Mortgage lenders 'too fast to repossess' homes
Lenders have failed to exhaust all possible ways of keeping people in their homes in a third of repossession cases, a report by charities has said.Mortgage providers are expected to use repossession only as a last resort under legal rules.
But judges did not always step in to ensure the protocol was followed, said Advice UK, Citizens Advice and Shelter.
The charities did point out that some support packages for struggling homeowners were having an effect.
Low interest rates have also held down the number of homes being repossessed this year.
In November, the Council of Mortgage Lenders (CML) cut its forecast for the number of homes likely to be repossessed this year to 48,000.
Originally, the CML thought that repossessions would rise steeply in the course of 2009 to about 75,000.
Government support
The charities said that sub-prime lenders, who specialised in dealing with riskier borrowers, tended to be taking court action earlier than mainstream lenders.
The government offers some help with paying mortgage interest bills under the Support for Mortgage Interest (SMI) scheme.
This is aimed at helping people who have lost their jobs. It kicks in 13 weeks after a claim and operates for mortgages of up to £200,000.
In the pre-Budget report, Chancellor Alistair Darling announced that the standard interest rate of 6.08% for SMI would be maintained for another six months.
However, the charities claimed that many borrowers who ended up in court were paying higher monthly interest rates than would be covered by SMI payments. They also argued that there was some evidence of shortfall in take-up of this benefit.
"Government, lenders and regulators have taken swift and welcome action to protect people affected by the recession from losing their homes unnecessarily," said David Harker, chief executive of Citizens Advice.
"Our advisers see evidence of these initiatives working in many cases, but our research makes it clear that the safeguards already in place to protect people from avoidable homelessness need to be strengthened if they are to succeed in stemming the rising tide of repossessions."
The report was based on 452 people who were given last-minute help by one of these charities' advisers at courts on the day of their repossession hearing.
Extra help
The report coincided with an announcement that the government would provide extra funding for debt advice agencies and help desks at 80 courts.
Last-gasp advice was offered in 36,000 cases at court desks over the past year, the Department of Communities and Local Government (DCLG) said.
Mortgage lenders also have to tell councils when repossession action has started against residents, so councils have the opportunity to step in to offer advice.
"I welcome the report from Citizens Advice and Shelter. The people who work in these agencies are, in many respects, the unsung heroes of our campaign to help people avoid repossession," said Housing Minister John Healey.
"I am also deeply concerned that a disproportionate number of repossession cases come from specialist lenders. So tougher regulations next year from the Financial Services Authority will mean all borrowers are treated with the same tolerance and understanding, regardless of who their lender is.
"These measures combined will ensure that in all cases, repossession remains the last resort."
FH Debt Solutions can help you get back in control of your debts. Our highly trained advisors are always happy to help. Our Debt Management Plans & IVAs have already helped thousands of people on their way to becoming debt free.
Call Our Debt Management Helpline Today On 0800 389 6339
FH Debt Solutions are licensed Debt Adjusters and are Data Protection registered. We have partnerships with Licensed Insolvency Practitioners, Credit Brokers and Mortgage Brokers.
There are a large number of companies out there offering services but charging percentage fees on a month by month basis. These fees can be 15% of you overall payment. E.G. payment is £300 their fee is £45. FH Debt Solutions believes in being realistic with charges. We have built up strong relationships with creditors over the years that have helped give our customers a quicker and more effective service. Fees are based on work load, not the amount of debt you owe.
FH Debt Solutions is a partnership. The partners bring many years of experience in the Debt Management field. By working for other Debt Management companies, the partners found gaps in service, reliability, customer satisfaction and overpricing. Using our knowledge and listening to what customers want, FH Debt Solutions was formed.
All customers have an appointed member of staff to deal with their case from start to end. This helps us keep our service high and queries low.
Being in debt is stressful. FH Debt Solutions gives its customers a sympathetic, professional and stress free alternative to their debt problems, and with the office always open, you can call at a time that's convenient to you.
