Plans to close loophole and reduce repossessions

Wednesday, 30 December 2009 12:00

Mortgage lenders could soon be forced to obtain a court order and ask the borrower's consent before repossessing a home, under new proposals.

The Ministry of Justice has launched a consultation on the plans which will close a loophole in the law which currently allows lenders to repossess the home of people in mortgage arrears without court or owner approval.

If proposals are implemented it will mean borrowers in residential properties will be able to access protections offered by the court.

The government's Housing Possession Court Duty Schemes, which help people avoid eviction from their homes, have so far helped thousands of people.

Figures show more than 33,000 struggling homeowners and tenants facing court across England benefited from schemes offering last minute emergency help between October 2008 and November 2009.

And the Ministry of Justice also found 76 per cent of people helped by the schemes were able to return home immediately after repossession hearings thanks to the advice they received.

Four out of five people were saved from repossession after receiving help from 80 government-funded court desks.

Justice minister, Bridge Prentice, said: "And now we're doing more. Under existing laws lenders have the right to repossess and sell a property without seeking either the agreement of the owner, or of the courts.

"While there is no evidence that owner-occupiers are being treated this way, the government proposals would close this loophole and prevent any future instances of 'rogue lenders' behaving this way."

The consultation runs until March 28th, 2010.

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