The sale of mortgages to ‘vulture funds’ must be made illegal, say campaigners

John Glen has written to bosses at UK Finance  Photo: Andrew Matthews/PA Wire
John Glen has written to bosses at UK Finance Photo: Andrew Matthews/PA Wire
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CAMPAIGNERS are calling on the Government to implement a “no consent, no sale” bill which would make it illegal to sell mortgages to inactive and unregulated lenders.

Rachel Neale, the UK Mortgage Prisoners’ lead campaigner, said that nobody’s home should be sold to a so-called “vulture” fund.

Speaking after a meeting with City Minister John Glen, Ms Neale said: “The threat of another financial crisis persistently looms. The knock-on effect of such crises is tumbling house prices, negative equity, loss of jobs and mass sell-off of people’s homes as vulture funds (are) set to profiteer.”

Britain’s mortgage prisoners are trapped into paying higher rates of interest to their borrower because they cannot meet affordability tests, brought in after the financial crisis, despite making payments on their current, higher interest rate mortgage.

This has caused particular problems for borrowers who have found their debt sold on to unregulated private equity firms that do not offer new mortgages or more affordable rates.

Ms Neale said her group wanted the Government to help all mortgage prisoners move their mortgages to active lenders.

She added: “To reduce the perceived risk to banks, the Government should also underwrite these loans.”

The City Minister John Glen has called on UK lenders to take swift action to ensure Britain’s mortgage prisoners gain access to better deals.

Kevin Hollinrake MP, of the All Party Parliamentary Group on Fair Business Banking (APPG), has warned that many lenders were doing nothing to help the mortgage prisoners, which is leaving many people in limbo.

Ms Neale added: “We want the Government to look into the individual circumstances of mortgage prisoners to understand the harm that has been caused by setting crippling interest rates 12 years ago and selling their homes to inactive and unregulated lenders. We want the Government to make reasonable recompense for the financial losses and harm they have suffered.

She continued: “ We want the Government to introduce legislation that supports mortgage prisoners who are also victims of financial abuse, whose abusive ex-partners refuse to sign for reduced rates or sales as a means to continue to control them, leaving victims struggling to support themselves and their children.”

“Finally, we would like the Government to appoint a charity to support the complex mental health and financial needs of mortgage prisoners. “

An HM Treasury spokesperson said: “We know that being unable to switch your mortgage can be stressful.

“That’s why we’ve introduced rules that make it easier for some customers to switch.

“We now want to see more people offered these new deals and have been working closely with banks on this important matter.”

The Economic Secretary wrote to UK Finance last week to urge the industry to do more to help those eligible to switch to a new deal, the spokesman added.

In his reply, Stephen Jones, the chief executive of UK Finance, said customers of inactive lenders and firms not authorised for new mortgage lending will be contacted by their mortgage administrator later this year.

The letter added: “At that point we anticipate there will be a range of products from a variety of lenders available.

“Customers will need support in understanding and making their choices,” said Mr Jones.