Homeowner Mortgage Support Scheme backed by BSA
Thursday, 15 Jan 2009 12:25
BSA urge borrowers to contact their lenders
The Building Society Association (BSA) is urging struggling borrowers to contact their lenders.
In a response issued today to the government, the Association welcomed the introduction of the
Mortgage Support Scheme.
However, it cautioned that, although the scheme will represent an important new weapon in the fight against repossession, it remains concerned it will not help as many borrowers as the government expects.
In their response, the BSA said that the government’s key message must be to advise borrowers to contact their lender at the earliest sign of repayment difficulty.
Paul Broadhead, head of mortgage policy at the BSA, said: “For building societies, taking possession of a property really is the last resort. They maintain good relationships with their customers to ensure that they can develop individual solutions to arrears problems, and this scheme could represent an important new tool for them.
“As such, we look forward to continuing to work with the Government as the scheme is developed further to ensure that it adds value over existing practices and that the most vulnerable borrowers in need of help are able to receive it.”
The BSA said the objectives of the Homeowner Mortgage Support Scheme must be that:
The scheme adds value over existing practices and steps to help homeowners already available to lenders, ensuring that the most vulnerable borrowers in need of help are able to receive it;
The scheme needs to be practical and not onerous to administer;
The scheme should promote proportionate and realistic risk sharing between all the parties involved; and
High quality independent advice is available to ensure that this is the best course of action for the borrower.
Mr Broadhead added: “It is vital that government understands that lenders have to hold increased capital for accounts in arrears, and if not considered fully, this scheme could have the unintended consequences of further stifling new mortgage lending.”
“However, it remains the case that as soon as borrowers believe they may have a problem, the most important thing is that they should contact their lender as soon as possible to allow the best solution for them to be determined.”