Northern Rock offers respite to homeowners in arrears

[Legal Beagles]

Northern Rock today pledged to wait six months before taking action to repossess homes of borrowers who have fallen behind with their mortgage repayments.
The government-owned lender said it was formalising an existing policy "as part of its ongoing commitment to working with customers who are experiencing mortgage repayment difficulties".
Earlier this year the bank was accused by charities of taking an aggressive approach to repossessions since being nationalised in February. Its approach to lending before nationalisation, when it offered mortgages of up to 125% to first-time buyers, has been blamed for an increase in arrears at the bank.
By the end of September, 1.87% of its mortgage book was at least three months in arrears compared with 1.44% across the industry as a whole.
Northern Rock said less than 1% of repossession cases currently involved customers who were fewer than six months in arrears, and that on average it worked with people for a period of 15 months before a property was repossessed.
Chief executive, Gary Hoffman, said: "We continue to work with customers facing repayment difficulties to try and agree an acceptable debt management solution and avoid repossession.
"In the vast majority of cases, where repossession regrettably does take place, we have been working with the customer for well over six months."
Northern Rock is the second major lender to announce a six-month breathing space for borrowers who have fallen behind on repayments. On Monday, the Royal Bank of Scotland, which owns NatWest, said it would also wait until a borrower was at least six months in arrears before starting repossession proceedings.
The moves follow a warning from the City watchdog last Friday that lenders should ensure they are treating customers fairly.
Repossessions jumped by 12% in the third quarter of the year and are expected to continue to rise as increasing numbers of homeowners struggle to make their mortgage repayments. Figures from the Council of Mortgage Lenders (CML) show that by the end of September 30,200 properties had been taken into possession by lenders so far this year, compared with 26,200 in the whole of 2007.

• Repossessions
• Mortgages
• Property
• Borrowing & debt
• Housing market

guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds

More...

[Amethyst]

Re: Northern Rock offers respite to homeowners in arrears

Two down, lots to go.

Good news though. Nationalised/partly nationalised companies I gues have to act on the governments wishes a bit speedier than the rest - but signs are the rest will follow suit.

Think people need to be made aware of the actuality of the situation so the hype six months isnt taken in the wrong context.