Measures to help struggling homeowners weather the recession need to be strengthened, according to Turning the tide?, a report from AdviceUK, Citizens Advice and Shelter.
The three agencies believe the government package of support for homeowners is making a difference, but there are still gaps and too many homeowners are falling through the net.
Published on the same day as new repossession figures are expected from the FSA, the report is based on research into hundreds of cases seen by advisers who give last minute advice to people at court on the day of their repossession hearings.
It found that in a third of recorded cases the lender had failed to comply with the ‘pre-action protocol’ – requiring them to take court action only as a last resort after offering borrowers other options for dealing with their arrears.
In general, sub-prime lenders who specialise in lending to riskier borrowers were found to be taking court action earlier than high street lenders. A few sub-prime lenders in particular had many more court cases listed than their share of the mortgage market would suggest.
The report calls on all lenders to comply fully with the mortgage pre-action protocol. It also calls for a fundamental review of private and state safety nets, along with more flexible powers for courts to help borrowers stay in their homes. Funding for free, independent advice in court for people facing repossession action must be maintained as a priority, it adds.
David Harker, chief executive of Citizens Advice, said: “Our research makes it clear that the safeguards already in place to protect people from avoidable homelessness need to be strengthened if they are to succeed in stemming the rising tide of repossessions.”
Steve Johnson, chief executive of AdviceUK, added that the report made it clear that not all lenders are showing forbearance and that additional protection is needed to avoid a repeat of the repossessions crisis of the early 1990s.
