Lenders Support Mortgage Repossessions Suspension
Towards the end of January (2021), UK Finance reported that lenders had agreed to extend the moratorium on mortgage repossession executions. In turn, the Financial Conduct Authority (FCA) confirmed the decision.
For hard-pressed homeowners in financial difficulty, the two extra two months of breathing space proposed in the draft guidance will mean no evictions before 1st April 2021. Although welcome news, the extension to the deadline applies only to owner-occupiers experiencing repayment problems with mortgage loans for residential property.
In summary, the key points relating to this suspension of residential mortgage repossessions are:
- Mortgage lenders can initiate court action and obtain possession orders, but must not apply for a warrant to enforce the possession while the moratorium is in force. Also, they will not enforce existing warrants.
- Lenders will telephone or write to borrowers again if they were already subject to legal proceedings for possession initiated before March 2020. Similarly, they will re-contact customers in payment arrears who have not been in touch recently.
- Wherever possible, companies will try to resolve cases by alternative means – including rehousing.
- Lenders may issue customers with formal demands detailing how much they owe and emphasising the possibility of repossession.
In exceptional circumstances, such as empty properties or at the borrower’s request, repossessions can proceed.
Finally, in the case of buy-to-let loans, lenders can opt to use a Receiver of Rent. That way, tenants who pay their rent regularly could remain in the property concerned.