Repossession must remain the last resort

Housing Minister John Healey has stepped up Government efforts to help struggling homeowners get a grip on their finances and avoid the trauma of repossession, by extending a campaign offering impartial free advice to homeowners, tightening rules to ensure repossession is always the last resort and boosting the backstop help for those families most in need.

Figures published from the Council of Mortgage Lenders show that there were 11,700 repossessions over the past three months, which although a small increase on the previous quarter, represents 8% fewer people losing their homes than in the first three months of 2009.

The Council of Mortgage Lenders said that they are revising down their forecast on the numbers of repossessions this year from 65,000 to 48,000 - in recognition of lender forbearance, Government measures and the beneficial effect of continuing low interest rates which are helping most borrowers facing difficulty to keep their homes.

The CML have also revised down their forecast on the numbers of homeowners expected to be in arrears of more than 2.5 per cent of their mortgage balance this year – from 360,000 to 195,000, and will only rise modestly in 2010 to 205,000 households.

New figures also published show that since the launch of the Mortgage Rescue Scheme in January, nearly 11,000 households have received free advice from their local authority – of which two thirds have been helped through tailored information, or referral to their lender or independent money adviser.

With the risk of repossessions staying high throughout next year, Mr Healey has stepped up support for struggling homeowners by extending into 2010 a Government campaign offering free and impartial help and advice both online and over the phone.

The rules have also been tightened so mortgage lenders must inform councils when repossession action is started against residents in their local area, allowing councils able to step in and offer advice and help for those most in need. There are also tougher tests for lenders in courts, with a new checklist in place so they must prove they have exhausted every possible option before taking repossession action.

The Financial Services Authority has also announced plans to put in place tougher protections for homeowners, so they can expect minimum standards of tolerance and understanding from lenders if they go into mortgage arrears, and won’t face excessive and unfair charges as they try to make repayments.

The tighter rules will also mean lenders will have to consider if borrowers can benefit from the Government schemes available – including help with mortgage interest payments, the Homeowner Mortgage Support Scheme and the Mortgage Rescue Scheme.

Extended backstop help for the most vulnerable families means they can be helped more quickly through the Mortgage Rescue Scheme now offered by all councils, and there will soon be three times more housing associations providing the scheme than when it was first launched. And a new fast-track team is in place to speed up applications and decisions.