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Lenders 'support mortgage repossessions suspension'

UK Finance has stated that lenders support the moratorium on mortgage repossessions, which was confirmed by the Financial Conduct Authority (FCA).  

The regulator confirmed the draft guidance for mortgages, which extends the moratorium on repossession until 1 April 2021. Specific guidance on consumer credit will permit firms to repossess goods and vehicles from 31 January 2021, but only as a last resort and lenders will be expected to consider customers’ vulnerability, when taking this action.

 

How the repossessions moratorium on residential mortgages will work:

  • Lenders will not issue a warrant for eviction or enforce an existing warrant before 1 April;
  • Lenders can start court action, including obtaining a possession order from the courts but will not seek a warrant to enforce the possession while the moratorium is in place;
  • Lenders will aim to engage or re-engage customers who were already in proceedings prior to March 2020 or who are not in contact with the lender and have not been paying their mortgage for some time, via letters or phone calls;
  • Lenders are able to issue a formal demand, so that the customer is aware of the money they owe and informed that the case will go to possession proceedings;
  • Lenders will seek to resolve the case through alternative means, including informing the customer about voluntary means and rehousing options;
  • Firms can proceed with repossession in exceptional circumstances, including for empty properties or where the customer wants the possession to go ahead. For buy-to-let customers, lenders may use a Receiver of Rent where appropriate which would allow the tenant to remain in the property if they are maintaining rental payments.

A UK Finance spokesperson said: “The banking and finance industry is committed to providing ongoing support to those facing financial difficulty as a result of the pandemic. Lenders support the extension of the moratorium on mortgage possessions until 1 April 2021 which will ensure customers do not lose their home at this difficult time.

 

“This is part of a package of support, including payment deferrals and tailored assistance, provided by lenders for those who need it. Mortgage possession is only ever a last resort. Seeking help early is important, so we would urge customers facing financial pressures to get in touch with their lender to discuss the best solution for them.”

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