How to Manage Mortgage Arrears


Around 71% of mortgage lenders go for in-house management of mortgage arrears, while another 24% utilize an amalgamation of external staff and in-house staff. This indicates that only 5% of the mortgage lenders completely outsource the functions related to arrears management.

Only a handful of lenders, around 20% stated that the statutory regulations regarding management of mortgage arrears laid down by the concerned body brought any substantial alteration in the manner they are handling mortgage arrears. The majority opined that the regulations brought little or no variation to their arrears administration, but in certain cases, the lenders had to alter their notification procedure. This is indicative of the fact that almost all the mortgage lenders already complied with the regulations prior to their implementation.

In the few cases wherein the mortgage lenders made substantial alterations in the arrears management, the alterations incorporated telephone call monitoring and recording, better qualified staff, increased quality guarantee checks on staff as well as inclusion of quarterly arrears statements.

Mortgage Arrears Notifications and Statements

Most mortgage lenders lay stress on getting in touch early with the borrowers who are into arrears. Almost every lender intended to make their initial contact subsequent to missing one complete or partial mortgage payment. Moreover, 81% of lenders did more than what was required of them by rendering information regarding two payment misses in 15 working days to borrowers.

Formal Litigation and Mortgage Arrears

78% of the mortgage lenders follow strict criteria regarding the initiation of court action. There are two prime elements in the criteria, namely the time element and the contact element. A majority of lenders had a general time frame for initiation of proceedings related to repossession. Regarding the contact part, borrowers need to be in touch with the lender for explaining the circumstances or talk about likely solutions.

When a repossession proceeding is initiated by the lender, the probable results usually do not vary much between the non-prime and prime sectors. 90% of the court proceedings resulted in repossession orders, with 40% being absolute possession orders.

A few cases experience adjournments, especially if the borrow constitutes a sale with respect to the property or it can be proved that quicker repayment of mortgage arrears is possible.

Take Careful Steps in Case of Mortgage Arrears

Mortgages as well as second mortgages or secured loans are known as priority debts. This implies that in case you are unable to cope up with the repayments, there is the probability of loss of home. In other words, irrespective of how tough other creditors or lenders are, it is required on your part to pay the secured loans or mortgage first.

In case there are debts other than the mortgage that are a cause of financial problems it is indeed tempting to go for a bigger mortgage that takes into consideration every other debt.

This might make you capable of paying off or clearing the current debts. However, it involves a lot of risks. Monthly outgoings might amplify and you might be required to pay higher lending charges or extra arrangement fees. For any kind of assistance, you may get in touch with a financial advisor who operates independently.

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