The Intermediary Mortgage Lenders Association (IMLA) accepts that some lenders may have some way to go, but draws attention to the changes that have already been made in recent months and to the very severe funding pressures most specialist lenders face.
The non deposit taking lenders who together constitute a significant part of the specialist market have been excluded from all the government programmes aimed at easing funding pressures.
Peter Williams, executive director of IMLA commented: "Helping customers in difficulty is a top priority for all lenders whether mainstream or specialist. It is a process all lenders take very seriously and the FSA review recognises that strenuous efforts are being made to improve practices and procedures. In recent months lenders have had to deal with both increased numbers of arrears and new procedures including the new court pre-action protocol, the home owner mortgage support scheme and the mortgage rescue scheme. All this takes time and the FSA acknowledges that it is still bedding in.
"However the FSA must recognise that there is considerable strain on non-deposit taking lenders in general and inactive lenders specifically at the moment. These are the very institutions which have been neglected by the government credit guarantee schemes because they do not take retail deposits. A large number of lenders, and consequently the borrowers for whom they are responsible, have been left to struggle un-aided.
"The government should not ignore the detrimental effect that a constricted mortgage market is having. The number of borrowers falling into the non-conforming sector is growing fast, reflecting the contraction in the prime market. Specialist lenders have been central to this market and as long as the securitisation market remains closed and the government continues to deny them alternative finance, non-deposit taking lenders have less capacity for action - including helping struggling borrowers onto more appropriate products.
"Specialist lenders and servicers are doing their level best to help borrowers stay in their homes but both the FSA and the government need to recognise their role in the wider funding problem which continues to exist."
