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FSA bolsters mortgage arrears rules
Tuesday January 26th 2010
The Financial Services Authority has introduced tough new measures to protect homeowners who fall into arrears.
Homeowners without mortgage payment protection insurance who fall behind with mortgage payments are currently hit with a raft of fees and charges that make repayment even harder in the long-term.
However, the City watchdog has proposed a clampdown on the charges, which sometimes run into hundreds of pounds.
The FSA also warned lenders that repossession must be seen as a "last resort" after all other avenues of repayment have been exhausted.
Following an investigation last summer, the FSA found that some lenders were charging up to £150 for a visit by a debt collector and £300 for instructing a solicitor, prompting the authority to seek tougher sanctions to clamp down on 'bully boy' tactics.
Borrowers can also be charged £60 a month in fees even once they have come to an arrangement with their lender about repaying the arrears.
Under the proposals, firms will no longer be allowed to apply monthly arrears charges to consumers when they have agreed a repayment plan.
They will also not be allowed to add early repayment charges on to arrears charges or charge interest on the fees.
Copyright © Press Association 2010
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