Figures published on the 12 November 2009 by the Council of Mortgage Lenders (CML) on mortgage arrears and possessions show that there were 11,700 homes taken into possession by lenders between June and September, equivalent to one mortgage in 1,000.

This is up on the preceding three months, 11,400, but is an improvement on the 12,700 homes repossessed in the first quarter of this year.

Today's figures mean that the total number of possessions in the three quarters of 2009 stands at 35,800, with the CML predicting 48,000 for the whole of 2009.

Arrears

There are 11.1 million mortgages in the UK, with loans worth over £1.2 trillion.

At the end of September, 194,600 mortgages, 1.77% of the total, were in arrears of 2.5% or more of the outstanding mortgage balance. This compares with 204,200 cases (1.86% of all mortgages) at the end of June.

CML arrears and possessions statistics for the fourth quarter of 2009 will be published on 11 February 2010.

Mortgage Pre-action Protocol (Taken from MOJ website)

A new Mortgage Pre-action Protocol for possession claims relating to mortgage or home purchase plan arrears came into effect on 19 November 2008. The protocol applies to mortgage arrears on;

• first charge residential mortgages and home purchase plans regulated by the Financial Service Authority under the Financial Services and Market Act 2000;
• second charge mortgages for residential property and other secured loans regulated under the Consumer Credit Act 1974 on residential property; and
• unregulated residential mortgages.

The Protocol gives clear guidance on what the courts expect lenders and borrowers to have done prior to a claim being issued. The main aims of it are to ensure that the parties act fairly and reasonably with each other in any matters concerning the mortgage arrears, to encourage more pre action contact between lender and borrower and to enable efficient use of the court’s time and resources.

The introduction of the MPAP coincided with a fall of around 50% in the daily and weekly numbers of new mortgage repossession claims being issued in the courts as evidenced from administrative records. As orders are typically made (where necessary) around 8 weeks after claims are issued, the downward impact on the number of mortgage possession orders made was seen in the first quarter of 2009. The large fall in mortgage possession actions will have had a negative impact on the quality of the seasonal adjustments.

More on the MPAP can be found at www.justice.gov.uk/civil/procrules_fin/contents/protocols/prot_mha.htm 

DebtWizard Comment

Although the data is collected correctly by the Council of Mortgage Lenders (CML) and Ministry of Justice (MoJ) in my view it does not offer a true reflection of current market conditions because;

• the number of homes being sold by families to private landlords, under 'sale and rent back’ schemes, is not taken into account.
• it takes between 6 and 12 months to have a home repossessed, and the figures released are based upon house holders who experienced difficulty up to almost a year ago.
• the CML is only collecting the number of first charge holders. There is no record of how many second charge holders, usually secured loans, that are repossessing homes.
• the introduction of the Mortgage Pre-action Protocol last year could be delaying what will be eventual repossession for some home owners.

Sale and rent back schemes

Many of these sales under 'sale and rent back' are conducted to prevent the home being repossessed and the seller then usually remains in the property, albeit owned by someone else, paying rent and effectively becoming a tenant.

The Financial Services Authority (FSA) estimates that some 50,000 of these homes have been sold under this scheme over the past few years and it is thought that up to half of these have been sold in 2008 alone. I believe that because 'sale and rent back' was not an option back in 1991 when 76,000 homes were repossessed , the true figure for this year, without 'sale and rent back', would be 80,000 - 85,000 homes, making it higher than those figures back in 1991.

Unemployment

With unemployment expected to reach 2.5 million by the end of the year, this will only add to the repossession figures.

When interest rates go up 

Exceptionally low interest rates are helping to keep mortgage payments down and some people are using redundancy payments or credit cards to meet their mortgage commitments. However with interest rates expected to go up next year and with rising unemployment many families will continue to struggle. This is just a time bomb waiting to explode.

Chasing the mortgage shortfall debt

Not many house owners are aware that any debt still owed to the mortgage company after the repossession and subsequent sale of the property is recoverable by the lender for a period up to twelve years in the UK. This counts from the date of the last payment or acknowledgement of the debt, and applies on any sole or joint mortgage account.

I have written an article on 'House repossession debt / mortgage shortfall claims' and explain how long lenders have to pursue a borrower for a mortgage shortfall following the forced sale after the repossession. Some will be astounded by the length of time they can chase the debt.

Advice if you are struggling to meet your mortgage payments

• Contact your mortgage lender sooner rather than later.
• Visit the government website www.direct.gov.uk to see if you qualify for any of the mortgage rescue schemes.
• If you have other debts such as credit cards, personal loans and are struggling to meet these then visit our page of helpful organisations.
• Make sure you pay your priority debts first such as mortgage, council tax and utilities before your unsecured borrowings, more on our DIY debt plan
• Try our much acclaimed free budget form, designed to help you keep control of your finances.