The Council of Mortgage Lenders (CML) has called on the government to change the way the state helps those who incur mortgage arrears on their mortgage due to unemployment.
With the current economic situation there is a possibility we will see rising unemployment over the next 12 months. The CML say hat the current situation is unacceptable as it takes to long for state aid to be granted.
The current DSS rules give the borrower no financial assistance for the first 9 months in the event of involuntary unemployment, assist only the interest element of the monthly payment after 9 months and give very limited assistance in the event of accident or sickness.
When you have such a large loan as a mortgage not being repaid a lender can not wait 9 months for the borrower to start making payments and have to start taking proceedings.
The lender will start repossession proceedings within that period so it is likely that the borrower would have lost their home before any state aid becomes available
The CML is wanting a system that pays more quickly and is not capped at £100,000 mortgages as this is out dated.
The CML added that the aid does not need to ultimately cost the taxpayer as the money can be repaid once the property has been sold.