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Second charge mortgages are Loans secured on a property that is already subject to a first ranking charge mortgage. This Practice Note considers the second charge mortgage regime including (i) the transfer of second charge mortgages to the Financial Conduct Authority (FCA) regulated mortgage regime (ii) the treatment of the back book of second charge mortgages that existed before the implementation of the Mortgage Credit Directive (2014/17/EU) (MCD) on 21 March 2016, and (iii) the rules that apply to second charge regulated mortgage contracts (RMCs) entered into on or after 21 March 2016.
Authorisation requirements for second charge mortgage business
Any business carrying out a regulated activity must be authorised under the Financial Services and Markets Act 2000 (FSMA 2000), unless they benefit from an exemption or an exclusion. This includes lenders, administrators and intermediaries carrying on second charge mortgage activities.
For more information on the authorisation process, see Practice Note: FCA and PRA authorisation under Part 4A of FSMA 2000.
Second charge mortgages defined
A regulated second charge mortgage is a loan secured on a Borrower’s property
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