Housing Minister John Healey today launched a new national campaign to help struggling homeowners take control of their finances and make the most of the support available for them to avoid repossessions and stay in their homes.
A series of press, online and billboard advertisements will highlight the measures the Government has put in place at every stage for homeowners to avoid repossession. Over 300,000 people have received help and advice in paying their mortgage since April 2008.
The advertisements will point people to an advice line and a new website illustrating the practical steps they can take to resolve their mortgage repayment worries, as well as contacts for the wide range of support available.
While this will be a national campaign, extra advertisements will appear in 22 "hotspots" - areas facing a greater risk of increased repossessions due to higher levels of unemployment and numbers of court orders.
Only six families in England have been aided by the government's mortgage rescue scheme, a junior communities minister has admitted.
Ian Austin confirmed the accuracy of the figure during a debate in Westminster Hall on the package, which was launched in January.
The initiative aims to help families who are struggling to pay their mortgages and are facing the threat of repossession.
Not-for-profit housing associations buy the properties and then allow the family to continue living there, charging an "affordable rent".
The statistic came in for criticism from the Conservatives and the Liberal Democrats, but the housing minister, John Healey, said that steps were being taken to speed up the process for vulnerable families.
"To make sure families are getting the support they need, I can confirm that from next month a new central team will operate to manage and fast-track the cases of those most at risk of repossession," he said.
There has been a mixed reaction to the latest statistics monitoring take-up of the government’s mortgage rescue scheme.
Some reports have focused on the low number of households that have taken up an offer under the scheme. So far, only six households have done so, although more than 5,300 have embarked on the first stage of approaching a local authority to inquire about mortgage rescue.
Shelter criticised the low number of households taking up an offer under the scheme when the government published its latest statistics at the end of June. The homelessness charity called for a review of how successfully mortgage rescue was working. It said the scheme “has the potential to help many vulnerable home-owners to stay in their home, so it is very disappointing so few people have been accepted on to the scheme.”
Shelter continued: “Getting accepted into the mortgage rescue scheme is obviously taking considerably longer than we would want. The government needs to review the current eligibility process and tackle any issues that are preventing people from successfully taking up the scheme.”
Small scale
It should not be forgotten, however, that the scheme was only ever intended to operate on a fairly small scale, providing help for 6,000 households over two years. The circumstances of each individual case have to be carefully assessed – and there are a number of stages of the process to work through – so it was always likely that progress from inquiring about the scheme to acceptance into it would take some time.
Mortgage rescue is, of course, also only one of the possible solutions available to households experiencing payment difficulty.
It is important that borrowers explore all the options, including the range of tools that lenders already have at their disposal like switching from a capital repayment to an interest-only mortgage, re-structuring their payments or extending the length of the term. And other government schemes – including help through income support for mortgage interest and the home-owner mortgage support scheme – might be more suitable for households in different circumstances.
Meanwhile, with cases of possession now rising more slowly than the number of borrowers falling into arrears, there is evidence that lenders are showing forbearance where they can and helping borrowers to work towards solving their problems, even if they do not end up in a government scheme.
Working with borrowers
Although only a handful of home-owners have accepted an offer of mortgage rescue, the much larger number of inquiries about the scheme may indicate that an increasing number of home-owners in difficulty are taking action to address their problems at an earlier stage, including discussing them with their lender.
Sometimes, borrowers have not even been in touch with their lender, despite experiencing difficulty. This was borne out at our mortgage regulation conference yesterday, when the chairman of the Financial Services Consumer Panel, Adam Phillips, told delegates that more than 40% of those having difficulty paying their mortgage did not seek advice in dealing with their problems. And that happened even though seven out of eight of those in difficulty thought their problems were serious.
