Mis-sold Mortgage Claims > Mortgage News
Sub-prime lenders attracting higher arrears and repossessions
Mon, 18 Apr 2011
Recent reports following Fitch Ratings information on ‘servicer ratings’, have highlighted that a number of sub-prime lenders who have ceased trading, have residential mortgage books with increasing arrears, some as high as 30 per cent.

This has raised concerns that there could be an "arrears time bomb" facing borrowers, which could lead to an increase in repossessions should interest rates increase creating a payment shock and making financial management more difficult.

Many industry experts believe that the sub-prime sector has been hit the hardest due to irresponsible lending practices during the race for market share. The former Lehman lender, Southern Pacific Mortgages Limited (SPML) has been singled out for poor performing loans, SPML were a high profile specialist lender before Lehman closed its doors in 2008.

There has also been criticism of how some lenders are aggressively pursuing borrowers who are struggling to make payments. Luke Memory, managing director of Revival, which offers a service to borrowers seeking advice and help when in arrears or facing repossession, comments, "Our experience demonstrates that many lenders show no regard for the law surrounding repossession, they use the court as a threat to force either a lump sum payment or an unaffordable arrangement on to the borrower, lenders often increase the debt by imposing significant extra legal costs whilst putting their customers through an unnecessary ordeal."

He added. "If interest rates were raised by just 0.5 per cent this would significantly increase the number of people facing repossession and make thousands of mortgages totally unaffordable."
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