New homeowners mortgage support begins

Published	21 April 2009

New support to help homeowners remain in their homes if they fall on difficult times will be available from today, announced Housing Minister Margaret Beckett.

Homeowners Mortgage Support (HMS) will enable eligible borrowers who suffer a temporary loss of income to cut their mortgage interest payments for up to two years to help them get back on track with their finances.

This new support will be available throughout the UK and builds on a range of measures the Government has already put in place to ensure that repossession is always a last resort.

From today, the following major high street lenders will offer their customers HMS: Lloyds Bank Group (which includes Halifax, Cheltenham and Gloucester and Bank of Scotland), Northern Rock, the Royal Bank of Scotland (which includes NatWest and Ulster Bank, the One account, First Active (UK) and Direct Line), Bradford and Bingley, including Mortgage Express, Cumberland Building Society, and the National Australia Bank Group (which includes Clydesdale and Yorkshire Bank).

A number of other banks, building societies and specialist lenders have also confirmed today that they will offer their customers HMS as soon as possible. These are Bank of Ireland (which includes Bristol and West), GMAC, GE Money, Kensington Mortgages, the Post Office and Standard Life Bank.

Lenders offering HMS will have the security of a Government guarantee if the borrower defaults.

At the same time, four other high street lenders, Barclays (including First Plus), HSBC, Nationwide and Santander (including Abbey and Alliance and Leicester) have all confirmed today they will offer comparable arrangements to HMS to their customers, while opting not to take up the Government guarantee. Customers of these institutions experiencing a reduction in income and willing to make regular monthly payments will receive a similar level of support and be encouraged to seek independent money advice.

As a result of today's announcement, lenders covering more than 80 per cent of the mortgage market will now be providing enhanced support to their customers. Borrowers will receive independent money advice as part of these changes to help them make the right decisions for their circumstances.

Margaret Beckett said:

"We know that many families are worried about how to pay the mortgage right now, and we're determined to ensure there is real help available for them.

"Today's news is a result of excellent co-operation between Government, lenders, and money advice services.

"On top of the range of measures we've already put in place, this new support will help borrowers who just need a bit more time to get themselves back on their feet.

"The clear message to borrowers is to contact your lender straight away if you're concerned about how to pay the mortgage as often a solution can be found."

The Government will continue to work with smaller lenders to encourage as many as possible to offer HMS or comparable arrangements for their customers in the future. HMS does not provide consumers with a payment holiday. The mortgage interest payments that have been deferred will eventually have to be paid back.

The enhanced support agreed by lenders today will be underpinned by FSA regulation and the Financial Services Ombudsman to ensure customers are treated fairly.

Since the autumn, the Government has put in place a range of measures to give more protection to households at risk of repossession. This includes a new pre-court action protocol for all the main high street lenders, quicker and more extensive support to home owners who have lost their job, a scheme to enable the most vulnerable home owners to stay in their homes, and a major extension of free debt and legal advice.

Statistics released today show that, on average, each month more than 2,800 people in England and Wales at risk of losing their home benefit from free, immediate legal advice and representation in Court, thanks to the Housing Possession Court Duty Scheme, run by the Legal Services Commission.

Duty advisers are available on days when repossession cases are heard and are available to anyone, regardless of their income, who has a hearing listed on that day. Almost 34,000 people across England and Wales used this service last year, an increase of more than 5,000 compared to 2007.

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Notes to editors

1. Borrowers who are interested in applying for Homeowners Mortgage Support, or finding out about comparable arrangements should contact their lender in their first instance to check their eligibility.

2. For lenders offering HMS with the Government guarantee, the borrower must:

Have bought their home before 1st December 2008
Be an owner-occupier -the scheme is not open to buy-to-let or investment properties
Have an outstanding mortgage of less than £400,000 and savings of less than £16,000
Have a regular household income and should be able to make a minimum contribution of 30 per cent of the total interest payment
Have talked through other options with their lender and have been making regular payments for at least five months
Have sought independent money advice

3. More information for consumers on Homeowners Mortgage Support can be found at www.direct.gov.uk/hms (external link).

4. The Government has put in place a comprehensive package of support to ensure that repossession is always a last resort.

This includes:

Free legal and debt advice with £25 million invested to expand these services, including an additional £2.5 million to support HMS
A new Pre-Action Protocol that requires lenders to prove that they have exhausted all options before seeking repossession through the courts
Agreeing with lenders a three month minimum waiting period before lenders seek to repossess
More help for people who lose their jobs by reducing the waiting time for Support for Mortgage interest from 39 weeks to 13 weeks
A £200 million Mortgage Rescue Scheme to help the most vulnerable households avoid repossession

5. Money advisers that have been trained to deliver Homeowners Mortgage Support advice include: Citizens Advice, Shelter, CCCS, National DebtLine and Payplan.

6. To find out where you can get HMS advice in your area from Citizen's Advice or Shelter please follow the links below.

Shelter
http://england.shelter.org.uk/get_advice/advice_services_directory (external link)

Citizen's Advice
http://www.citizensadvice.org.uk (external link).