Unallocated mortgage rescue funds prompts landlord’s extension call

Published by 24publishing for 24dash.com in Housing and also in Communities, Local Government

Unallocated mortgage rescue funds has prompted a housing association – delivering the largest rescue programme in the UK – to call on the Government to extend the application deadline.

Radian received an allocation of £30.6m for 2012-14 to deliver 398 cases, however, it says there is still £115m unallocated from the initial £221m the Government budgeted for 2,500 completions.

The scheme enables homeowners facing severe financial difficulties to sell all or part of their property to a housing association and then rent it back, allowing them to stay in their own home without fear of repossession.

The lack of uptake in the Mortgage Rescue Scheme (MRS), Radian says, is disappointing as the number of repossessions is still high, with the Council of Mortgage Lenders predicting 45,000 this year.

Since 2009 Radian, which owns and manages over 17,000 homes across the South East, has completed 505 rescues – which accounts for nearly 13% of the entire national programme.

It believes misconceptions are to blame for the lack of registered providers delivering MRS with many not considering it in their remit to bail out homeowners in financial trouble. They also regard taking on vulnerable people, many in high levels of arrears, not good business practice, although the 260 MRS tenants that Radian took on in the first couple of years, are now in line with average levels of arrears, it says.

Whilst Radian is on target to hit its £30m allocation for the two years, it says it is clear the allocated budget will not be spent by 2014, and is calling on the Government to extend the application deadline.

Radian chief Lindsay Todd said: “When we introduced this scheme in May 2009, we quickly realised it was a service we needed to get involved with. We have now completed 505 rescues, which represents about 3% of our stock, so it is a significant investment. One of the keys to our success is the partnerships we enjoy. I want to pay tribute to those involved and invite further interest.”

When questioned on the lack of uptake from registered providers, the Homes and Communities Agency’s lead mortgage adviser, Graeme Hough, admitted that it should have made MRS mandatory for all RPs to deliver in order to qualify for other grants.