www.mortgagestrategy.co.uk LETTERS
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value of the organisation involved,
staff training and expertise, and an
appropriate focus on treating
arrears cases fairly by identifying
and acting according to individual
circumstances.
Lenders bound by clauses in
securitisation contracts face the
task of matching contractual terms
with adopting the most appropriate
commercial approach, balancing
rapid repossession with a degree of
targeted forbearance.
Once again the key lies in a
detailed analysis of what the rules
say and also having the people and
processes in place to be able to
differentiate between different
categories of customers. This
applies equally to both mothballed
and active lenders.
At Provience we have been
working with lenders to develop
such an approach.
We have found that building
customer empathy and agreeing a
course of action based on what
customers say on the telephone can
lead to positive resolutions for
lenders as well as fair treatment for
borrowers.
This approach can lead to more
successful arrangements with
regard to rescheduled loans, better
understanding of customer
behaviour, compliance with
regulatory and brand promises,
and ultimately better financial
returns for lenders.
Putting the fair treatment of
customers in arrears at the heart of
lenders’ Treating Customers Fairly
strategies is fundamental to the
delivery of customer, capital and
compliance dividends.
ROB HAYES
DIRECTOR
PROVIENCE
BY EMAIL
Old law that favours
lenders is unfair on
today’s borrowers
I was interested to read about four
firms being investigated over
arrears management.
To my mind, the Law of
Property Act 1925 is outdated and
unfair on today’s home owners.
Until there is a reduction of the
powers lenders have to repossess
properties under the conditions set
out in the act they will continue to
do as they like with the assistance
of the law.
Considering the push towards
home ownership by governments
past and present, I cannot see how
it can be regarded as equitable that
in 2009 – some 84 years after the law
was passed – with arrears of just
two months, borrowers’ homes can
be in danger of repossession.
Lenders can disregard the value
of the properties involved,
outstanding loans, borrowers’
equity in their homes and their
history of payment before falling
into arrears.
Also, under Common Law
lenders have an automatic right to
take possession of properties if
market conditions suggest their
security may be at risk.
So a borrower could own 75% of
the equitable interest in their
home, miss two months’ interest
payments on an outstanding loan
of 25% and their lender could
repossess the property.
Home owners are at the mercy
of lenders that have the blessing of
politicians who only pay lip service
to a just society.
CHARLES BUNBURY
BY EMAIL
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Abbey backlogs are
down to staffing
issues, not brokers
I’d like to comment on the recent
article concerning Abbey’s pledge
to toughen up its packaging terms,
in which the lender states that
applications that do not meet the
required standard will be declined
and that decision will be final
(Mortgage Strategy Online June 23).
My question is – what happens
when it comes to downvaluations
on purchases or remortgages
where cases have originally been
fast-tracked but then, because of
increased LTV requirements,
payslips or references are
required?
Will Abbey cancel these or will
it continue not to deal with them in
a timely manner or even lose
information because there’s too
much for it to handle?
Backlogs occur because Abbey’s
staff are up to their eyeballs in
applications, not just because of
cases for which they need more
information.
Abbey is not using its staff
resources correctly. Brokers are
loyal to Abbey not only because of
the deals if offers but also because
of the service and support they
remember. It should not endanger
this loyalty at a time when
everyone in the industry should be
standing together.
So come on Abbey, use some of
Santander’s money to recruit more
staff, or at least redeploy and
retrain the staff you have
ALAN NADIN
MANAGING DIRECTOR
EXECUTIVE MORTGAGE SERVICES
BY EMAIL
MORTGAGE STRATEGY June 29 2009 17
Prize may vary from picture
Pay and save deals
could tempt FTBs
back to the market
With lenders struggling to attract
savers and offering attractive
terms to new borrowers I’ve come
up with something they could offer
first-time buyers.
If lenders were to offer deals at
95% LTV with a set amount of
monthly repayments going into a
savings account, they and
borrowers could have the best of
both worlds.
By paying their monthly
mortgage amount borrowers would
accumulate a savings pot and
lenders would benefit by having
long-term savers.
It would take a mortgage
interest rate loading of around
1.5% of annualised repayments to
allow the product to work well but
imagine a repayment of £800 per
month of which around £100 is paid
into a savings account.
Safeguards could be built in.
For example, lenders could put
constraints on withdrawals from
savings accounts until the
mortgage is below 85% LTV.
And should the property value
drop lenders could use the savings
pot to reduce the mortgage balance
and stave off the threat of negative
equity. Similarly, if a borrower
loses their job or falls ill the
savings account could be used to
help with mortgage payments.
We need products that build
confidence and this sort of deal
could be attractive.
IAN CRAMPTON
SALES DIRECTOR
FERNDOWN LIMITED
BY EMAIL
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