May 25 2013 Latest news:
Ed Foss , Senior writer
Sunday, October 2, 2011
Any single repossession is a personal tragedy, but it also creates wider problems
There will always be repossessions when people fail to meet their mortgage payments.
The phenomenon will not come to an end whatever the banks and the government do to the rules and regulations which govern the mortgage market.
But there is always more that can be done to keep the repossession figures down.
The impact of a repossession is not only on the individual concerned.
There are also wider social problems created at the same time.
This double ‘hit’ on individuals and communities means there are clearly good reasons for trying to keep repossessions to an absolute minimum.
A leading financial organisation has come up with a range of proposals to tackle the problem. Although the Building Societies Association (BSA) has definitive suggestions, one of the key aspects of their work is to encourage as much debate as possible on the issue.
And that debate can only be welcomed - bring something to the discussion table and hopefully people will join in with the conversation.
The BSA has said a joined-up approach is needed to help mortgage borrowers in difficulty and has urged the government, the industry and consumer groups to work together.
They say their report, called ‘A joined-up approach to helping mortgage borrowers’, is designed to provoke discussion and sets out a number of recommendations on insurance, flexible tenure, lender forbearance and government schemes.
“The cost of repossession to families, lenders and the government is high, both in monetary and emotional terms,” says the report.
“The government has an important role to play preventing repossession, but so do others including lenders, insurers and advice agencies.
“These groups must work together to reduce the affliction of repossession.”
The report was deliberately launched to coincide with the political party conferences and featured at fringe events run jointly with the Money Advice Trust.
Main recommendations include:
• Government should actively encourage the take-up of insurance which would help pay a consumer’s mortgage in the event that they become unable to pay.
• The government should examine whether the provision of Support for Mortgage Interest (SMI) could be extended so more people are eligible for help.
• Forbearance by mortgage lenders has worked well for consumers to prevent repossessions. However, the separate regulatory structures for first charge, second charge and unsecured lending is confusing for consumers and leads to varying requirements on forbearance. This should be changed so that it provides clarity for consumers and lenders alike.
• Shared equity schemes may have a place for preventing repossessions, but further investigation is needed into how homeowners could change the amount of equity in their property up or down depending on their circumstances.