Homelessness increasing as banks theaten repossession – even if you’re paying the mortgage!

The News Line reports that the recession is driving up homelessness:

Crisis, the national charity for single homeless people, yesterday warned of a potential surge in homelessness in 2009 as it opened the doors of Crisis Christmas to hundreds of homeless people.

Following official figures showing record unemployment levels, a YouGov survey on behalf of Crisis has revealed that 41% of adults in Britain know somebody who has lost their job due to the economic downturn.

Unemployment is hitting home with almost one in ten (9%) of people with a mortgage or rent repayment already struggling to pay the rent or mortgage.

In addition, a third of those surveyed (32.4%) believed they would lose their home within three months of losing their main form of income – leading to fears of a surge in homelessness in the New Year.

The survey also reveals that the poorest are the most vulnerable to the impact of the economic downturn, with more than three times as many people with lower incomes struggling to pay the rent and mortgage compared to more affluent groups in Britain.

Poorer people are also more concerned about losing their jobs and homes.

The findings were announced on the day that Crisis is opening nine temporary centres across London to hundreds of people who are already homeless and vulnerably housed.

The centres provide vital companionship, hot meals and shelter as well as services including housing, job advice, health checks, training and further education opportunities.

Leslie Morphy, Chief Executive of Crisis, said: ‘These figures are a stark warning for 2009.

‘Today we open the doors of Crisis Christmas to hundreds of homeless people in London – some of the most vulnerable and deprived people in our society.

‘The economic downturn is hitting the poorest the hardest.

‘Many are struggling to keep their homes.

‘The situation is only made worse by pressure on jobs, with unemployment levels set to reach two million by the end of the year.

‘Our fear is that as the recession bites in the New Year we are going to see more people in the same situation as those relying on our Christmas centres today, whilst those already at the bottom of the pile are going to be further away from the help and support they need to put their lives back together.’

Even if you are in employment and can afford to pay the mortgage, you could still be repossessed, as The Times reports:

Homeowners who have not missed a single mortgage payment could still be threatened with repossession by lenders who use an emergency clause to demand that the entire loan is repaid at short notice.

Peter and Marian Addyman, who live in St Leonards, East Sussex, received a letter this month from NatWest – part of the Royal Bank of Scotland, which is majority-owned by the Government – insisting that they repay a £226,000 mortgage within 30 days or face repossession.

The couple, who have never failed to make a mortgage repayment, bought their new-build five-bedroom property for £250,000 in 2004. When their initial mortgage deal expired at the beginning of the year, they took out an interest-only tracker loan at 0.04 per cent above the Bank of England base rate.

Their local MP, Michael Foster, who has twice written to the bank to request an explanation, said of the mortgage: “The bank are obviously not making any money out of it but they agreed it.”

The Council of Mortgage Lenders said that the clause allowing lenders to demand that a mortgage be repaid at short notice existed in the small print of almost every mortgage in Britain, although it was meant to cover only exceptional circumstances. This month a judge supported the right of lenders to repossess properties at will under a law dating back to 1925.

Since the government owns a majority of RBS, ministers should get involved to ensure this doesn’t set a precedent for the banks. It must be tempting for banks to recapitalise via repossession, thus avoiding total nationalisation and concerted regulation.

Back to the News Line for what to do about the homelessness crisis:

In the next year a million people will lose their jobs, and hundreds of thousands of them will be unable to make their mortgage or rent payments. They will end up on the streets.

What is required is an emergency plan to house the homeless.

Under the Labour government, Labour Councils are actually demolishing council estates and selling the land to developers for speculative building aimed at the very rich.

It has reached the stage where almost the entire housing stock has been sold off, and where council tenants are being threatened with eviction by councils in Camberwell and other places, because they will not leave their council homes.

The sales of council estates, or their demolition by councils must be halted at once.

Likewise, all empty properties must be requisitioned and taken over to house the homeless.

As well there must be a programme of public works to build a million new council homes, both to house the homeless and to provide hundreds of thousands of young workers with jobs and the opportunity to learn trades and master skills at trade union rates of pay.

This is the way forward to begin to solve the housing crisis.

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Banks resisting efforts to stop wave of repossessions

So the Financial Times says:

Ministers are struggling to secure more protection for homeowners facing repossession, with the judiciary and banks resisting pressure to show leniency that goes beyond existing law.

Some judges are opposing requests from Jack Straw, justice secretary, to give more leeway to people defaulting on their mortgages and permit them to change their repayment terms, according to Whitehall sources.

Judges on the side of the banks? Well, I never…

The FT goes on:

Yvette Cooper, chief secretary to the Treasury, said on Sunday that repossessions should be a “last resort” by the banks.

She called for alternatives such as “re-profiling” payments, repayment holidays – where only interest is paid – or schemes where banks or housing associations buy stakes in homes.

But the FT has learnt that efforts to allow borrowers to soften their repayment terms have foundered in recent weeks.

The dispute comes as the civil justice council drafts the first “pre-action protocol” for mortgage arrears, setting out guidelines for settling disputes before the matter is taken to court.

A key point of contention is whether struggling borrowers should be given the right to request a “reasonable” extension to the period of their loan and arrears to reduce their monthly payments.

Credit card borrowers are presently offered stronger protections under UK law than mortgage holders, allowing them to request that courts adjust interest rates or extend loan periods via so-called “time orders”.

By contrast, powers of judges are much more restricted by case law on home loans.

Whitehall insiders say there have been forthright discussions between the representatives of the judiciary, banks and ministers over what actions can be taken to prevent a wave of repossessions.

The consultation period on the new protocols, which is led by the Master of the Rolls, is nearing its end. “Jack Straw is very keen to speed this up and put in place as much protection as possible,” said one Whitehall source. “There is a general sense that this is the right thing to do. The question is how quickly it will happen.”

The draft protocol put out for consultation in February says lenders and borrowers should try to agree affordable sums for borrowers to pay towards arrears.

It adds that “lenders should accept a reasonable request from borrowers to change the date of payment [within the same payment period] or the method by which payment is made”.

One Whitehall adviser said an emergency bill was a possible option to break the deadlock, although allies of Mr Straw denied this.

Here’s Andrew Fisher, of the Left Economics Advisory Panel, speaking on the BBC News channel: