The news that the British Banker’s Association has introduced new guidelines to help borrowers defaulting on mortgages was welcomed by consumer credit information expert, Equifax.
Previously, it has been the borrower’s responsibility to contact lenders if they were having trouble paying their debts. However, the new BBA guidance places the onus on banks to monitor consumers for signs of struggling and to contact individuals to help them resolve the issue. The new initiative aims to put the onus on lenders to take action to help borrowers who could be getting into financial difficulties.
“There are concerns that the interest rate hikes of 2007, combined with some 1.5 million borrowers coming to the end of fixed term rates will leave many homeowners in dire straits, as their monthly payments go up,” says Neil Munroe, external affairs director, Equifax. “We are delighted, therefore, to see the banking industry taking significant steps to protect borrowers. Heavily indebted borrowers are most likely to suffer from the impact of rising interest rates, leaving themselves vulnerable to repossession.”
The BBA guidelines expect banks to look for key signs of indebtedness, such as bounced cheques for utility bills, missed repayments on loans or people falling further into their overdrafts and when these are identified to take action and help borrowers create a plan to regain control of their finances.
Equifax’s Risk Navigator and Insolvency Navigator credit scoring tools offer banks account management capabilities to help them spot borrowers in danger of defaulting and or becoming insolvent. With access to information on over 45 million consumers, including CCJs and credit searches, and over 300 million consumer credit agreements and payment performance data, Equifax’s risk scoring solutions can help banks and other lenders monitor the on-going performance of their customers, and provide a highly effective customer account management tool.
“These new guidelines will heighten the need for banks to undertake account monitoring,” says Munroe. “Banks need to ensure they have the right systems in place to be able to meet the new guidelines and help borrowers avoid the threat of mortgage defaults and repossession, and we believe Equifax Risk Navigator can provide a very effective tool to achieve this.”