MOGI 2.11 Arrears and repossessions (MCOB 13)

This section of the Guide explains the rules on arrears and repossessions in chapter 13 of MCOB (MCOB 13). These rules apply to mortgage lenders and mortgage administrators, but if you undertake any debt collection work the chapter may apply to you.

The rules require firms to deal fairly with consumers in arrears, facing repossession or who have a shortfall debt after the sale of a property, for example, after it has been repossessed. The firm must operate in line with a written arrears policy which must be agreed by its governing body (for example your board of directors, or if you are a sole trader, the sole trader). The rules set out what we consider to be fair treatment of consumers in these circumstances.

The rules require firms to give borrowers information about the state of their mortgage as soon as possible (and no later than 15 business days) after they first go into arrears. The term 'arrears' has a special meaning in the rules (see Appendix A). This means that there are trigger points for when the firm must provide the information.

The firm must also send the borrower a statement at least once a quarter where the payment shortfall is attracting charges. This includes when the arrears are attracting interest at a different rate to the main mortgage.