The Council of Mortgage Lenders will use its annual conference today to plea for an honest assessment of the challenges facing the lending industry.
The CML agrees with Mervyn King that the most pressing problem now is to get institutions lending again. But it says there are inherent conflicts in demands to improve the flow of funding, be more lenient with borrowers and improve the capital position of firms – all at the same time – and politicians of all parties should acknowledge it.
The CML says it wants to join the Bank of England, the Financial Services Authority and the industry itself in delivering a realistic assessment of the policy issues and conflicts confronting us.
The CML says the debate about how long a lender should extend forbearance to a borrower in difficulty intensified this week.
In a large number of cases, borrowers are already able to remain in their home for six months or longer while they work with the lender on implementing a plan to pay off their arrears.
But in cases where there is little or no equity in the property – and no chance of the borrower getting back on his feet in a short period – it may be in the best interests of the homeowner to move towards selling the property, rather than allowing arrears to continue to build up over a long period.