[Ben Reeve Lewis is worrying about mortgage repossessions this week …]
I am not going to go on about Monday’s Landlords from Hell programme on Channel 4.
I have already wasted far too many words on it, both in blog form, on twitter, which got Shelter on my back again and in person in a rant to Frazzy who as usual didn’t really listen, smiling benignly and nodding whilst thinking of something entirely different.
As Teena from Property 118 said of it “I love a woman with a coping strategy”.
No. There are far more important things happening out there in housing world. In fact a very serious things that might be passing you by.
Mortgage repossessions to rise
Most of you know I do landlord/tenant work but what I don’t write about much is the fact that the other half of my job is defending mortgaged homes from repossession by the banks.
I negotiate with them on the borrowers behalf and go to court to represent people in proceedings, usually about 5 times a month at least.
A few weeks back I attended a conference on mortgage repossessions where the Council for Mortgage Lenders announced that they estimate mortgage repossession will rise this year.
A quick guide to defending a home;
Put very very simply when trying to save someone’s home it is important to maximise income and reduce outgoings wherever you can. Standard tools for people in my line of work is to get people to change their mortgage type to Interest Only, which reduces the monthly amount they have to pay and apply for a thing called ‘Support for Mortgage Interest’ payments (SMI) which will pay a large chunk of the monthly payment, thus saving the home.
In June the Financial Services Authority issued guidelines to mortgage lenders saying they need to be more circumspect in transferring to Interest Only mortgages. Thanks for that FSA, that’s one more boot put in to borrowers in difficulty.
A disturbing announcement from Vlad
But this week I read a disturbing announcement in Inside Housing that Lord Freud, who is rapidly becoming the Con-Dem’s own version of Vlad the Impaler, architect of HB Cuts and staunch supporter of direct LHA payments to tenants and Universal Credit, that he is looking into cutting SMI payments.
The rate that it is paid at has already been slashed but he is looking for more savings. This, when put against the increasing reluctance to convert to interest only will be a major death throw to people’s ability to save their homes.
In the double speak peculiar to this time, where savage cuts and brutal policies are dressed up as caring – cuddly assistance he says :-
“We are committed to supporting homeowners to stay in their own homes when times are hard.”
As is the case with raising rents and calling them ‘Affordable Rents’ that I mentioned last week, this kind of almost sarcastic, or at best tongue in cheek, logic is breathtaking.
When the CML is predicting mortgage repossessions rising in the coming 12 months, how can you take away 2 major tools for saving people’s homes and say you are committing to supporting homeowners? What new tools are the introducing to save people’s homes?…..a big fat zero.
SMI as a secured loan
Having said that 1 thing he is considering that I don’t have a problem with is the possibility that the amount of SMI a person receives could be registered as a charge on the property t be recouped on sale. This way the money they received is a secured loan.
Why not just use SMI as a secured loan and not limit it? If SMI were granted without restriction and then registered, people could hang onto their homes. Lets hope that his ‘Consultation’….(stop laughing at the back. Anyone would think you were of the opinion that they have already decided what they are going to do without consultation)……, looks more closely at that.
Mortgage rates to soar?
Another bit of alarming news I read on Mortgage Rates 123 was Mervyn King, Bank of England supremo saying that with the Euro crisis worsening a rise in mortgage interest rates is going to be inevitable. Of course everyone has know this for some time but it now seems to be waiting in the wings. Not the leathery bat-like wings of Lord Freud, but I mean immanent.
So put these pieces of news together now. The FSA tells banks not to grant interest only mortgages so readily, the government plans to cut SMI and interest rates going up. How do you think this will impact on mortgage repossessions? How will you fare when all this comes in?
Contentious ideas for social housing
Changing subject. Wandsworth council in South London, you may recall, were the first to say they were going to evict families of rioters back in the summer. They were also one of the first to announce prioritisinig their council waiting list for people in work and have recently announced they are considering evicting new tenants if they don’t actively look for work.
These contentious ideas have received much attention and the Guardian this week gave council leader Ravi Govindia the chance to make his case He says:-
“Our focus is very much on supporting and encouraging people to set their sights high”.
Since when has it been housing’s job to be motivational gurus? And again we are back to enforcement dressed up as sympathy when he says:-
“That is why, as part of a pilot, we are using fixed term tenancies to offer a package of support to people”.
The logic here is, we will support you by taking your home away.
I hope this double speak doesn’t transfer to the NHS:
“Doctor, doctor, I have a painful lump under my arm.”
“Don’t worry sir, we’ll take the pain away from you immediately, NURSE? Where’s my shotgun?”
I can understand politicians using this deceitful language, they always have. What I don’t understand is why people don’t accost them in the street and tear their trousers off.
Bonkers idea?
And so, with another week’s satisfying rant out of the way I bid you adieu with a left-field but workable idea for mortgage borrowers in difficulty that just occurred to me.
If you aren’t going to get SMI why not find someone similarly in trouble with a similar house and swap, each becoming the other’s landlord/tenant. If you cant get SMI you can still get HB for the rent. Benefits would have to take into account rental income but it will be more than not getting SMI on the mortgage and you can still maintain ownership.
This is the way council thinking will go in the future as anything goes now. I’ve heard rumours that in future when members of the public ring us up we have to be helpful and polite hahahaa the very thought!!!!!!!!!!!
Nurse? The screens!!!!!
Ben Reeve Lewis
Ben has started Home Saving Expert, to share his secrets to defending people’s homes from mortgage repossession Visit his blog and get some help and advice on mortgage difficulties and catch up with him on Twitter and check out his free report “An Encouraging note on Dealing with your Mortgage Lender” and have it sent right to your inbox.
Houses on scales picture from Images of Money whose website is here
This is a great post, and yes, it is something of a distraction to focus on Landlords from Hell and ignore the low level misery that leaves people slowly yet unavoidably careering towards homelessness (ie roofless homelessness.) The Universal Credit seems to me to abolish housing benefit entirely – or have I got it wrong? Do people have to live off £140 per week, inc paying rent? And yes, it is to my mind absurd that so many people were encouraged to buy homes they could not afford in harsher times, ie losing one income, but I had heard talk of regulating, and rationalising, and making no-longer-evil-on-legs, the concept of sale and rent back. All of this is going to end very badly.
SARB is still the devil’s spawn Penny but it has a cuddlier face in what are termed ‘Lease Options’. Dont ask me how they work though.
Now the National Homelessness Advisory Service is also pushing a thing called Assisted Voluntary Sale. A scheme that leaves a tenant in the property rather than having it snatched back. They pay less monthly mortgage while it is being sold and some lenders will even pay deposit and 6 month’s rent up front to help people move on.
Keeping things local, which is how that ludicrous bleeding prefect we have running this country wants it, we have been looking into whether or not, when people really cant hang onto the family home, we can persuade our local portfolio landlords to buy the property and keep them in as tenants with our support.
It would be nice if the law allowed us to use council staff pension money to buy the property as a win-win for all. It doesnt, which is why our landord is a couple of Greek Brothers. That is why I know our rent will go beyond our means come March, because our national letting agents will wax lyrical about how much more they can screw out of us and up their 10%, regardless of where the rise is taking them once interest rates rise and tenants have already been bled too dry to deal with another rent increase.
While rents continue to rise, the one thing people are carefully NOT mentioning is the concommitant rise in rent arrears and late payments. I feel like a mum watching it’s child at a party gorging itself,knowing (As a housing advice worker in homelessness) that it is me who is going to have clean up the sick in the morning too