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News: Lib Dems Enter Mortgage Rescue Debate

Thu, 28 Aug 08

The introduction of a mortgage rescue scheme to help struggling homeowners is among a package of measures to combat the housing slump being proposed by the Liberal Democrats.

The Lib Dems wants to see a halt to repossessions and are calling for social landlords to step in to help homeowners who have fallen into arrears.

Lib Dem Treasury spokesman Vince Cable said: “Under this arrangement, families struggling to pay their mortgage could sell part of the equity in their home and rent it back from a housing association or private firm.
"These plans could be funded using money already committed to social housing but currently unspent because of the collapse of new building.

“They would also save taxpayers the cost of re-housing the homeless without going down the disastrous route of giving open-ended guarantees for new mortgage lending."

Other measures being proposed include allowing councils and housing associations to borrow money to buy up land and empty homes for use as social housing.

The Lib Dems also want to make it more difficult for lenders to repossess homes with courts given guidelines to allow repossession only in extreme circumstances.

"Ministers must act to help the thousands of families struggling to keep a roof over their heads,” added Cable.

Mortgage rescue schemes are already being considered by a number of local authorities and housing associations - see Home News 23 Aug 2008.

But the Council of Mortgage Lenders has warned that they will only be successful if they are part of a nationwide, standardised scheme.

The CML says some councils’ rescue packages effectively turn them into unregulated mortgage lenders.

A CML spokeswoman said: “In practice it might be difficult for local councils to run fully fledged mortgage businesses.

“If councils are to be more active in the mortgage market, we believe that it is important that they regulated by the FSA – just as our own members are.  That would ensure a level playing field for providers, and help promote consumer confidence in mortgage lending.”

 

By Joe Lepper

 

See Also - Mortgages

 

 

 

 

 

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