Charging borrowers who fall behind on mortgage payments have been deemed 'unfair' with experts calling for fees to be waived.
Fees for mortgage arrears should be waived in light of the current economic climate, one debt expert has said. Nick Pearson, a debt adviser from Paymex, suggests that charging for missed mortgage payments increases the risk of repossession.
Speaking to the BBC Radio 4's Money Box programme this weekend, Mr Pearson said that any work from lenders to avoid repossession is potentially undermined by arrears charges.
"We think the charges should be waived in the current crisis because they will undermine efforts to keep as many people in their homes as possible," he said in reference to a case he is currently working on where a borrower faced administration charges of £30 per month for every mortgage payment missed.
Arrears charges are generally stopped once borrowers arrange a repayment plan with lenders. However, Citizens Advice told the programme that this is not always the case and on some occasions customers have seen arrears charges continue even after an agreement is reached.
"We think it's very unfair that people in financial difficulty are being charged just for being in arrears," commented Citizens Advice policy adviser Peter Tutton. "It's particularly unfair when people have reached an agreement with their lender."
Recent figures from the Council of Mortgage Lenders revealed that 40,000 houses were reposed in 2008 – which was and increase of 13,000 on 2007, but 5,000 fewer than the organisation had originally predicted.
