Figures to December 2009 show CHL experienced a 27% reduction in early arrears (less than three months) and a 31% reduction in late arrears (over three months) since a peak in February last year. The lender expects the trend to continue for the foreseeable future with all indicators pointing towards arrears reducing back to 2008 levels over the summer.
CHL puts the improving situation down to a very pro-active approach from an extremely experienced team focussed on providing practicable solutions that benefit both borrowers and CHL. During the ‘boom years’ CHL adopted a cautious underwriting approach which has protected the book from many of the problems suffered by other lenders, particularly in the buy-to-let market.
Ahead of FSA guidance issued last year, CHL continues to deploy forbearance strategies and only considers repossession as a last resort.
Bob Young, Managing Director of CHL Mortgages, commented:
“We are pleased to announce a marked reduction in our overall arrears position which would not have been possible if it wasn’t for the pro-active and decisive action taken more than a year ago. At that time we reviewed and changed our arrears and recoveries strategies, strengthening our Specialist Servicing Team and establishing a Field Team to encourage customer engagements.
"It was these measures, coupled with a cautious underwriting and credit scoring strategy in the mid-2000’s and the current lower interest rate environment, which have worked in our favour. We believe we are now reaping the rewards from a motivated team, not reluctant to embrace change and not threatened by any challenge.
“Our latest figures show a major drop-off from previous peaks on all our key performance indicators and we fully expect this trend to continue in 2010. We have even seen a continuation of our arrears numbers continuing to drop over the recent Christmas period which is further good news, particularly at a time when you might expect some borrowers to use their mortgage payment money for other expenses.
"This appears not to have been the case and, if the economic recovery does not run out of steam, we expect CHL’s overall arrears to reduce by 15-20% in 2010, leaving us in good shape to capitalise on future opportunities."
