Securing a fair framework for homeowners

The Government has announced new rules to help protect homeowners, who may be facing the threat of repossession.

New court protocols will help make repossessions a last resort, and the Government is proposing that companies engaged in sale and rent back schemes, which may target vulnerable home owners, should be brought under FSA regulation.

The Master of the Rolls has today approved the Civil Justice Council's new protocol for the courts in mortgage repossession cases.

This sets out clear guidance on the steps that lenders are expected to take before bringing a claim in the courts to ensure that repossessions are a last resort.

Lenders will now be expected to demonstrate that they have tried to discuss and agree alternatives to repossession when borrowers get into trouble with their mortgage repayments. If a case reaches court, lenders will be required to tell the court precisely what they have done to comply with the protocol.

The Government will also be publishing a consultation paper on bringing sale and rentback under FSA regulation, responding to recommendations from the Office of Fair Trading's (OFT) study into the Sale and Rent Back market which was published last week.

Chief Secretary to the Treasury, Yvette Cooper said: "We need to make sure we help those who might be hardest hit in the tougher times ahead, ensuring repossession is the last resort not the first. We also want to make sure that vulnerable homeowners are protected from exploitation and dodgy deals."

Justice Minister, Bridget Prentice said: "The new Civil Justice Council protocol forms part of a wider package of measures which demonstrate this Government's commitment to provide the best possible support to debtors and vulnerable borrowers. The protocol sets out all the steps that a lender should take before issuing mortgage possession proceedings. Lenders will be expected to consider ways of resolving problems outside the court system so that mortgage possession claims are only brought to court after all other suitable options have been exhausted."

Housing minister, Margaret Beckett said: "We must ensure that every avenue has been explored before lenders seek to repossess homes. These new measures will further protect the most vulnerable households in the current economic climate. We have expanded free legal representation in county courts for households at risk of repossession, we have provided more free debt advice and will continue to work closely with lenders through this difficult time.

It is important that households who have concerns over their mortgage seek advice at the earliest opportunity, starting by speaking to their lender."

Consumer Minister Gareth Thomas said: "We need to ensure that these vulnerable consumers are protected from exploitation and know their rights.

"That's why we've responded so quickly to the OFT report and committed to working with mortgage industry representatives and consumer groups, through HM Treasury's consultation, to determine the best way of regulating this emerging market."