New Protection For Homeowners

New rules protect you if you are facing losing your home because you cannot make your mortgage repayments. This week, the government announced that the courts must ensure repossession is a last resort. The government has also proposed that firms operating “sale and rent back” schemes should be regulated by the Financial Services Authority.

The new rules set out clear guidance on the steps that mortgage lenders should take before they bring a claim against a homeowner to court. They will now be expected to show they have worked with homeowners to try and find alternatives to repossession if they get into trouble with their repayments. If a case does go to court, lenders will have to explain exactly what they have done to comply with these new rules.

Announcing the new rules, the housing minister, Margaret Beckett, said: "We must ensure that every avenue has been explored before lenders seek to repossess homes. These new measures will further protect the most vulnerable households in the current economic climate. We have expanded free legal representation in county courts for households at risk of repossession, we have provided more free debt advice and will continue to work closely with lenders through this difficult time. It is important that households who have concerns over their mortgage seek advice at the earliest opportunity, starting by speaking to their lender."

The proposals on the sale and rent back sector follow a report by the Office of Fair Trading (OFT) earlier this month. This showed that some homeowners entering into these deals can suffer sever detriment. As well as regulating the market, the OFT also wanted to see more consumer awareness about the issue.

If you are worried about your mortgage, you can get advice from your local authority, the courts and Citizens Advice Bureaux.

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