Mortgage holidays could end in lawsuits

Banks have warned Gordon Brown that the £1 billion scheme to underwrite mortgage holidays for cash-strapped homeowners could result in a wave of lawsuits if house prices continue to fall. Homeowners will have to make higher payments once the holiday ends, or face negative equity, leading to fears that banks could be sued by homeowners whose properties had plummeted in value. Treasury officials believe that such fears can be allayed by legal warnings and an insistence that anyone taking up the scheme must take independent advice.