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Shelter runs out of patience with government and finance industry

Leading housing and homelessness charity Shelter have demanded that the government urgently set up a free service to help people who are in serious mortgage arrears and risk losing their homes through repossession.

Leading housing and homelessness charity Shelter have demanded that the government urgently set up a free service to help people who are in serious mortgage arrears and risk losing their homes through repossession.

The charity issued the plea following a 14% increase in the number of people seeking help last year compared to 2006. Almost 80,000 homeowners called Shelter during 2007 hoping for advice on how to deal with falling behind on their mortgage repayments.

Shelter estimates that almost one million of the UK’s 12 million mortgaged homes are in danger of repossession, although the Council of Mortgage Lenders (CML) have estimated that only 45,000 repossessions will take place this year. But, regardless of the final total at the end of 2008, the charity’s chief executive Adam Sampson admits they do not have the resources to deal with the sheer number of enquiries they expect to receive in the coming months.

So, Sampson is calling for a government funded ‘one-stop shop’ to deal exclusively with queries from those with mortgage arrears. He believes that it is the joint responsibility of the government and the finance industry, including the regulator, to take the initiative and provide a safety net for those in difficulty.

Outlining his vision of the service Sampson said that those in difficulty would get initial advice from a telephone or online helpline, and importantly mortgage lenders would be obligated to tell customers about the free service.

The recommendations fall from a repossessions action plan whose other recommendations include; the Financial Service Authority (FSA) clamping down on irresponsible lenders, improved guidance for county court judges to prevent harsh lenders taking advantage, and a national mortgage rescue scheme which would allow defaulting payers to remain in their home.

In response the FSA said it already comes down hard on those lenders who treat borrowers unfairly, and if it encounters problems it does take action. And the CML says that the repossession threat still only affects a minority of the total number of borrowers.

However, despite the minor rebuttal of Shelter’s plea by both the industry and its regulator, it is a given that many more people are desperately seeking effective debt solutions this year than in previous years. In addition to the anticipated increase in the number of mortgage repossessions, there is expected to be record number of people opting for debt management schemes, IVAs or bankruptcy during 2008. Perhaps Shelter has got a valid point?