Northern Rock chief: I regret every repossession

Tuesday, 18 November 2008 01:05

The new boss of Northern Rock today denied allegations the nationalised lender is aggressive when chasing mortgage borrowers in arrears.

Gary Hoffman, chief executive of Northern Rock, who started last month, today told MPs of the Treasury committee: "Above all we want to make sure customers remain in their homes and repossession must be a last resort.

"Every one I will regret."

"We make sure there are payment holidays and customers can reduce payments to stay in their home."

He added a third of Northern Rock repossessions were voluntary - with many occurring without any dialogue between the bank and borrower.

The Northern Rock chief added repossessions were higher at Northern Rock than other lenders because of its Together mortgage range - which offered up 125 per cent loans.

A third of Northern Rock's mortgage book are Together Mortgages, but they represent three-quarters of repossessions.

Mr Hoffman was also questioned over whether Northern Rock was chasing repossessed customers after their home was sold to make up the shortfall.

He stated in some cases Northern Rock did follow borrowers to pay back the whole debt.

"It depends on circumstances if we forbear debt," he told MPs.

Mr Hoffman also said he was working on changing the attitude of people working in debt management for Northern Rock- an arm of the firm that has doubled in size in the last year.

He also stated he wanted Northern Rock to be a leader in a new field of mortgage rescue products.

Ron Sandler, Northern Rock non-executive chairman, told the MPs the bank would be "on the cutting edge of helping customers in danger".

New products being developed across the industry include switching equity in a home into shared equity with banks or housing associations.

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