LABOUR HAS ACTED TO PROTECT HOMEOWNERS DURING THE DOWNTURN

25 January 2010

Labour’s Housing Minister John Healey has today further extended help for homeowners struggling to get a grip on their finances and avoid repossession.  From today, new adverts will appear on local radio stations encouraging struggling homeowners in 86 hotspot areas to visit the Government’s repossessions help website at www.direct.gov.uk/mortgagehelp. Adverts will also appear in local and national media, pointing to site and the National Debtline’s free advice line at: 0808 808 4000.

Stafford’s MP David Kidney says this is practical help for people in fear of losing their homes:

“Councils in the 86 hotspot areas will also receive a £2 million boost to the Preventing Repossessions Fund, allowing councils to help struggling homeowners tackle their arrears and get back on top of their finances. Thankfully, Stafford is not a hotspot for mortgage repossessions but some of the help is available for Staffordshire homeowners, for example in Cannock.

“Over the past year, over 330,000 households have had help and advice with their mortgages, with repossessions now running at nearly half the rate of the early 1990s recession. But with pressure on families likely to remain high throughout 2010, our Government is now working with the Citizens Advice service to run ‘mortgage help’ events across the country. At these events, homeowners will get impartial face-to-face help and advice.

“Since its launch last September, nearly 88,000 people have visited of www.direct.gov.uk/mortgagehelp with over 26,000 of visitors using it to develop personal action plans tailored to their individual circumstances. This help has also proved valuable for those feeling the pinch after Christmas, with over 17,000 visitors since 1 January.

“In the early 1990’s under a Conservative government, families were left to sink or swim as the recession was allowed to take its course. In contrast, our Labour Government has put support for homeowners at the heart of our response to the economic downturn.”

A summary of Government action:

• Put pressure on lenders from the start of the downturn to extend forbearance to their borrowers wherever possible from the start of the recession;
• Launched a comprehensive publicity campaign to help ensure households know their rights;
• Brought in changes to Court rules to ensure lenders inform local authorities if they are taking repossession action so the authority can offer suitable help. The earlier a household receives help, the higher the chance of avoiding repossession;
• Increased funding to £130m to provide free face-to-face debt advice services between 2006 and 2011;
• Put in place legal guidance to ensure lenders have to prove to the Court that repossession is a last resort;
• Ensured there is access to an advice desk in every Court to help households on the day if they are facing a repossession hearing;
• Led the way from the start in providing targeted support schemes to act as a safety net for households in different circumstances.

• As a result:

• Over 330,000 homeowners get help and advice with their mortgage since April 2008, including 220,000 homeowners receiving Support for Mortgage Interest and 110,000 receiving information and advice from their local authority or a debt advice agency;
• 136,000 households benefit from formal lender forbearance;
• 35,000 people benefit from free advice in Court in 2008-9;
• Almost 11,000 households get help and advice from their Council through the Mortgage Rescue scheme, with over 1,100 live cases in the system.

• Comparing then with now:

• If repossessions were running at the same rate as 1991, we would expect 91,000 households to be repossessed this year (actual figure 40,000 in 2008 and CML estimates 48,000 in 2009);
• If arrears were as high as in 1992, we would expect 396,000 households to be in the same position – way above double the current figure of 154,000 (Q2, 2009);
• If negative equity was as high as in 1993 we would expect up to 2.2m households in negative equity (estimated 700,000 to 1.1 million in Q1, 2009 by Bank of England).