Report finds mortgage lenders flouting new repossession rules

Mortgage lenders have been criticised by debt charities after a report revealed that they are still neglecting to help vulnerable homeowners avoid repossession.

The report called ‘Turning the Tide?’ was published yesterday by AdviceUK, Citizens Advice and Shelter. It was followed by the most recent repossession statistics from the FSA, which revealed that 13,987 properties had been repossessed in the third quarter of 2009, rising 2.8% on the same period last year.

Based on research into hundreds of cases where homeowners received final advice from court duty desk advisers on the day of their repossession hearings, it showed that lenders didn’t comply with new rules in a third of all cases.

The new repossession rules, called “pre-action protocol”, state that mortgage lenders should only take legal action as a last resort. Homeowners should also be offered other options for dealing with their arrears.

Although Citizens Advice said that the new protocol had been successful in many cases, the rules would need to be strengthened to help other borrowers in arrears avoid being repossessed.

The chief executive of AdviceUK, Steve Johnson, added: “This report makes it clear that not all lenders are showing forbearance and that additional protection is needed if we are to avoid a repeat of the repossessions crisis of the early 1990s.”

The report also noted the importance of court desk duty advisers in helping borrowers threatened with repossession. In 77% of cases analysed by the survey, the advice from these professionals prevented people from losing their homes.

Housing Minister, John Healey, is now expected to announce a further £4 million of funding for debt advice agencies and court desks to help give free advice to families facing repossession.