MPs call on lenders to halt all repossessions against mortgage prisoners until help arrives
MPs have called on firms to cease all repossession proceedings against mortgage prisoners until a working group is established to help them.
Members from the All Party Parliamentary Group on Mortgage Prisoners today issued an open letter calling for a halt to repossessions against borrowers who saw their home loans sold onto inactive or unregulated lenders following the financial crash.
Up to half-a-million mortgage borrowers in the UK saw their home loan sold onto such lenders following the crash, meaning their mortgage is now owned by a company or fund that can’t offer them a remortgage.
However, many of these borrowers no longer qualify for a new mortgage under tightened rules brought in in 2014. This means they can’t switch to a cheaper deal with a new lender, and their current lender can’t offer them a better one.
Thousands of borrowers were stuck on inactive lenders after the financial crash (stock photo)
Kevin Hollinrake, vice-chair of the APPG on Mortgage Prisoners, today said: ‘The damage inflicted on both SMEs and mortgage holders has been a total scandal.
‘It is inconceivable and perverse that we require UK lenders to uphold high lending standards and then allow the sale of the loans they have made to UK consumers and businesses that do not have to observe these standards.
‘We need these lenders to do the right thing and show immediate forbearance and respect the full extent of UK regulations and the Government to step in and quickly legislate to close this loophole.’
The group also said that it would be asking the Competitions Watchdog to open an investigation into ‘overcharging’ by these inactive funds.
Rachel Neale, lead campaigner at UK Mortgage Prisoners, says ‘The solutions working group cannot find a solution fast enough.
‘Every day I am inundated with heart-breaking stories of people forced to live on the breadline or rely on food banks because they are being exploited by rapacious funds, most of whom are unregulated and do not have a license to lend in the UK. How is it possible this is allowed to happen, it is criminal.’
The APPG said it had invited the Financial Conduct Authority, Treasury, and banking trade body UK Finance to hold its first ‘working group’ meeting on 19 March.
A UK Finance spokesperson said: ‘We are engaging across our mortgage members as well as with the Financial Conduct Authority and the Prudential Regulation Authority to find solutions for as many customers in the mortgage prisoner population as possible.’