away to pay their capital and that sub-prime has been doing what it should be doing – helping people in non-standard situations or with a chequered credit history to get on the housing ladder.

But to do so, the mortgage industry, led by the Council of Mortgage Lenders, had better get up to speed first.


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