However the Council of Mortgage Lenders (CML) has slammed this report with its director general, Michael Coogan, saying that its "sensationalist tone risks throwing the baby out with the bathwater."
CAB believes that whilst governmental policy encouraging more people on lower incomes to buy their own homes can work, it will only do so if these fundamental issues are addressed.
However the CML has backed the CAB's calls for tougher enforcement of existing regulation; implementing controls on unregulated second charge lending and improving the overall regulation of brokers.
The CML also agrees that the government should improve the safety net available to borrowers - saying that the current system is 'woefully inadequate.'
"It is vital to recognise that the overwhelming majority of mortgage borrowers are meeting their payments in full and on time," said Coogan. "This report is in no way typical of the vast majority of cases where lenders work constructively with borrowers to get them over periods of financial difficulty and keep them in their homes."
In the 2006/07 financial year, the CAB dealt with over 57,000 problems concerning mortgage and secured loan arrears, an 11 per cent increase on the previous year.
Citizens Advice highlights that the hardline approach by lenders threatening court action, and escalating the debt by routinely piling on default charges, drives many to try and solve the problem by re-mortgaging or borrowing more in the form of secured loans, without realising they are putting themselves at even greater risk of losing their home by doing this.
The research also showed that many lenders and brokers failed to carry out basic checks to ensure that borrowers would be able to meet the increased payments when discounted or fixed rates ended, and some had not even checked that payments could be afforded from the outset.
