Tuesday 19 October 2010

Nice bit of Shroud Waving by the Council Of Morgage Lenders.

From CML News & Views:

A concerted effort by borrowers, lenders, the government and money advice agencies has helped to keep mortgage arrears and possessions in check during the current economic downturn. But the 'safety net' providing support for home-owners in difficulty is neither complete, comprehensive nor consistently available to all those requiring help.

Despite pressures on government funding, we believe it is important to maintain support for borrowers in difficulty – and fill some of the existing holes in the safety net – to help contain mortgage arrears and possessions in the challenging times ahead. On the eve of the comprehensive spending review, we are therefore making a series of recommendations in conjunction with the housing charity Shelter to minimise the number of cases of possession.

Our proposals include:

* retaining the existing 13-week qualifying period and the current capital limit of £200,000 for people claiming support for mortgage interest (SMI), thereby helping to offset the damaging effects of the 40% cut earlier this month in the rate at which this benefit is paid to claimants;

* maintaining current funding of free debt advice, so that struggling borrowers can get good quality, reliable and impartial help when they need it during the current period of economic uncertainty; and

* retaining the existing mortgage rescue scheme, which provides an option to become tenants in their own home for those for whom owner-occupation is no longer sustainable, and has the spin-off benefit of encouraging borrowers in difficulty to seek out independent debt advice early.


It gets better and better...

... home-ownership will not be sustainable for everyone, particularly those who stretched themselves in the period before 2007 and were then caught out by the downturn in the economy and tougher credit conditions.

We believe the government should now:

* consider ways in which borrowers could be encouraged to consider voluntarily selling their property to avoid court action; and

* explore the future options for a new form of insurance, possibly jointly funded by borrowers, lenders and the government, covering vulnerable borrowers who are not currently protected by the safety net but who still aspire to become home-owners (this sort of targeted approach would be much better than the blunt instrument of the FSA’s current affordability proposals).

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