Lenders to limit arrears chase

The Council of Mortgage Lenders (CML) yesterday announced that its members will cease chasing loan arrears on repossession cases over six years old.

Under the old system, cases up to 12 years old were being pursued leading to claims from the National Association of Citizens' Advice Bureaux (Nacab) that the problem had reached crisis point. Advisers at the bureaux were spending up to 25% of their working time helping those being hunted down by lenders, even where they had voluntarily surrendered the keys to their property.

The new voluntary code to be adopted by CML members will take effect from February 11. Anyone whose property was taken into possession and sold more than six years ago and has not already been contacted by their lender will not be asked to make up any shortfall. This will free many of those who became victims of negative equity in the 1980s when the property market dived.

The CML said the rule was introduced as a direct result of consultations with Nacab and the Federation of Independent Advice Centres.

Liz Phelps, a policy officer at Nacab, said it was delighted by the move but that it would still press for primary legislation to ensure equal treatment for all borrowers. "There will be some lenders who do not follow the CML line and there will be some lenders who are not members of the CML."

Nacab is also putting pressure on lenders to moderate their treatment of borrowers in arrears who have already been contacted.