Help at every step to avoid repossessions

Published	14 August 2009

Ministers have today urged homeowners concerned about their mortgage payments to seek immediate help from their lenders and the Government to avoid repossession.

Hundreds of thousands of families are benefiting from a comprehensive range of support available for people facing the threat of repossession - from free debt advice and greater understanding from lenders, to direct help from the Government for homeowners who have lost their jobs or suffered a sudden drop in income.

New figures from the Ministry of Justice show that lenders made 26,215 claims for mortgage possession between April and June this year, 32 per cent lower than during the same period in 2008 and 14 per cent higher than the first quarter of this year.

19,064 possession claims led to orders being granted by the courts - 31 per cent lower than the second quarter of 2008, and one per cent lower than in the first quarter of this year.

These figures follow a large drop in possessions during the first quarter of 2009 with the introduction of the Mortgage Pre-Action Protocol.

Of the mortgage possession claims that led to orders, 46 per cent were suspended.

Separate figures published today from the Council of Mortgage Lenders show that of the 11,400 repossessions over the past three months, a 10 per cent drop since the last quarter and 26 per cent were voluntary repossessions - that is, homeowners who have fallen into mortgage arrears but rather than seeking help available from their lender or the Government, have just handed in the keys or abandoned their home.

The range of support on offer from Government and lenders could have helped some of these families to stay in their homes.

In a matter of weeks, a new central team will be in place to fast track applications for help through the Mortgage Rescue Scheme, and later this year the Government will launch a new information campaign to encourage more households who could be helped by their lender or be eligible for support to take action and avoid repossession.

Steps have been taken to ensure help is available at every stage of the repossession process. This includes:

Action on advice: The Government is investing £130m in providing free face-to-face debt advice services between 2006 and 2011, and over the past year more than 100,000 families have received information and advice about their mortgages from councils and Citizens Advice Bureaux
Action on lenders: We have taken action so homeowners are treated fairly with tolerance and understanding from lenders for those in mortgage arrears - 116,000 struggling households are now benefiting from special arrangements agreed with their lender
Action in the courts: Lenders must prove they have exhausted every possible option before applying for a repossession order. Government has continued to put funding into Court Desks offering free, on-the-day legal advice and representation for those threatened with repossession. CLG recently doubled the extra funding to support this service. There is now universal access to this service for people attending repossession hearings at county courts in England. Even on the day of a repossession hearing, around four in five repossessions can still be stopped if the households attend court and access free advice
Action to provide direct support: Through special Government schemes like Support for Mortgage Interest and Homeowners Mortgage Support over 200,000 families are now getting help with their mortgage interest payments - with another 88,000 expected to benefit over the next two years. And for the most vulnerable households facing the immediate threat of repossession, there is the safety net of the Mortgage Rescue Scheme.

The support available at the earlier stages of the repossession process has meant fewer people have needed to apply for the Mortgage Rescue Scheme - while some homeowners who have applied for the Mortgage Rescue Scheme have been advised of other help available that better meets their individual circumstances.

New figures published today show that over the past three months 320 households have benefited from action to stop the immediate threat of repossession through the Mortgage Rescue Scheme, while a further 454 households are going through the assessment process with councils - 14 households have now accepted an offer from a Registered Social Landlord to sell and rent back their property, so they have been able to stay in their homes.

In a matter of weeks, a new Fast Track team will be in place to manage referrals from lenders for the "Government Mortgage to Rent" option of the Mortgage Rescue Scheme, where a homeowner may stay in their property by selling it to a registered social landlord and paying rent - cutting down processing times.

Housing Minister Ian Austin said:

"Every repossession is a tragedy for the family concerned, but today's figures show hard-pressed homeowners that the government is on their side and providing real help so they can stay in their homes.

"In previous recessions no help was provided whilst people lost their homes. This time, we're doing everything we can to prevent families from going through the trauma of home repossession.

"Families need to know that help is available from the moment they have difficulty paying their mortgage and at each stage of the process. More than 200,000 families each month are getting help with their mortgage payments or getting free Government-funded advice from their local council.

"And we've helped thousands more with other measures, such as stronger protection for homeowners and getting lenders to be more tolerant and helpful, to providing free court advice, or targeted schemes to help families in the toughest situations.

"Under the new rules, lenders can only repossess homes as a last resort, so it's really important that anyone struggling to make mortgage payments seeks immediate help, whether through their lender or a debt adviser. If that doesn't work, then seek free independent advice."

Homeowners who have benefited from Government support to avoid repossession include:

Mr and Mrs F in the South East, who bought their home under Right to Buy in 2002. In 2008 the couple divorced and Mr F continued to contribute towards mortgage payments, but later that year he was made redundant. Mrs F was referred to the local authority in January, and the assessment period for the Mortgage Rescue Scheme was fast-tracked to ensure repossession action was suspended. Mrs F completed the Mortgage Rescue in May, and continues to live in her home, paying rent to a Registered Social Landlord
Mr B and Mrs G from the West Midlands fell behind on their mortgage payments in 2008 after losing their jobs.The couple approached the local authority for help after the court issued a warrant for possession of the property, but after discussion with the lender the council were able to agree a three-week period to conduct a Mortgage Rescue Scheme assessment. The scheme was completed in July 2009 and the family were able to stay in their home.

This forms part of wider Government efforts to offer real help now to people feeling the pinch in the downturn. This includes:

A cut in VAT by 2.5 per cent for this year - benefiting households by an average £275
An increase in personal tax allowances, meaning 22 million basic rate taxpayers will pay £145 less tax over the year
Extra funding for local authorities in unemployment 'hotspots' to create an additional 50,000 jobs; and
Extra funding and staff at Jobcentre Plus to provide a personalised service to help people back into work, with dedicated support for the long-term unemployed.

Notes to editors

1. Ministry of Justice repossession figures are published today and can be found at: www.justice.gov.uk/publications/mortgatelandlordpossession.htm (external link).

2. The Council of Mortgage Lenders publish their figures today, which can be found at: www.cml.org.uk/cml/media/press/2357 (external link).

3. CLG Mortgage Rescue stats published today can be found at: www.communities.gov.uk/publications/corporate/statistics/mortgagerescuestatistics