Borrowers stand more risk of repossession with recent court ruling

Posted under General by Michael

The statutory right of the mortgage lenders has been upheld by the high court in its recent ruling. Under a 1925 law, a lender is free to sell mortgaged property independently, without applying for court’s permission, if borrower fails to make two consecutive payments.

In the court of Mr. Justice Briggs, lender was allowed to take possession of buy-to-let property of a borrower who missed payments. The court granted permission to auction the property for recovery of loan arrears.

Financial Services Authority is very much concerned with the approach of lenders who are too focussed on recovery of arrears and go all out for repossessions.

The Citizens’ Advice Bureau is also deeply concerned over likely misuse of court ruling as a practice to ignore rules on fair treatment to people in arrears of payment.

The ruling goes against the Prime Minister’s guidelines to lenders that repossession should be used as a last resort. It has created necessity for an urgent amendment to the existing law to safeguard borrowers’ rights.

As per the records of Financial Services Authority, percentage of evictions of families from their homes on account of arrears has increased by 70% in last one year. It is expected to keep rising as recession grips the UK economy.