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Rescue scheme helps few

Thursday, July 02, 2009

Source: Catherine Deshayes

Only six families have so far been saved from losing their homes by the Government's mortgage rescue scheme, a minister has admitted...

Ian Austin, a Junior Communities Minister, confirmed the figure in a debate in Westminster Hall on the £285 million scheme that was launched in January with the intention of helping 6,000 families facing repossession.

He said that four more families had accepted offers under the scheme in May, in addition to the two that had already been helped, "which shows that the impact of the scheme is accelerating".

The debate was opened by Vincent Cable, the Liberal Democrats' Treasury spokesman, who said that the scheme, which keeps people in their own homes as tenants, was the "least successful" element in the Government's suite of assistance measures.

Its "extreme complexity", with assessments taking up to five months, and tough eligibility rules meant many families were unable to get help through it.

He called on ministers to make the programme more flexible.

But Austin said judging it only by the numbers who accepted offers "undersells" it. He said 200 households had benefited from advice to freeze charges and stop the immediate threat of repossession, with a further 295 in the assessment stage.

Cable acknowledged that many Government measures had helped families avoid losing their homes, pointing out that the Council of Mortgage Lenders had revised downwards its predicted repossession figures.

But he also highlighted other research predicting 100,000 repossessions a year by 2011, saying: "The Government has brought forward some useful initiatives. They have undoubtedly alleviated the threat of repossession for probably thousands of people, but in many cases the problems are being postponed.

"We are building up a crisis which will probably reach its full maturity in a year or two's time."

Repossessions tended to lag behind unemployment, Cable said, and the number of people out of work was still rising - meaning the problem had a "very long fuse".

He said: "The worry is, amongst a lot of the people dealing with housing need, is that this is a problem that is going to deteriorate very badly next year and the year after."

Austin said ministers were working "day and night" to help homeowners through the recession.

"We need to ensure that wherever possible families do not have to suffer the trauma and upheaval of repossession," he said. "People need to be reassured that we will do everything we can to help all households at risk so that they can benefit from the package of help that we have provided.

"We will continue to put pressure on lenders to ensure they support their customers, we will continue to strengthen and accelerate delivery of the schemes that we have put in place, and we will ensure that households know where to get help if they are struggling, showing at every stage that they have got a Government that is on their side."

In response to the figures, Sam Younger, the Chief Executive of Shelter, said, "The national mortgage rescue scheme has the potential to help many vulnerable homeowners to stay in their home, so it is very disappointing so few people have been accepted on to the scheme.

"Getting accepted on to the mortgage rescue scheme is obviously taking considerably longer than we would want. The Government needs to review the current eligibility process and tackle any issues that are preventing people from successfully taking up this scheme.

"The introduction in July of regulation by the Financial Services Authority of private mortgage rescue schemes is vital as it will prevent any more vulnerable people from being robbed of their homes by unscrupulous sale and rent back companies."

Source: www.guardian.co.uk

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