Homeowner and Debtor Protection (Scotland) Act 2010Kennedy FosterCouncil of Mortgage Lenders

What I have been asked to cover• What changes will lenders be making

their repossession practice?• Transition arrangements• What are the key issues for lenders in

ensuring smooth implementation of the Act?

Mortgage Repossessions UK level2007 2008 2009 2010

(forecast)

25,900 40,000 47,700 39,000

0.22% 0.34% 0.42% 0.34%

Mortgage Repossession Outlook• Repossession levels below 1990s level---low interest

rates and lender forbearance• However all is not healthy:

– Seeing little reduction in number of borrowers with more than 10% of balance outstanding

– Interest rates likely to increase– Prospect of higher unemployment– Public expenditure cuts

• Reduced Government support for ISM1• Mortgage Rescue Schemes• Debt Advice funding

– Stigma over Mortgage Payment Protection

What changes will lenders be making in their repossession practice?• MCOB 13 and TCF• Evidence to Court that they have

complied with MCOB 13 and TCF—the Pre-Action requirements

• Sheriff Court Rules require lodging of a checklist by lender’s Agent to show compliance with Pre-Action requirements

Pre-action requirements

Lenders must:• Provide clear information• Notify amount due including any arrears and

charges regarding late payment• Detail clearly any other reason for default• Make reasonable efforts to agree with

customer proposals for dealing with arrears• Notify sources of advice and assistance• Encourage contact with Local Authority

Pre-action Requirements

Lender should not be taking possession where customer taking steps which are likely to:

• result in payment of arrears or whole mortgage within reasonable time

• clear within a reasonable time any other obligation under the mortgage which is in default

Transition Arrangements

• Customer defaults pre 30 September but no possession action taken to post 30 September new procedures apply

• Lender applies for S24 order pre 30 September old procedure applies—Mortgage Rights Act continues to apply

• Lender serves notice of default or calling up notice pre 30 September old procedure applies but if defended or lender has to raise Section 24 or ejection proceedings pre action requirements apply subject to one small modification

Key issues for lenders

• Lateness of Sheriff Court Rules• Entitled residents—have to specify in

initial writ• Ability of Court System to cope with

increased workload• Possession cases taking longer• Scotland now like England and Wales

but no suspended possession orders