Repossession as last resort

Gordon Brown has announced that mortgage lenders will be forced to prove in court that they have been moved to repossess property only as a last resort.

The current Financial Services Authority rules and the law of the land both currently protect the mortgage borrower rather than the mortgage lender, but the new rules mean lenders will have to spell out exactly what other avenues they have pursued before a case comes to court.

Repossessions of mortgaged properties are predicted to rise by 50% to 45,000 this year, and could well escalate next year as unemployment figures continue to increase.

The Civil Justice Council has drawn up new rules, which require mortgage lenders to examine all other alternatives with homeowners before they start repossession action.

Yvette Cooper, Chief Secretary to the Treasury, said:

"We need to make sure we help those who might be hardest hit in the tougher times ahead, ensuring repossession is the last resort, not the first."

Housing charities have welcomed the new rules from the Civil Justice Council. Adam Sampson, chief executive of Shelter, said:

"Most lenders have aspired to act in this way but not all lenders have lived up to these standards in the past. The new rules will enshrine good practice and will have the effect of keeping more families in their homes, avoiding the misery of repossession."

Experts pointed out that, with the Government taking a stake in those banks responsible for more than 60% of mortgage lending in the UK, it comes as little surprise that Gordon Brown wants to minimise the number of mortgage borrowers made homeless by those very nationalised banks.

Not only would this win the Government few votes, but the bill for housing thousands of repossessed former homeowners would subsequently fall on the State in any case.