Healey defends repossession views
John Healey has defended his view that repossession can be the ‘best thing’ for some struggling families, and hit out at his critics.
Rival politicians accused the housing minister of being out of touch with reality, after he made the comments last week.
But in a statement yesterday, Mr Healey reiterated his position. ‘If families are deep in debt and there is no way they can keep paying their mortgage, then repossession might be the only way they can get their finances and lives back on track,’ he said.
‘But my job as housing minister is to ensure this is always the last resort and that they have been able to explore all other options first. So far around 330,000 families have received help or advice and this has meant repossessions are running at around half the rate of the last recession.’
He was also critical of shadow housing minister Grant Shapps, who had called on Mr Healey to apologise for the remarks.
‘Obviously, Grant Shapps needs reminding of the record repossessions that took place during the early 90s recession. Families were left to sink or swim, as the Tories left the recovery to the market,’ he said.
‘Grant Shapps and his fellow Tories haven’t learnt anything from their past mistakes - they are dismissive of the help we have put in place and propose cuts that would hinder economic recovery.’
The Council of Mortgage Lenders published figures last week saying there were 46,000 repossessions during 2009. Mr Healey’s office said this compares favourably with the last recession, when repossessions peaked at 75,500, under a Conservative government in 1991.
However the Conservatives said the 46,000 figure does not include homes sold through sale and rent back schemes to avoid repossession. If these were taken into account, the Conservatives think as many as 85,000 households could have lost ownership of their home in 2009 due to financial difficulties.
In response Mr Healey said: ‘The Tories are desperate for repossessions to be higher to both deflect from their own failings as a government during the last recession and mask their cynical opposition towards help this Labour government has put in place for struggling homeowners.
‘While some people will have chosen this route as a way of remaining in their homes, others will have renegotiated their loans with their lenders.’
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Readers' comments (6)
alex kendall | 16/02/2010 10:13 am
Mr Healey and his gang have no concept of reality for millions of families struggling to survive this Labour recession. I guss Gordon Brown would not shade a tear for these families most of whom have worked and paid in to the system and get sweet F A in return. Can we be any blunter ?? Think not reality is such a cold dish particularly when I serve it!!!
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alex kendall | 16/02/2010 10:19 am
could we also get grant Shapps on the record ?? So quiet and so silent over `third party rights’ and how this would impact on RSL new build. Could it be a case of those in glass houses???
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michaelbarratt | 16/02/2010 10:54 am
Sometimes events are beyond the control of ordinary families and when they are faced with insurmountable mortgage debt maybe the only sensible course of action is to walk away.
As the US humorist W.C.Field advised: "Try try and try again then stop only a fool would continue."
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ancient Greek | 16/02/2010 12:20 pm
Its the old "Let Them Eat Cake" syndrome for some including "those whom God wishes to destroy" as it were.
As long as Britain retains the ability to 'borrow' in wolrd money markets so as to be able to mount 'Expeditions' to distant lands in memory of Empire along with fellow English speaking colonists, such arrogance would not be out of place for a while longer.
Arguments may continue to be had bewtween the established order and the BNP but the substance remains.
And so will the unresolved and little spoken of structural issues such as the 'recession' which keeps 'ending' and then getting a little worse (like the wars in Iraq and Afghanistan no doubt).
I say let them read Savills+Uni. latest report (excerpts recently referred in BBC Radio Money-Business prog) on the not-so-secret devaluation of Commercial Property by between 25-50% (at least in Britain) but kept quite and threatening to reveal the continuation of the 'Subprime' saga here.
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Jacks | 17/02/2010 10:21 am
I find it very sad that Shapps and Healey are more concerned about having the least number of repossessions during their respective political terms than the effects of recession on some homeowners. They are all out of touch with reality and as usual we are mere statistics. Perhaps Healey should have quoted the number of people assisted under the innovative Mortgage rescue Scheme - how many was that exactly?
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Muse | 18/02/2010 9:57 am
Jacks - the MRS has helped just 276 households since it was introduced in January 2009. This scheme was meant to help 6,000 of the most vulnerable people facing repossession within 2 years, and already the funding is starting to run out. Why? Because the government envisaged shared ownership of the properties between the owners and a participating Housing Association. Instead, the vast majority of people assisted have chosen or been forced by their levels of debt to sell up all of their interest in the property and take out an Assured Shorthold Tenancy instead. At least they stay in their home, which is better than eviction in anyone's book. However, the government seriously underestimated the levels of debt faced by people confronted with repossession and this scheme will only ever be remembered as an epic failure.
There can be many causes of mortgage arrears - in some cases, yes, borrowers do 'self certify' to a higher income than they actually receive in order to get a mortgage for "the house of their dreams" that they then cannot afford. But there are also those people who have been made redundant, or cannot work due to ill health, or have divorced/lost a partner, or any number of scenarios.
I suppose that without the banks having a right to repossession, nobody would be able to get a mortgage... think about it; if the banks had no security to enforce in the event of non-payment, very quickly people would have little incentive to pay their mortgages, and either the banking system would finally cave in on itself, or they would simply stop lending money. Already we are seeing tighter controls on borrowing as repossessions become harder to achieve (for example with the introduction of new Court pre-action protocols that the banks must follow before they can issue a claim for possession). So that covers the "won't pays" but does nothing to assist the "can't pays", many of whom are in that position through no fault of their own.
So we come back to mortgage rescue. That won't help unless you're "vulnerable" (i.e. disabled or have young children) and have an exceptionally low income. Your last resort is the mercy of the bank or the mercy of the court.
Having personally attended quite a few repossession hearings in various contexts, it seems to me that 9 times out of 10 the court is very much on the side of the debtor - the Judges can suspend possession orders (so that the bank is not allowed to evict you if you keep up the payments and pay extra each month towards the arrears), adjourn to allow you time, e.g. to sell the property yourself, or postpone the order (allowing you more time to find alternative accommodation etc.). Judges will only make possession orders where there is absolutely no other way that the mortgage debt can be repaid.
It is hard to see what else can be done to save people from repossession - the government cannot possibly pay people's mortgages for them, and local authorities/housing associations simply don't have the funds to keep buying up properties (whether through mortgage rescue or not) or even building more social housing. There are already multiple free debt advice schemes available (admittedly some are better than others) but a lot of people still have an unfortunate habit of burying their head in the sand and hoping the problem will go away.
I think I can summarise my views on this as follows (and I apologise for the length of this post!)
1. Banks are not always at fault, but they do need to be more sympathetic to those in arrears, and need to have a more approachable attitude - too many are cynical towards those in arrears and seek to "blame the borrower"
2. Borrowers in arrears need to be proactive in addressing the issue, either by contacting the lender to make an agreement or actively seeking out assistance - too many people leave it to the last minute to apply for social housing or emergency accommodation
3. The government needs to make more funding available to support those facing repossession & eviction
4. Social housing needs to be more widely accessible; though good luck finding the funds for construction in this market
And before anyone asks... when I was a young teen, my parents lost our home to mortgage repossession. It was one of the hardest things we ever had to go through.
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