Struggling homebuyers are to be given extra protection from greedy mortgage lenders.City watchdogs want to stop banks slapping unfair penalty fees on those who fall behind with repayments. The Financial Services Authority also aims to do more to remove rogue advisers from the industry.It says a clampdown will lessen the misery of repossessions and cut fraud.There are nearly 400,000 buyers with mortgage arrears, according to the FSA.Its investigation found some lenders imposing penalty fees of up to £50 a month even when borrowers had struck a deal to repay what they owe.
The FSA wants to outlaw this and stop lenders imposing interest on penalty fees and early-repayment charges. Banks will also be obliged to check if customers could benefit from any Government schemes aimed at helping buyers. Lenders will also be required to record all phone conversations with customers in arrears and keep them for three years.Fsa mortgages director Lesley Titcomb said: "Lenders need to be in no doubt of their obligations to customers who fall behind with payments and must realise that such circumstances are not an opportunity to create further profits."
The regulator will also force lenders to employ "fit and proper" staff. Roughly half the mortgage industry's 40,000 sales staff are not FSA-approved.Andrew Hagger of moneynet.co.uk said: "This will be welcome news to thousands battling to keep a roof over their heads."Having an extra £30 or £40 charge added to their debt each month, even when they'd agreed a repayment plan with their lender, was yet another kick in the teeth for those doing their utmost to stave off repossession."But Michael Coogan, director general of the Council of Mortgage Lenders, accused the regulator of using "a sledgehammer to crack a nut".
The Obama administration is expected next month to draw a broad outline of what should happen to the two agencies when it releases the White House's fiscal 2011 budget proposal. "Obviously, we want to make sure that Freddie Mac has a voice in the debate about the future," Haldeman said. In its defense, Haldeman said Freddie Mac avoided at least 250,000 foreclosures last year through various homeowner assistance programs. In 2008, that number was 88,000. Last year, Freddie Mac provided liquidity for nearly $550 billion in home loans, and helped some 2.2 million borrowers and another 350,000 renters, he said.
The administration had been offering lenders who made so-called "piggyback" mortgages — second loans that allowed consumers to make a little or no down payment — incentives to lower payments or eliminate the loans entirely.But no one signed up until Tuesday when Bank of America became the first to do so.During the housing boom, lenders readily gave such second loans. While home prices soared, such mortgages were even extended to borrowers with poor credit and people who didn't provide proof of their incomes or assets.
