Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.
The FCA has proposed extending mortgage holidays for struggling homeowners during the coronavirus pandemic.
Banks will be continuing to support those in need if mortgage payments are struggling to be met.
The Financial Conduct Authority (FCA) has announced new proposals to make sure banks are providing homeowners with customised assistance to everyone who is still struggling to make mortgage payments during the pandemic.
A new draft on the mortgage holiday guidance establishes that consumers who have used the scheme can continue to be supported if they are still having financial difficulties during the pandemic.
Some consumers are still struggling while there may be new job losses or other circumstances that force more people to use the mortgage holiday.
The FCA’s guidance calls for “tailored support” for homeowners, so banks will work with them to identify their needs and create a payment plan that works for them.
The current mortgage holiday guidance is in place until 31 October 2020.
Homeowners can use a three-month mortgage holiday for either the first or second time. The expiration date will be under review, contingent on the circumstances of the pandemic.
The guidance urges banks and firms to consider short- or long-term payment options for homeowners. Some may need extended terms and some may need to restructure their mortgage payments entirely.
Firms should be flexible with payment arrangements to fully support consumers.
For those who have been hit the hardest, firms should continue to be supportive and help with managing finances or giving advice, according to the FCA.
“It is important that consumers who can afford to resume mortgage payments should do so,” the FCA’s Christopher Woolard said. “However, we understand that borrowers facing payment difficulties because of the pandemic will continue to face uncertainty and may also experience temporary interruptions in income. We are proposing that firms contact their borrowers in good time before the end of a payment holiday, and work with them to come up with a tailored plan to help get them back on track. Firms should not take a ‘one size fits all’ approach.”
When the pandemic began, the FCA announced payment holidays in March to help borrowers.
Millions of homeowners benefitted from the mortgage holiday scheme.
The scheme was originally set to end in June, but was extended to continue to help struggling homeowners.
Since its initiation in March, the scheme has helped over 1.9 million borrowers, according to a Reuters report.
It was expected that most borrowers who took advantage of the mortgage holiday would be able to eventually continue paying full mortgage payments, but as the pandemic is still in full effect, many borrowers still cannot make ends meet.
Firms can use credit files to understand a consumer’s financial profile to be sure they can afford mortgage payments. Firms must also be transparent about borrowers’ credit score implications.
Forbes reported that UK Finance said firms will follow the instructions of the regulator to help the specific needs of coronavirus-affected homeowners.
“As we begin to arrive at a ‘new normal’, a more tailored approach to customer support using a range of measures will likely be more suitable for those customers who continue to experience financial difficulties or find themselves newly affected by the ongoing crisis,” UK Finance’s Eric Leenders told Forbes.
Do you think the mortgage holiday will be extended past 31 October 2020? Let us know in the comments.
Check back daily for the most recent U.K. class action lawsuit and consumer protection news.
ATTORNEY ADVERTISING
Top Class Actions is a Proud Member of the American Bar Association
LEGAL INFORMATION IS NOT LEGAL ADVICE
Top Class Actions Legal Statement
©2008 – 2024 Top Class Actions® LLC
Various Trademarks held by their respective owners
This website is not intended for viewing or usage by European Union citizens.