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Sarah UKFast | Account Manager

Mortgage arrears admin charges should be waived

Parent company of Baines and Ernst, The Paymex Group, one the UK's largest commercial providers of financial solutions products, has seen a dramatic increase in the number of new customers who have mortgage arrears. Commenting on the CML arrears and repossession figures, Nick Pearson, External Affairs Director at Paymex, said "Over the last 12 months Paymex has seen a 36% increase in the number of new customers who have mortgage arrears. The average level of arrears has also increased over the year by 6% to £1890. We anticipate that the 45,000 mortgage repossessions in 2008 is likely to be the calm before the storm as repossession figures increase in 2009. It is entirely possible that mortgage repossession in 2009 could reach 100,000." Mr Pearson also noted that "We are particularly concerned about the mortgage arrears administration charges applied by many lenders to accounts in arrears, which can be as high as £50 per month. In our view these charges are out of all proportion to the costs incurred by the lenders in administering these accounts. They may also increase the risk of borrowers being repossessed." "Although the majority of lenders stop these charges once we become involved, the fact remains that these charges can significantly undermine borrowers attempts to clear arrears as quickly as possible and may increase the likelihood of their home being repossessed. In our view, for the foreseeable future lenders should agree to waive all administration charges and interest on arrears for all accounts." Pearson also commented that "We are pleased to report that over the last 3 months or so most mortgage lenders have adopted a more realistic and sensitive approach to their handling of mortgage arrears cases. The majority of mainstream lenders now allow repayment of arrears over a more reasonable time period than previously." "We fully endorse the comments made by the Prime Minister last week in relation to lenders "at the bottom end of the market." Regrettably there are some smaller lenders, operating particularly in the secured lending/2nd mortgage market, who are still not willing to allow borrowers to clear their arrears over anything other than a 3-6 month period and these lenders may well account for a disproportionate number of repossessions over the next 12 months." Pearson continued "Despite the current low interest rates, we anticipate that as unemployment rises, the number of people seeking mortgage arrears advice from Paymex will continue to increase. Clients who contact Paymex for advice also have substantial unsecured debts averaging some £40,000 in addition to their mortgage arrears and they benefit greatly from our holistic, best advice approach to dealing with their debt problems."

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