Sell homes to pay off debt, says CML

25 October 2010 | By Natalie Thomas

The Council of Mortgage Lenders says the government should encourage those in financial difficulty to sell their property in a bid to avoid long-term arrears.

The trade body made a series of recommendations along with housing charity Shelter to minimise the number of repossessions.

It wants the Department of Communities and Local Government working group to look at instances in which it might be advisable to recommend that owners should consider selling their homes voluntarily.

In its latest issue of News & Views, the CML says: “Borrowers must not be pushed into this position, but we believe in some cases a voluntary sale may be in their best interests, enabling borrowers to avoid building up long-term arrears and eroding equity when owner-occupation is no longer a sustainable option.”

Bill Warren, managing director of Bill Warren Compliance, says: “The CML, Shelter and others seem to have missed a big opportunity to help borrowers in serious trouble.

“Under sale-and-rent-back home owners can sell and rent back their property, hopefully paying off their debts. Surely this is better than selling and looking for social housing.”

Last Friday the Association of Mortgage Intermediaries, the Intermediary Mortgage Lenders Association and the CML released their Working Together guide, outlining the responsibilities brokers and lenders should take in the mortgage sales process.

It says accountability for mortgage affordability lies with lenders, al-though brokers are responsible for establishing affordability to ensure the mortgage is appropriate and in accordance with lenders’ criteria.

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