Mortgage Arrears Advice and Repossessions

Repossessions News and Advice

In the current economic climate, more households are struggling with their mortgage payments and facing the threat of repossession. The Government is determined to help people to stay in their homes wherever possible and a range of measures is now in place to provide help at every stage to households struggling with their mortgage repayments.

When we entered the recession, many commentators were claiming that in 2009 repossessions would be at a similar level to that of the early 1990s, when they peaked at 75,500 in 1991. The Council of Mortgage Lenders’ (CML) original forecast for 2009 was 75,000 repossessions. But Government has acted decisively in this recession to put in place help at every stage for households struggling with their mortgage and repossessions, and arrears and negative equity are currently running at around half the rates at which they peaked in the early 1990s.

However as the CML forecasts for 53,000 repossessions in 2010 show, the risk of repossession will remain high throughout next year. That is why as part of the Governments programme of work to help prevent repossessions, they have launched a communications campaign to help provide reassurance to worried households that help is available and give them advice on the steps they need to take to help avoid the threat of repossession.

The campaign includes national and local newspaper advertising, pointing worried households to the help available through our money advice services; and to a new website, which provides tailored information on the extra help and protections available to households. The campaign highlights that more than 300,000 households who have received help and advice with their mortgage over the last year or so, and 136,000 are now benefiting from lenders offering more tolerant payment terms on their mortgages – 75% up on last year.

Today the Government is planning to announce an expansion of these Government efforts to include the next tier of repossession ‘hotspots’, so those at a higher risk of losing their home get the information they need and are encouraged to seek advice at an early stage. They will be writing separately to ‘hotspot’ areas so they are aware of this extra support in their areas.

This is in addition to regulatory changes that will further help ensure repossession remain a last resort and all consumers are clear what help they can expect from lenders if they get into difficulties. The Mortgage Markets Review published last month set out the Financial Services Authority’s plans to put in place tougher protections for homeowners, so they benefit from greater tolerance and understanding from lenders, and won’t face unfair and excessive charges as they try to repay their arrears.

The tougher rules will also mean lenders will have to consider if borrowers can benefit from the Government schemes available – including help with mortgage interest payments, the Homeowner Mortgage Support Scheme and the Mortgage Rescue Scheme.

Comprehensive help and advice is available to any constituents worried about their mortgage repayments, including free and independent debt advice, protections through regulation and the Courts, and targeted support schemes for households in different circumstances. The Government also recently launched a new website – www.direct.gov.uk/mortgagehelp which provides comprehensive information on help available and an interactive tool for households to develop their personal ‘action plan’. The Government hope this information is helpful and that the new website provides a useful resource for any of you who may face difficulties with their mortgage payments.

Mortgage Arrears Advice

For many families, the cost of running a home has become increasingly difficult.

Important update to Mortgage Rescue Scheme

From 1st May, the mortgage rescue scheme is being expanded to allow some households in negative equity to apply for assistance. This includes mortgages and secured loans on the property. The Council can consider Mortgage Rescue applications from homeowners in cases where the levels of debt (mortgage and secured loans) exceed the estimated value of the property by up to 20% (i.e. no more than 120% loan to property value).

Mortgage Rescue Scheme

If your mortgage is becoming unmanageable, you should act quickly to contact your lender, seek debt advice and also contact the Housing Options Team at Wealden District Council.

You should also read the National Homelessness Advice Service (NHAS) leaflet on mortgage issues, which sets out the options available to you.

Lenders can offer options ranging from agreeing to change the length of your loan to payment breaks.

There are other ways to help you stay in your home, such as Income Support Mortgage Interest (ISMI) available through the Department of Work and Pensions and other housing options which can be discussed with you.

There are various charitable organisations that can offer you free debt advice such as Citizen's Advice Bureau, National Debtline or Consumer Credit Counselling Service.

The Government has recently announced further assistance to help families with children and vulnerable households that have fallen into mortgage arrears under the Mortgage Rescue Scheme.

When you contact the Housing Options Team we will discuss whether the Mortgage Rescue Scheme is suitable for you, depending on your circumstances. We can also discuss alternative housing options for you to chose the best option for you and your household.

Under the government's Mortgage Rescue Scheme there are two products that may be offered to you:-

Shared Equity Scheme - enables people to sell part of their property to a Registered Social Landlord. You pay rent on the share you have sold, therefore reducing the monthly outgoings to an affordable level. The option remains to buy the share back in the future.
Government Mortgage to Rent Scheme allows people to sell their property to a Registered Social Landlord and then rent it back under an Assured Shorthold Tenancy, at an affordable rent. Under this scheme there is no automatic option to buy the property back.

In all cases act as soon as you think that you may be facing problems. Criteria apply to the Mortgage Rescue Schemes and not all households will be eligible so it is important that you discuss your circumstances with a Housing Options Officer as soon as possible.

Homeowner Mortgage Support

Homeowner mortgage support (HMS) is an additional mortgage support tool for homeowners experiencing a temporary drop in income, for example, the client had two part-time jobs but lost one of them, experienced a drop in hours or overtime or if one partner loses their job and the household now relies on one income.

The scheme involves part of the interest payments on the mortgage being delayed. The mortgage must be changed to an interest-only mortgage and the homeowner must be able to meet at least 30% of the interest payments. The scheme is available for up to two years. The interest that is not paid during that period is added to the total loan. Homeowners should be satisfied that they could meet the increased payments after the two year period.

Households interested in the scheme should contact their lender to find out if the scheme is offered and whether it is the right option for them. Further advice can be obtained from the Council's housing options team on 01323 443322. You can also read the CLG Mortgage Leaflet (pdf, 756kb) leaflet for more information

For more information

Housing Options Team

01323 443380

www.wealden.gov.uk

Citizens Advice Bureau

www.citizensadvice.org.uk

National Debtline

0808 800 4000

www.nationaldebtline.co.uk

Consumer Credit Counselling Service

0800 138 1111