Lending body calls for rules on buy to let mortgages to be properly enforced

30 April 2010

Written by Steve Olejnik.

The Building Societies Association (BSA) has responded to new rules on buy to let mortgage arrears proposed by the Financial Services Authority (FSA).

The proposals, detailed in the FSA's latest Mortgage Market Review, are designed to make mortgages fairer to consumers by forcing financial institutions to behave responsibly.

In accordance with the new rules, mortgage lenders would not be permitted to add early repayment charges on top of arrears charges or charge interest on repayments.

They would also be stopped from applying monthly arrears charges where they and the customer had already arranged a payment plan.

Firms would be forced to consider all options for borrowers, making repossessions a last resort, and ensure that customers experiencing financial difficulties didn't have to pay arrears charges after they had caught up on their monthly payments.

The BSA has said it is supportive of the proposals but feels that strict enforcement would need to be in place before any real change would be made.

Paul Broadhead, head of mortgage policy at the BSA, said: "Rules alone will not stop miscreant firms treating borrowers unfairly. It is crucial that the supervision of firms is robust and, where necessary, enforcement action is swift and effective."

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