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Lenders join with charities in support of mortgage rescue


Published: 24 April 2013 | Author: Bernard Clarke

We have joined a number of charitable organisations and consumer advice bodies in urging the housing minister, Mark Prisk, to give continuing support to the government’s mortgage rescue scheme.

Mortgage rescue was launched in England more than four years ago, and allows vulnerable owner-occupiers unable to continue to pay their mortgages the option of remaining in their homes as tenants, thereby avoiding many of the problems of possession. Latest figures show that around 5,000 families – usually those with children or living in properties that have been modified for care needs – have been able to avoid moving out of their homes.

As well as helping these families stay in their homes, mortgage rescue has encouraged tens of thousands of others struggling with their mortgages to investigate possible solutions to their problems with their local authority or lender, and to seek free, independent, debt advice.

With the 2015-16 spending review announcement due on 26 June, we have joined forces with Citizens Advice, Shelter and the StepChange Debt Charity in urging Mark Prisk to provide continuing support for mortgage rescue.

We welcome the decision to extend the deadline for applications across the English regions and London until spring 2014, which will enable more households to get help and ensure that the existing budget is fully committed.

We also welcome the recent launch by the Department for Communities and Local Government, supported by both the National Homelessness Advice Service and Citizens Advice, of the process under which lenders can directly refer borrowers for help under the scheme. Direct referral makes mortgage rescue available to families in areas where local authorities do not have the resources or expertise to provide help.

Although borrowers in difficulty are helped by the persistence of low and stable interest rates, and mortgage arrears and possessions have fallen since 2009, the need for mortgage rescue has not diminished. The number of borrowers in deeper arrears has not fallen and the options open to them are more limited, especially as household budgets come under greater pressure.

By enabling borrowers to relinquish their mortgage commitments but stay in their homes as tenants, mortgage rescue eases the pressures on local authorities to re-house families. That is likely to become more difficult in the coming years, as resources and funding are further squeezed.

With mortgage rescue closed to new applications from April 2014, it is vital that all the good work in making the scheme a success is not completely lost. To build on the current scheme, we are standing alongside the charities and debt advice organisations in urging:

  • funding for mortgage rescue for 2015/16, in line with existing commitments;
  • the maintenance of current eligibility criteria to provide stability and certainty for all parties;
  • that lenders should be able to continue to refer borrowers directly for help under the scheme;
  • that steps are taken to ensure that local authorities do not lose the skills or make help for vulnerable households a lower priority during the mortgage rescue hiatus between 2014 and 2015; and
  • that the government holds talk with all involved in the scheme to work out how the benefits of mortgage rescue can be sustained from 2106 onwards.

Clearly, there are major challenges in sustaining mortgage rescue, and proposals for welfare reform and localism may make it more difficult to continue to support this initiative across England. It would, however, be unfortunate if all the time, effort and resources invested in mortgage rescue were now lost, given the contribution it has made in providing an alternative to the financial and human consequences of families losing their homes.