Society to opt out of mortgage scheme

AN East Anglian building society is to opt out of Government's Homeowners Mortgage Support Scheme after branding the conditions with which it would have to comply as “overly burdensome”.

AN East Anglian building society is to opt out of Government's Homeowners Mortgage Support Scheme after branding the conditions with which it would have to comply as “overly burdensome”.

The Saffron Building Society, which is based in Saffron Walden, said it fully supported the ethos of the scheme, which is designed to ensure that householders who suffer temporary loss of income during the recession are able to remain in their homes.

However, the society said its had decided not to sign up to the scheme, on the grounds that its own management process for borrowers in difficulty already supported vulnerable customers on a case-by-case basis.

Chief executive Andy Golding said: “We strongly support the principles of any scheme which aims to help borrowers who suffer difficulties paying their mortgage, due to unavoidable temporary changes in their financial circumstances.

“However, having reviewed the scheme in depth, we do not feel that it will improve what we do for our members should they find themselves in difficulty and we have concerns that the reporting and administration requirements under the scheme are overly burdensome, especially as we do not believe that this scheme is likely to provide any additional help to our borrowers.”

Households eligible under the HMSS revert to an interest-only mortgage and maintain a reduced level of payment, with the Government then guaranteeing the lender against a proportion of any loss incurred through the deferred payments should the borrower eventually default and the property be repossessed.

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However, Mr Golding added: “As a regional lender, with an expectation that very few of our borrowers would qualify for the scheme, we feel we would better serve our members by maintaining our excellent current processes.

“That isn't to say that we believe the basis of the scheme to be wrong, in fact I commit that Saffron will at least do all the things the scheme suggests for relevant borrowers in difficulty.

“But our duty is to serve our entire membership in a fair and appropriate way at a time when they need us, regardless of whether or not they qualify under a national scheme.

“In addition, opting out of the scheme allows us to continue operating independently of Government and taxpayers' assistance - as a well-run, risk-averse business, we are proud to champion our self-sufficiency.

“Ultimately our borrowers are comprehensively supported by the core values of the mutual model, and we believe that this justifies opting out of the HMSS.”