Some lenders still not doing enough

AdviceUK, Citizens Advice, the Money Advice Trust and Shelter conducted a survey of their advice experts to see how Government mortgage repossession schemes are working on the ground. The research highlights that those in the sub-prime and second charge sector aren’t doing enough whilst. mainstream lenders' practices have improved.

The survey has found that while 51% of advisers surveyed reported an improvement in mainstream lenders practices since the Pre Action Protocol came into force, only 20% of advisers report that sub-prime and second charge lenders' arrears collection practices have improved since the new guidance for judges was established.

National Debtline also conducted a survey of its clients, which reflects the experiences of advisers. 58% of callers in arrears with their first charge loan said the solution offered to them by their lender was affordable when told about repayment problems. This contrasts with only 39% of callers in arrears with their second charge loan who were offered an affordable solution.

AdviceUK, Citizens Advice, Money Advice Trust and Shelter are calling on all lenders to fully comply with the Pre Action Protocol and industry guidance to help prevent rising repossessions.

Other findings from the adviser survey include:

• 74% of advisers agree that following the launch of the Pre-Action Protocol judges are asking more questions about lenders' attempts to reach the borrower before taking court action (compared to 24% who disagree)
• 46% of advisers surveyed report no real difference in lenders' practice following the changes to Support for Mortgage Interest; yet
• 30% report that lenders are less likely to proceed with possession action through the courts following the changes to Support for Mortgage Interest
• 80% of advisers surveyed report that clients move into the private rented sector following repossession
• 82% of advisers report that clients need debt advice after being repossessed.

Joanna Elson, chief executive of the Money Advice Trust said: "Money Advice Trust applauds the improvements that many lenders have made in their practices. In the current climate, where 800 repossessions happen a week, it is vital that lenders adhere to the standards in the protocol. I welcome the fact that 51% of those surveyed found mainstream lenders' practices have improved; clearly we need to ensure that this applies to all lenders.

"One of the findings was that a major obstacle to accessing the government mortgage to rent scheme was the bar on those with negative equity; and we therefore welcome the Government's announcement in the Chancellor's Budget that this scheme will now apply to those in negative equity."