New mortgage regulations unveiled by FSA

MortgageFinders are busy reviewing the new proposals revealed yesterday by the Financial Services Authority (FSA) in a discussion document. The industry has until 30^th January to comment and MortgageFinders will be feeding into this debate. The body has set out a raft of new proposals for major reforms in the UK mortgage market, with the aim of ensuring that the sector works better for consumers and becomes more sustainable for market participants. Key features of the review include: imposing affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer's ability to pay; banning self certification mortgages through required verification of income; and banning arrears charges when a borrower is already repaying, thus ensuring firms do not profit from people in arrears.   While no caps were made in loan-to-values, loan-to-income or debt-to-income, the FSA said it would not rule out such changes if the initial proposals do not have a sufficient effect. Under the new rules, all mortgage advisers will be personally accountable to the FSA. "The mortgage market has seen extraordinary upheaval over the last 18 months and whilst it has worked well for the vast majority of borrowers, some have suffered great financial distress," said Jon Pain, FSA managing director of supervision. "We recognise that we need to bring about a step change in regulation and we need to act now to address the issues we have identified."