Government pledges support to households facing repossession

The Government is introducing a £10 million package of measures to support homeowners who may be experiencing difficulties with their mortgage repayments.

Debt advice services provided by organisations such as the Citizens Advice Bureau will receive £9 million in extra funding and the money will also be used to expanded access to free legal representation at County Courts across England.

Next week, treasury and housing ministers will meet consumer and debt advice groups to discuss other methods of helping people in financial difficulties.

Meanwhile, the UK’s six leading retail banks (Lloyds, Barclays, RBS, HBOS, Abbey and HSBC) have agreed to work closely with groups involved in debt advice and consider what support the industry can provide.

While repossession rates remain historically low, latest figures from the Ministry of Justice show a 16% rise in the number of repossession claims in England and Wales, in the first quarter of the year.

While a repossession claim is only the first stage in a legal process and may not end in a homeowner being evicted, the figure has risen 7% on the final quarter of 2007.

The Government is also calling on lenders to implement best practice guidelines that ensure borrowers on fixed-rate mortgages are given sufficient warning before their repayments change.

In addition, it wants banks and building societies to make early contact with customers experiencing short-term difficulties in making repayments and help them by rescheduling their debt.

Discuss this in the Finance Markets forums

Story link: Government pledges support to households facing repossession