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SHELTER REPORT
http://www.infohub.moneyadvicetrust...._briefing1.pdf
http://www.infohub.moneyadvicetrust...._briefing1.pdf
This briefing from Shelter looks at what lies behind the overall increase in reposessions since 2004, and sets out some issues raised by the changing nature of the mortgage lending sector. This briefing questions whether adequate systems are in place to deal with the new levels of risk that homeowners are experiencing, and whether lenders, regulators and the state are delivering the level of protection needed for homeowners in the current market.
The courts as last line of defence
Over 90 per cent of possession actions taken to the
county court result in the granting of a possession
order, and only 0.2 per cent are dismissed.29
It is possible to improve procedures at the point
where a possession order is applied for in the
county court. Scrutiny of actions brought could
identify those cases where lenders have not adhered
to regulatory standards or treated the customer
unfairly, and could prevent lenders in such cases
from obtaining a possession order. Tenants in the
social housing sector have some protection with the
pre-action protocol for rent arrears, but there is no
such protection for mortgage possession cases.
The existing law does not allow judges to make a final
consideration on whether it is reasonable in all the
circumstances to grant possession. Such freedom
does exist in many tenancy possession cases, and
there may be scope for the law to be changed so
that a test of reasonableness becomes possible for
mortgage possession actions.
The Unfair Contract Terms Act 1977 potentially allows
judges in the county court to rule that any of the
terms of a contract are unreasonable, and to dismiss
a case brought under such terms. Using this legal
measure could provide some protection to borrowers
whose lenders engage in practices such as charging
unreasonable sums as a penalty for defaulting on
payment, or setting an unreasonable timescale
under which arrears have to be paid back. However,
deciding unfairness in this way is a cumbersome and
unreliable way of dealing with the problem.
Over 90 per cent of possession actions taken to the
county court result in the granting of a possession
order, and only 0.2 per cent are dismissed.29
It is possible to improve procedures at the point
where a possession order is applied for in the
county court. Scrutiny of actions brought could
identify those cases where lenders have not adhered
to regulatory standards or treated the customer
unfairly, and could prevent lenders in such cases
from obtaining a possession order. Tenants in the
social housing sector have some protection with the
pre-action protocol for rent arrears, but there is no
such protection for mortgage possession cases.
The existing law does not allow judges to make a final
consideration on whether it is reasonable in all the
circumstances to grant possession. Such freedom
does exist in many tenancy possession cases, and
there may be scope for the law to be changed so
that a test of reasonableness becomes possible for
mortgage possession actions.
The Unfair Contract Terms Act 1977 potentially allows
judges in the county court to rule that any of the
terms of a contract are unreasonable, and to dismiss
a case brought under such terms. Using this legal
measure could provide some protection to borrowers
whose lenders engage in practices such as charging
unreasonable sums as a penalty for defaulting on
payment, or setting an unreasonable timescale
under which arrears have to be paid back. However,
deciding unfairness in this way is a cumbersome and
unreliable way of dealing with the problem.
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