Lenders repossessing 'too quickly'
Updated on 05 August 2008
Specialist mortgage lenders are "too ready" to take court action against cash-strapped borrowers struggling with repayments, the City watchdog has warned.
The Financial Services Authority (FSA) said specialist lenders are failing to use repossession as a last resort as they focussed efforts too strongly on recovering arrears.
Its findings came as data from more than 300 lenders regulated by the FSA revealed a 40 per cent surge in home repossessions.
New repossessions rose to 9,152, up from less than 7,000 in the first quarter of 2007 as borrowers failed to repay their home loans, according to the research.
The FSA also found that the number of mortgages three months or more in arrears rose by 15 per cent to 302,000 in the three month period - 2.44 per cent of the UK total mortgage loan book.
Lesley Titcomb, FSA director responsible for the mortgage sector, said: "More people are struggling to meet their mortgage payments and it is vital that firms treat them fairly.
"This means paying attention to their individual circumstances and not repossessing their homes when there may be an alternative solution. Repossession has to be the last resort," she said.
Housing charity Shelter said the FSA needed to clamp down on "merciless" mortgage lenders.
Adam Sampson, Shelter chief executive, said: "We see many homeowners owing very small amounts of money, whose lives are wrecked by some, particularly sub-prime, lenders racing to repossess."
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