Lenders could receive rent from tenants, says CML

Posted under General by Jermaine

According to the spokeswoman of CML, lenders could collect rent from tenants of defaulting landlords for a fixed period to recover mortgage loan amount.

She opined that it would not be a wrong step since it would protect those tenants from eviction who pay their rent regularly but their landlords fail in paying mortgages.

Estate agents have reported sharp increase in number of properties in the rental market and decline in rents for the first time in last 5 years, said the Royal Institution of Chartered Surveyors.

The banks have already deployed more staff to attend calls from struggling homeowners who are in arrears of their mortgage payments.

Executive chairman of the Bradford & Bingley, Richard Pym, informed the Treasury select committee that its staff strength in arrears department would swell to 400 next year from existing 200 in August. Northern Rock also would be deploying more staff for arrear recovery. Experts expect more banks would follow suit as the economic condition worsens further.

According to Defaqto’s principal consultant, David Black, increasing number of borrowers would find it extremely difficult to repay mortgage under deteriorating economy and waves of job losses.

Research by an insurance group revealed that 50% of 2.9 million interest only UK borrowers possessed no investment vehicle to pay off loan capital.

CML stated that lenders would not sell houses occupied by residential borrowers in absence of possession order from a court.

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