The proposed home-owner mortgage support scheme will, we believe, have only a modest impact on the level of possessions in the long run. It is unlikely to deliver much over and above what lenders already do in extending forbearance to borrowers in difficulty and meeting existing FSA requirements. However, it is too early to assess how many customers going through the scheme would not already be supported by lenders’ direct action.
We believe there are two other measures the government could implement to keep possessions in check. The first is to make access to ISMI much more widely available at the point of need by households experiencing payment difficulty due to a loss of income. The additional cost of this could be offset by taking a second charge on the property, so that any benefit paid to borrowers could be recovered over time.
The second measure is to make government-backed sale-and-leaseback options much more widely available. Alongside statutory regulation of private firms offering sale-and-leaseback, this could be an effective way of ensuring that this option is more widely used as vehicle for avoiding legal action. It would also help the government achieve its goal of keeping people in their homes in cases where owner-occupation is no longer sustainable."
