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MCOB 2.1A Regulated mortgage contracts: guidance on the meaning of “payment shortfall”


1A payment shortfall is defined in the Handbook as the total sum of periodic payments of capital or interest (or both) that have become due under the terms of a regulated mortgage contract but which, in breach of those terms, remains unpaid. For the purpose of that definition, capital includes any amounts rescheduled over the term of the loan. An amount that has been rescheduled for payment over the remaining term of the mortgage in accordance with the terms of the contract does not form part of a payment shortfall. If, following such rescheduling, the customer misses a recalculated periodic payment, the full amount of that missed payment becomes part of the customer’s payment shortfall. Such rescheduling may only be done in a way that is consistent with the FCA’s rules, including those in MCOB 13.