Shelter calls for 'national mortgage rescue scheme' to cut repossession rates

Published by Jon Land for 24dash.com in Housing and also in Bill Payments

Housing charity Shelter will today call on the Government and mortgage lenders to jointly fund a rescue package to help struggling homeowners facing repossession.

Treasury and housing ministers meet with the Council of Mortgage Lenders tomorrow (Tuesday) to talk about the housing crisis and the number of repossessions hitting homeowners.

But Shelter has demanded that the talks are about solving the crisis now and not about ‘passing the buck’ between Government and lenders.

The call comes as new figures by Shelter show repossessions could be 20 per cent higher than official figures by the Council for Mortgage Lenders (CML).

Shelter chief executive Adam Sampson said: “The Government bailed out Northern Rock, and now they and mortgage lenders must stop passing the buck between each other and take responsibility to help hard-pressed families in genuine need.

“The human misery of people being repossessed is devastating, with families uprooted from the security of their homes and left to fend for themselves.

“The Government has made billions of pounds from Stamp Duty and the lenders billions from mortgages. It’s now time to plough some of this money into helping save people from repossession.”

At present the CML estimates that 45,000 homeowners will be repossessed this year. Its calculations are based on people losing their homes after defaulting on ordinary first charge mortgages.

But new research, in the latest edition of the charity’s ROOF magazine, shows the number of cases of repossession involving second and third charges – loans secured against a property on top of the original mortgage pushes the total repossessions figure up by at least 20 per cent.

A CML spokeswoman admitted: “We only collect information on first charges. We don’t represent second charge lenders and so we don’t collect data on that. The poor state of knowledge about underlying business volumes makes it difficult to gauge the number of actual possessions outside the first charge market.”

Shelter spoke to six different debt experts who are seeing a huge rise in second and third charge repossession cases, meaning repossessions this year could top 54,000.

Shelter has launched a five point plan which it is urging the Government and lenders to adopt:

• A national mortgage rescue scheme for people facing repossession
• Reducing the time people have to wait for State help from nine to three months
• Immediate extra financial support for arrears and repossessions help and advice phone lines
• Ensure second and third charge lending is regulated by the Financial Service Authority (FSA)
• Give more powers to courts to insist lenders only repossess as the very last resort.

Mr Sampson added: “These measures would save tens of thousands of homeowners from being repossessed and should be adopted at tomorrow’s meeting.”

He said low-income homeowners were the worst affected as they had become the target of sub-prime lenders.

“Repossessions as a result of second loans can involve what seems like small amounts compared to a first mortgage. We’ve seen cases where someone has lost their home due to defaulting on a loan of less than £10,000 on their house.

“Once homeowners fall into difficulty the help available to them, is extremely limited. Because they are really stretched they are more likely to take on additional debt, and that’s when the problems really start.”