Second Mortgage Lenders Cut Forecast For Possessions

In the second quarter FLA members, representing over 85% of the second charge mortgage market, took possession of 421 properties. The FLA‘s 2009 forecast is for 1,550 second charge possessions and the Council of Mortgage Lenders predicts 65,000 first charge repossessions.

The figures reflect the ongoing efforts FLA members are taking to avoid taking possession when customers are in arrears with their second charge mortgage repayments.  In November 2008, the FLA introduced Good Practice Guidelines for Second Charge Lenders which provide additional assistance to customers in arrears and which were welcomed by the Government.

FLA members also comply with the Pre-Action Protocol for Mortgages, which was introduced by the Ministry of Justice in November 2008. The Protocol requires that lenders only take possession of homes as a last resort.

Second charge mortgage lenders are regulated by the Office of Fair Trading, the Consumer Credit Act and the FLA Lending Code.  The OFT has also recently published new guidance for second charge lenders, which prescribes further standards for the industry. 

Commenting on the figures, Fiona Hoyle, Head of Consumer Finance at the FLA, said:

"Second charge lenders are making every effort to help customers in financial difficulties and to avoid taking possession and our figures are proof that this is working. But with rising unemployment, this type of support will become even more important.  We would urge any homeowner who is worried about meeting their mortgage repayments to contact their lender”.