Your location: New deal for homeowners
23 October 2008
After months of campaigning and lobbying for it, Shelter has welcomed a new package of measures announced by the Government this week to help homeowners during the credit crunch.
The package has three main elements: new rules on repossessions, regulation of sale and lease back firms, and reform of ISMI (Income Support for Mortgage Interest).
New rules on repossessions
The rules are designed to make repossession a last resort. From now on, mortgage lenders will be expected to be able to show in court that they have considered alternatives to repossession, and that they have tried to pursue other courses of action that would allow the borrower to keep their home.
Shelter chief executive Adam Sampson said: ‘This is a major step forward in helping thousands of people keep their homes. The Prime Minister has announced the ground rules, and it is now down to mortgage lenders and the courts to ensure they are treating struggling homeowners with fairness and dignity.
‘If lenders fail to explore every avenue to keep people in their homes then the courts must make sure they throw out any cases they feel have not been fully examined.
‘Shelter will be keeping a very close eye on both the lenders and the courts to ensure this guidance is being adhered to. If carried out correctly we should see less repossessions than are being forecast for the future, and this will be good news for everyone.’
Sale and lease back firms to be regulated
The Government has also announced that it is planning to bring ‘sale and lease back’ firms under the Financial Services Authority’s regulation, as the Office of Fair Trading recommended last week.
Adam Sampson welcomed the announcement and said: ‘This will prevent homeowners from being robbed of their homes by these unscrupulous companies. The Government must now pass the legislation as a matter of urgency to give the FSA the powers to regulate the rogue behaviour in this industry.’
Reform of ISMI (Income Support for Mortgage Interest)
Meanwhile, Secretary of State for Work and Pensions James Purnell announced in Parliament this week that reforms to ISMI (Income Support for Mortgage Interest) will be brought forward from April to January 2009.
ISMI offers help with mortgage payments to people who lose their jobs. Under the new reforms, the waiting period for help will come down from 39 weeks to 13 weeks, and homeowners will be eligible for help on the first £175,000 of their property - up from the previous limit of £100,000.
This stronger safety net is something Shelter has been campaigning on for nearly a year.
Get advice on mortgage arrears
Get more information on the announcements in the Government's press release
