Court orders for repossessions soar in the region

8:02am Saturday 10th May 2008

Comments (1)   Have your say »

AN ALARMING increase in the number of families on the brink of losing their homes because they cannot pay the mortgage, was revealed yesterday, across the region.

County courts reported a huge increase in repossession orders made by mortgage lenders, including in Teesside (18 per cent), Skipton, North Yorkshire (93 per cent) and, most starkly, Scarborough (165 per cent).

Meanwhile, the numbers hit with a possession claim - the first stage of threatened action - also increased, including in Bishop Auckland (40 per cent), Hartlepool (25 per cent), Consett (18 per cent) and Darlington (13 per cent).

The figures were seen as further gloomy evidence of the effect of the "credit crunch", which has dramatically pushed up the cost of new mortgages and cut the availability of deals.

The Government immediately moved to calm fears of a return to the repossessions crisis of the early Nineties, by pledging free legal advice for every homeowner threatened with a court order.

A £10m package will pay for extra advisors, offering help on mortgage "holidays", loan rescheduling or changes to the interest-only payments, before court action is reached.

Housing Minister Caroline Flint said: "It is important to recognise we are dealing with an entirely different situation in the market from what was experienced in the early Nineties.

"But, for the minority of owners who may need support and advice now, we want to ensure it is there for them in the right place and at the right time."

However, the Conservatives quickly accused the Government of complacency, insisting it had called for the boost to debt advice more than 18 months ago.

One in ten homeowners are suffering the shock of demands for higher payments as they come off fixed-rate mortgages this year - just as higher living costs put a squeeze on household budgets.

That pain is hitting harder in the North-East than across England and Wales as a whole, where the increase in possession orders in the first quarter of this year was 11 per cent.

No figures were available for county courts in County Durham, Hartlepool or Harrogate.

However, figures were provided for possession claims - the initial step of the repossession process - which, again, mostly dwarfed the average increase of 16 per cent.

Even when a court does grant an order for repossession of a home, it does not necessarily mean that a family will lose its property.

The borrower has an opportunity to present the court with a case for not proceeding, or the lender may come to an arrangement for altering payments.

Nationwide, there were 27,530 orders made - up from 23,438 in the same period of last year - of which 47 per cent were suspended, allowing the borrower time to catch up with repayments.

Caroline Davey, of housing charity Shelter, criticised banks and building societies for being too quick to go to court when households got into difficulties.

She said: "I think the lenders have to take a real share of the responsibility here. What they have not done is put their hands in their pockets to help the many thousands of people who are struggling."

The Council of Mortgage Lenders has suggested repossession figures will jump from 27,100 last year to 45,000 this year, still barely a third of the total in the early Nineties.

Advice for homeowners falling behind with payments

TEN tips to avoid repossession have been issued to homeowners at risk.

The advice from the Citizens Advice Bureau, Shelter and the Consumer Credit Counselling Service recommends:

● If you find yourself out of work or unable to work, check for payment protection insurance you may have and get advice about benefits and other help you may be entitled to.

● Face up to the problem - the earlier someone at risk of losing their home seeks help, the more likely it is that their home can be saved.

● Speak to an organisation that can give impartial, independent advice, such as the Citizens Advice Bureau, Shelter or the Consumer Credit Counselling Service.

● Speak to the mortgage lender as soon as difficulties arise.

● Assess your financial position.

Shelter advises anyone with problems to draw up a list of money coming in and going out each week or month, and show the list to the lender.

● If faced with a large mortgage payment and a much smaller credit card payment, always prioritise the secured loan. Speak to the mortgage lender and offer to put whatever money is available towards mortgage payments.

● Avoid turning to debt management companies, which will probably charge large fees for their advice.

● Think twice before extra borrowing, including second charge loans and loans from debt consolidation companies.

● Do not ignore court papers and court hearings - do attend court, but get advice first.

● Remember, repossession is not inevitable. Options include converting to an interest-only loan, or negotiating an alternative repayment.