CeMAP Post-Completion Issues and Arrears Questions and Answers

Question 1

A client has missed two consecutive mortgage payments due to a short-term illness.
According to the FCA's MCOB 13 rules, which of the following actions is the most appropriate initial step for the lender to take?

Accepted Answer

Make reasonable efforts to reach an agreement with the client over a realistic repayment plan.

Answer

Commence immediate legal action to repossess the property.

Answer

Sell the mortgage debt to a third-party collection agency without informing the client.

Answer

Apply a significant penalty fee and demand the full arrears are cleared within 7 days.

Question 2

Following the repossession and sale of a property, the proceeds were insufficient to cover the outstanding mortgage balance, resulting in a shortfall. Which of the following statements is true regarding this shortfall debt?

Accepted Answer

The lender can pursue the borrower for the shortfall, which remains a legally enforceable debt.

Answer

The debt is automatically written off by the lender as a business loss.

Answer

The shortfall is automatically covered by a government-backed insurance scheme.

Answer

The lender must wait 12 months before they can contact the borrower about the shortfall.

Question 3

A client with a capital and interest mortgage is facing long-term financial hardship but has significant equity in their home. As a measure of forbearance, what is a common and viable option a lender might offer to make the monthly payments more manageable?

Accepted Answer

Offer to extend the remaining term of the mortgage.

Answer

Suggest the client take out an unsecured loan to cover the mortgage payments.

Answer

Insist on an immediate switch to a higher variable interest rate.

Answer

Demand the sale of the property within three months.

Question 4

A homeowner is two years into a five-year fixed-rate mortgage and wants to borrow an additional £30,000 for a significant home extension. They wish to avoid the Early Repayment Charge on their main mortgage. What is the most suitable option their current lender is likely to offer?

Accepted Answer

A further advance, potentially at a different interest rate, which runs alongside the existing mortgage.

Answer

A complete remortgage of the total required amount, which would trigger the ERC.

Answer

An unsecured personal loan, as secured borrowing is capped at the original amount.

Answer

A requirement that they wait until the end of the fixed-rate period before borrowing more.

Question 5

What is the primary nature of the government's Support for Mortgage Interest (SMI) scheme for eligible individuals on qualifying benefits?

Accepted Answer

A loan, secured against the property, which is used to help pay the mortgage interest and must be repaid.

Answer

A grant that pays off a portion of the mortgage capital.

Answer

A monthly benefit that does not need to be repaid.

Answer

A free mortgage advice and counselling service.

Question 6

Which of the following statements best describes a lender's primary obligation under MCOB 13 when dealing with a customer who has fallen into arrears?

Accepted Answer

Repossession must be treated as a last resort after all other reasonable options have been exhausted.

Answer

The lender must arrange a sale of the property within 6 months of the first missed payment.

Answer

The lender is required to offer the client a mortgage payment holiday for at least 12 months.

Answer

The account must be passed to a specialist debt collection agency immediately.

A client has missed two consecutive mortgage payments due to a short-term illness.According to the FCA's MCOB 13 rules, which of the following actions is the most appropriate initial step for the lender to take?

A client has missed two consecutive mortgage payments due to a short-term illness.
According to the FCA's MCOB 13 rules, which of the following actions is the most appropriate initial step for the lender to take?