Mortgage possessions – Gordon feels your pain

Giles Peaker

17 years ago

Mortgage repossessions are rising at the fastest rate since 1991. According to the MoJ quarterly figures [pdf]:

Possession claims in the first quarter of 2008 were 38,688, 7% more than in the last quarter of 2007. The rise over the last year was 16%.
27,530 mortgage possession orders were made on a seasonally adjusted basis, 17% higher than in the first quarter of 2007 and 9% higher than in the fourth quarter of 2007.
47% of mortgage possession orders were suspended compared to 47% in the first quarter of 2007 and 46% in the fourth quarter of 2007.

Caroline Flint and the Chancellor announced a £10 million package of measure to ‘support homeowners facing difficulties with their mortgage’.

This package includes measures to ensure that financial advice and support is available for borrowers who may need it and includes an additional £9 million extra funding for face-to-face debt advice provided by third sector partners including Citizens Advice Bureau.

Let us unpick this a little. That is £9 million over three years, so £3 million a year to ‘third sector partners’. Citizens Advice claims advice is provided at 3000 locations, so, if equally distributed, that is £1000 per location. Of course, it won’t be equally distributed – some will be used centrally or for training and I would be surprised if certain bureaux weren’t targeted, particularly those that run Court advice, but it doesn’t actually look like much.

The other £1 million (over three years!) is presumably to fund the other promises:

expanded access to free legal representation at county courts throughout England for households at risk of repossession;

strengthened National Housing Advice Service to provide a new comprehensive debt advice service

I take this to mean a bit more support for duty scheme possession solicitors. Does anybody know about the ‘National Housing Advice Service’? It has slipped beneath my radar, or do they mean Community Legal Advice?

The press release adds that this £10 million

builds on the services already in place, backed by £560 million Government investment, such as face to face debt and financial advice, a national debt helpline, homelessness prevention work by every council, legal aid, and financial support for low income households who may face short-term difficulties in repaying their mortgage.

Uh huh. Few mortgage repossession cases are eligible for legal aid. Council ‘homelessness prevention’ is hardly of use and ‘financial support’ amounts to limited payments of interest only, after six months of eligibility.

The government is also talking to the main banks on avoiding repossessions. However, my anecdotal experience, also reported by Shelter, is that it is sub prime mortgagees, second mortgagees and secured loan holders who are pushing for repossessions, often with relatively low amounts at stake. Given the great frenzy of cashing in equity over the last few years, this could present a very large ongoing problem.

Meanwhile, the Civil Justice Council are consulting on proposals for a mortgage possessions pre-action protocol. The consultation paper is here [pdf] and the consultation ends on 23 May 2008.