Mortgage Arrears

When a borrower is in financial difficulty, a lender must consider all forbearance options including term extension, capitalisation of arrears, and interest rate changes under MCOB 13.3.4A, rather than relying solely on standard policies.

A lender must not transfer a borrower's account to its recoveries department and demand full repayment when arrears are minimal and recent, especially where a business support plan has been recently agreed.

A mortgage lender must make appropriate adjustments to its communications when informed of a customer's vulnerabilities, despite having a legitimate need to maintain contact about arrears.

A lender must communicate clearly about the stage of repossession proceedings and any suspension of action to avoid causing unnecessary distress to borrowers.

A mortgage lender must act fairly when processing product transfers and rate switches, providing adequate notice of changes and handling arrears cases with appropriate customer communication.

A lender is not obliged to provide financial advice and is not responsible for arrears where it presented available options and the consumer made their own choice.

A mortgage lender must treat vulnerable customers fairly and apply the lowest interest rate they qualify for, even when economic conditions change and rates must be adjusted.

A mortgage lender must treat a borrower fairly when taking legal action to recover debt, including exploring repayment options and ensuring clear communication between itself and its solicitors.

A lender must take reasonable steps to contact joint borrowers about arrears and consider their position before taking possession action, though failure to do so does not necessarily mean the borrower could have prevented the outcome.

A lender must take reasonable steps to help a consumer submit Support for Mortgage Interest forms when the consumer has completed them but the lender has failed to receive them through its own channels.

A lender must not unilaterally change agreed payment arrangements without discussion and consideration of affordability impact on the borrower.

A lender must provide a final redemption statement within a reasonable timeframe, but providing the total figure owed is sufficient to enable redemption even if a detailed cost breakdown is not immediately available.

A lender must take reasonable steps to communicate with a borrower and explore forbearance options before pursuing legal action when a mortgage term expires with an outstanding balance.

A mortgage lender may pass on costs incurred in eviction and repossession only if those costs were incurred reasonably and in a reasonable amount, even where the mortgage terms permit cost recovery.

A lender must consider mortgage concessions including term extensions when a mortgage is in arrears, rather than immediately proceeding to litigation.

A lender may reasonably require understanding of a borrower's financial circumstances before agreeing to forbearance, but must communicate effectively and make reasonable adjustments under the Equality Act 2010.

A payment obligation under a suspended possession order is satisfied when the consumer sends the payment on the required date, not when it clears in the lender's account, provided faster payment methods are used.

A lender is not required to keep former borrowers informed of the sales process after repossession, only to sell the property for the best price and inform them of the outcome.

A lender selling a property in possession must obtain independent valuations and use them as a guide when marketing, while seeking the best price achievable without holding out unrealistically long as interest accrues.

A lender must make proportionate affordability checks before approving credit, considering income, credit history, existing debts, and personal circumstances.

A lender must treat borrowers in financial hardship fairly while maintaining the fundamental principle that lenders have a right to receive payment of money owed, and must explore ways to resolve arrears through reasonable concessions such

A firm is not liable for errors that have not caused demonstrable detriment or been used incorrectly in external dealings.

A complaint that has already been considered by the ombudsman cannot be reconsidered merely because the consumer provides additional detail or disagrees with the previous outcome.

A lender must carry out proportionate affordability checks before lending, with the level of scrutiny dependent on factors such as loan amount, term, and borrower relationship stage.

A payment arrangement is only effective when formally agreed and confirmed in writing before the lender's stated deadline for enforcement action.

A lender must handle borrower contact details with care and offer appropriate remedies when unauthorized changes cause potential risk, even if no actual harm occurred.

A lender must consider all reasonable options before commencing legal action when a borrower is in financial difficulties.

A lender must complete reasonable and proportionate affordability checks before approving credit, but the nature of these checks depends on the amount, duration, costs, and individual circumstances of the borrower.

A lender may communicate clearly about arrears and the possibility of legal action without acting unfairly, even to vulnerable customers, provided the communication is fair, not misleading, and tailored where specific adjustments have been

A lender may issue formal demands and default a loan account when arrears remain unresolved and contractual payments have ceased, even if the borrower claims non-receipt of prior communications.

A lender may require communication by phone to discuss mortgage arrears and potential solutions, even when a borrower requests written-only communication under the Equality Act 2010.

A lender may commence legal action for possession after allowing reasonable time to remedy arrears, particularly where a borrower's circumstances have not improved and they have been unable to sell the property as intended.

A lender is not obliged to offer a new fixed rate mortgage product if affordability assessment shows the borrower cannot sustain the payments even with extended terms and lower rates.

A lender may pursue repossession proceedings when a borrower fails to maintain an agreed payment arrangement and refuses to provide evidence of affordability for alternative arrangements.

Complaints must be referred to the FOS within six months of the lender's final response, and where this deadline is missed, exceptional circumstances must exist to justify late referral.

Complaints must be referred to the ombudsman within six months of the business's final response, and this time limit is not disapplied merely because the complainant did not receive the response if it was correctly addressed.

The Financial Ombudsman Service lacks jurisdiction to consider complaints about the actions of Law of Property Act Receivers once appointed, as they act for the borrower not the lender, and the ombudsman must work within its defined remit a

Consumer Buy-to-Let (CBTL) mortgage protections do not apply retrospectively to mortgages originated before 2016 and do not convert automatically upon lender transfer.

A lender is entitled to pursue legal action for mortgage arrears where there is no agreement to waive payments or allow interest to roll-up, and the borrower has a responsibility to maintain contact if they do not hear back.

Lenders must provide clear information about how payment arrangements will affect credit files, presented in an accessible way considering any vulnerabilities, and must report accurate information to credit reference agencies.

A lender is entitled to expect repayment once a mortgage term ends and is not required to extend indefinitely without reasonable prospect of repayment, though it should show reasonable forbearance.