RBS and Natwest have committed to giving their customers a six month grace period if they are experiencing difficulties keeping up with their mortgage payments.
Repossession proceedings will not be initiated for a full six months after Royal Bank of Scotland mortgage
and Natwest mortgage
customers first fall into arrears, giving them ample opportunity to seek advice before action is taken against them.
The pledge, which applies to all customers and will remain in place at least until the end of 2009, will give customers of RBS and Natwest, which it owns, "a much-needed financial breathing space" and help to ease the pressure being felt by those struggling to keep up with monthly repayments, giving them more time to work with their bank towards a viable solution.
The bank says that it already works with their mortgage
customers to understand their circumstances and offer all other alternatives to repossession, such as mortgage payment holidays
, extended terms and reduced monthly payments. It has also trained its staff to provide helpful and practical advice to customers.
"We fully understand that one of the biggest worries facing homeowners in financial difficulty is the thought of losing their home, this is especially true given the current economic climate." said Craig Donaldson, managing director of retail banking, announcing the move.
"We hope that our commitment will reassure our customers that we are committed to providing them with enough time, professional support and the assistance they need to resolve their financial difficulties."
"The repossession route is always a last resort and one where all other reasonable attempts to resolve the position have failed and one that we look to avoid where at all possible."
The announcement from RBS and Natwest follows a request from the FSA to ensure that mortgage lenders
treat their customers fairly when it comes to arrears and repossessions.
British Bankers' Association Chief Executive Angela Knight said of the FSA's request: "Banks are by far the biggest providers of mortgages and are working hard to ensure as many of their customers as possible are protected against the downturn. Repossession is the absolute final step for a bank, once all other options to resolve the customer's financial problems have been exhausted."
It is thought that the announcement from RBS will put pressure on other lenders to offer a similar guarantee to help their customers to come out the other side of the credit crunch with their homes.
Banks are facing close scrutiny from the Government and regulatory bodies to ensure they are helping the consumer as the financial system is injected with billions of pounds of taxpayers money.
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