HOOPER & WOLLEN Christopher Wills takes a look at the practical help available to mortgage borrowers facing repossession n these times of global economic uncertainty very few are immune from feeling the financial pinch. Some, inevitably, feel it more than others and there can be very few things worse than the fear of losing your home. That, however, is the reality for many. The Council of Mortgage Lenders (CML) recently reported that the number of homes repossessed in the first three months of 2009 rose to 12,800 from 10,500 in the final quarter of 2008. This was an increase of 50% over the same period last year. 265,100 households are now at least three months in arrears and 205,300 of those have arrears equal to at least 2.5% of their outstanding mortgage balance. The CML estimates that 75,000 homes will be repossessed this year although this was a revised estimate lower than previously given. Faced with such stark statistics the temptation for many will be to despair and to think that nothing can be done. There is, however, arguably more advice and assistance available now than ever before. The starting point for everyone faced with such difficulties is not to ignore it and not to hope that it will simply sort itself out as it very seldom does. There are many reasons why people fall into difficulties paying their mortgage. Redundancy, illness and relationship breakdown are three of the main causes but there are others of course. It is vital to remember that advice should be sought to address the underlying reasons for the accrual of arrears. Anyone facing difficulty in keeping up with the contractual mortgage instalments should talk to their lender as early as possible. Major mortgage lenders reached agreement with the Government on 24th November 2008 that they would hold off starting mortgage possession proceedings relating to residential property until after the Borrower has accrued three monthsâ€™ arrears but the earlier that the problem is discussed the better. From 21st April 2009, major high street lenders are now able to offer Homeowners Mortgage Support to eligible Borrowers who suffer a temporary loss of income. If a
Borrower is eligible then the scheme enables them to reduce their mortgage interest payments for up to two years. There is also a Government-backed Mortgage Rescue Scheme which was introduced in England on 16th January 2009. This enables Social Landlords, such as Housing Associations to purchase the homes of eligible people and then rent them back to them. Anyone at risk of losing their home can apply for assistance to their Local Housing Authority and their eligibility for the scheme will then be assessed. In response to the rising tide of repossessions, a Pre Action Protocol for Possession Claims based on Mortgage Arrears in Respect of Residential Properties came into force on 19th November 2008 for all possession claims issued after that date. The aim of the Protocol is to make possession proceedings an option of last resort to Lenders by encouraging both Lenders and Borrowers to act fairly with each other and to promote early communication in the hope that a resolution can be reached. In the event that proceedings for possession are issued then sanctions can be imposed by the Court if either party fails to comply with the Protocol. According to the CML the number of mortgage possession claims issued in the first quarter of 2009 was 42% fewer than in the same period last year and of the 17,054 Orders for Possession that were made by the Courts, 47% of those were Suspended Orders which means that provided the Borrower complies with the terms of the Court Order then they can remain in their home. Often the Court will stretch payment of the arrears across
the remainder of the mortgage. Borrowers should also seek advice from the numerous sources available such as Solicitors, Citizens Advice Bureaux and Local Authority Housing Departments. Such agencies can suggest ways to maximise income such as taking in a lodger or applying for welfare benefits that a person may not be aware that they were entitled to. Advisers can also check that the lenders are following the Pre Action Protocol and to ensure that any agreements reached are practicable. Even the day of a Court hearing is not too late to obtain relevant advice. I recently advised a lady at Court whose husband had died in the past year. She had fallen into arrears and a Claim for Possession had been issued. I met with her at the County Court under the auspices of a free scheme that is run in partnership locally by the Local Authority Housing Team and two firms of Solicitors to provide free advice and advocacy to those attending possession hearings. The scheme is facilitated by the Court and similar schemes can be found at many other County Courts. I looked through the paperwork and noticed a reference to a Mortgage Protection Policy which provided for the payment of a lump sum on the death of one of the borrowers. The lady had not made a claim on the policy and had not been provided with any practical assistance by the lender. Upon hearing the circumstances the District Judge adjourned the proceedings and after correspondence with the payment protection provider, they paid out on the policy and the possession proceedings were withdrawn. In summary, we all know that many people face difficult financial times at the moment but advice and assistance is available from Lenders, Statutory, Private and Voluntary agencies to give people the best chance of keeping their homes.
Readers should consult professional advisers before acting upon the issues raised in this article. If you would like further advice regarding any of the issues raised please contact Christopher Wills at Hooper & Wollen Solicitors in Torquay 01803 213251 or e-mail firstname.lastname@example.org.
HOOPER & WOLLEN Solicitors Carlton House, 30 The Terrace, Torquay, TQ1 1BS Telephone 01803 213251 10 The Quay, Dartmouth, TQ6 9PT Tel 01803 832191 Belgrave House, 2 Winner Street, Paignton, TQ3 3BJ Tel 01803 521692 www.hooperwollen.co.uk