To ask Her Majesty's Government what guidance they have given to banks on interest-only mortgages, particularly in respect of foreclosure and accelerated capital recovery where no default has occurred or where there is surplus asset value over liability. [HL5559]
The Financial Services Authority (FSA) is the body responsible for setting rules in relation to mortgages. In 2004, the Government extended the scope of FSA regulation to include first-charge residential mortgages. The FSA's regime requires lenders to treat customers fairly and treat repossession as a last resort.
On 19 October, the FSA published a review of its mortgage market regulation, including proposals to help to ensure that lending is sustainable. This review announced that the FSA will publish specific proposals in January to toughen up rules on arrears handling as well as banning administration charges where a borrower is adhering to an arrangement to repay arrears, and prohibiting the charging of early redemption charges on arrears fees. It is available to view at http://www.fsa.gov.uk/pubs/discussion/dp09_03.pdf.
To ask Her Majesty's Government what assessment they have made of the effect on mortgages on residential property in the United Kingdom of proposals by the European Commission to harmonise rules governing access to mortgages; and whether the proposals will adversely affect those on lower incomes wishing to purchase homes. [HL5710]
On 15 June 2009, the European Commission published a consultation paper on responsible lending and borrowing in EU mortgage and consumer credit markets. The Government and FSA jointly responded to this consultation paper in August 2009, following discussion with the UK mortgage industry, trade bodies and consumer groups. This document is available here: http://www.fsa.gov.uk/pubs/international/ response_lending_and_borrowing.pdf.