2008: A record year for property repossessions

According to a recent report issued by the UK Council of Mortgage Lenders (CML), the number of properties repossessed in the United Kingdom in 2008 rose to around 40,000. This figure represented an increase of 54% from 2007.

In a statement that can only be described as contrary, the CML hastened to add that the number of repossessions was considerably less than their original projections, due to the fact that lenders had made considerable concessions to their clients to ensure repossession was a last resort.

In 2009, as the recession really begins to bite, the CML expect that around 75,000 families and business premise owners will be asked to vacate their properties

In their report, Michael Coogan, director general of the CML’ advised borrowers strongly to make every effort to reach an agreement with their mortgage bank regarding outstanding debts. He pointed out that many borrowers simply vacate the property when repossession appears inevitable to avoid the trauma of forced eviction. Coogan advised that people who borrowed money to buy property remain liable for their debts, even after the leave the property.

In general, the situation regarding UK mortgages is certainly less than healthy, as arrears levels continue to grow.

At the end of 2008, there were more than 180,000 mortgage holders in arrears. The average arrears were more than 2.5% more than the outstanding balance, and more than 1.5% or total UK mortgage debt. .

Housing Minister Iain Wright pointed out that the fact that arrears figures were gradually rising was a cause for concern. He added that the government had instigated a range of initiatives in order to forestall repossessions that he hoped minimise the risk as much as possible

He pointed out that families where one or more of the principal wage earners have been made redundant are entitled to claim support to meet their mortgage interest payments. This option has been in place for some time, but it is now available within a much shorter time frame

Others who have suffered a major drop in income as a result of the recession will be able to apply to their mortgage bank request to have a percentage of their repayments deferred for a period of up to two years.

To provide a little sunshine in this otherwise bleak picture, the Royal Institution of Chartered Surveyors (RICS) announced in a recent statement that Wright’s programmes appeared to be making a difference. The report stated that despite increasingly difficult economic circumstances, both the number of houses taken into possession in the fourth quarter of 2008 as well as mortgage possession actions issued actually fell during that period

A set of guidances introduced at the end of 2008, stipulate that County Court judges are required to ensure that all mortgage banks are required to clearly demonstrate that they have tried to discuss and agree alternatives to repossession. In addition, court action can not be taken within three months of a borrower missing their first payment.

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Tags: Bank, Budget, Credit Crunch, Economy, Mortgage, Mortgages, negative equity, Recession