Publishing our data on the same day as the MoJ figures is designed to help improve understanding of what the two sources of information actually show. It will also illustrate just how wide the differences between the two sets of numbers can be.
What the figures will show
Even allowing for differences in coverage, the two sets of figures are likely to illustrate once again how the number of claims issued in the courts, and the number of court orders made, dwarfs the number of mortgaged properties that are actually taken into possession. In the third quarter of last year, for example, the MoJ data showed that 38,500 claims were issued and 29,500 orders were made (both numbers seasonally adjusted) while, in the same period, our figures showed that the number of homes actually taken into possession was considerably lower, at 11,300.
Our figures do not, of course, capture possessions in the second charge market, which could add between 10% and 20% to the overall total. Even so, it is clear that court action does not inevitably lead to losing possession of the property.
The large difference between the numbers of court actions and actual possessions illustrates the fact that lenders continue to explore workable options for addressing a borrower’s payment problems, even after obtaining a court order, right up to the point of possession. Possession is the last resort, as we continue to reiterate, and should only occur when all other reasonable attempts to resolve a case of mortgage arrears have failed.
Lenders remain absolutely committed to helping borrowers in difficulty help themselves; it is not in their commercial interests to take possession. Similarly, borrowers have a responsibility to address their own problems. Most that do so, and work with their lenders to solve them, succeed in managing down their arrears over a period and avoiding the risk of possession. Any borrower worried about mortgage payments should therefore contact their lender at the earliest opportunity, before a payment is missed, and continue to engage constructively in working towards a solution to their problems.
Although we have not yet finalised the data we are due to publish later this month, we continue to believe that the number of properties taken into possession last year will not exceed 45,000, the forecast we originally made in October 2007. Data we have already published for the first nine months of 2008 shows possessions totalling 30,200.
So, action taken by both lenders and borrowers is already resulting in fewer possessions than we anticipated. The increase in borrowers seeking debt advice is another example of action they are taking to help themselves – an important development at a time when many consumers will have various debts and credit commitments, and not just a mortgage.
Minimising possessions
In anticipation of the worsening economic outlook, we put a lot of work last year, with members, into reinforcing that mortgage lenders do all they can to avoid possession. We worked on a series of measures intended to ensure that lenders continue to:
- help borrowers in difficulty overcome their problems with solutions tailored to their individual circumstances;
- consider all realistic options to possession, given the borrower’s circumstances; and
- only pursue possession as a final option.
