Treasury Committee launches inquiry into mortgage arrears

Continuing its examination of the ramifications of the banking crisis, the Treasury Committee has decided to undertake a short inquiry into mortgage arrears and access to mortgage finance.

The inquiry will focus on households affected by the recession and struggling with mortgage arrears and/or at risk of repossession, as well as problems in accessing finance for first time buyers. 

The Committee is seeking evidence on the current number of homeowners in mortgage arrears and forecasts for the trend in mortgage arrears over the medium-term.

It wants to know the number and characteristics of homeowners who have had their properties repossessed, and who are having their homes repossessed, as well as forecasts for the trend in repossession levels over the medium-term.

The way mortgage lenders treat borrowers in arrears or at risk of repossession, is of interest to the Committee, especially financial institutions specialising in sub-prime lending.

It will look at the adherence to, and the effectiveness of, Financial Services Authority rules and guidance for mortgage lenders on repossession policy and treatment of consumers in arrears, as well as the FSA's regulatory approach in this area.

Adherence to, and the effectiveness of, codes of conduct, protocols and statements of good practice issued by industry bodies in this area will also be investigated.

The Committee will look at issues of concern around the operation of sale and lease-back schemes.

It is also interested in the success of those Government schemes in existence before the financial crisis to support homeowners facing difficulties with mortgage payments and/or at risk of repossession, as well as the effectiveness of initiatives introduced since the financial crisis began.

And finally, the impact of the credit crunch on access to mortgage finance and the terms on which such finance is offered for first time homebuyers.