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Mortgage Repossessions Double!

Cliff D'Arcy
by Lovemoney Staff Cliff D'Arcy on 22 January 2009  |  Comments 55 comments

The latest data show that house seizures rose by a whopping 92% in the third quarter of 2008. However, these seven safety-nets may save some homeowners...

Today, City regulator the Financial Services Authority (FSA) released its latest mortgage-lending data up to the end of September 2008. These figures made for grim reading, particularly the following:

  • The number of new cases of mortgage arrears has risen from a fairly constant 54,000 each quarter to 60,000 in the third quarter of 2008 (Q3/08), up a tenth (10%)
  • At the end of Q3/08, there were 340,000 home loans in arrears, up almost a quarter (24%) on a year earlier.
  • The proportion of mortgages in arrears rose from to 2.13% in Q3/07 to 2.92% in Q3/08, a rise of more than a third (37%).
  • Most shockingly, the number of repossessions has almost doubled to 13,161 new cases in Q3/08, which is 92% higher than a year earlier.

Clearly, with the collapse of the housing and credit markets, more and more homeowners are having difficulty meeting their monthly mortgage repayments. Indeed, the government is frantic that repossessions could exceed the 75,740 peak recorded in 1991. Hence, working with lenders and other housing firms, it is desperately conjuring up ever-more ingenious ways to keep people in their homes.

Here are seven of the biggest safety-nets designed to assist struggling homeowners - you can judge for yourself whether you think any of them will work:

1. Mortgage payment protection insurance (MPPI)

Mortgage PPI meets your monthly mortgage repayments, usually for up to a year, if you are unable to work because of an accident, sickness or unemployment. This optional insurance cover is largely sold by mortgage lenders, which tend to charge around £6 for every £100 of monthly benefit when the `true' cost is around half this rate. For the record, two million of the UK's 11.7 million home loans are covered by MPPI, which comes to around one in six (16.9% of) households. Learn more about MPPI.

2. Income Support for Mortgage Interest (ISMI)

If you are a homeowner who is out of work and eligible to claim Income Support, then you can also make a claim for ISMI, which is a form of Housing Benefit for owner-occupiers. Alas, after the last housing crash had subsided, the government drastically cut both the scope of and entitlement to ISMI, dramatically watering down the value of this benefit.

However, as fears mount over the financial health of homeowners, the government recently beefed up ISMI. From this month, it has strengthened this safety net by slashing the no-benefit period from 39 weeks to 13 weeks, and doubled the size of home loan on which ISMI is assessed from £100,000 to £200,000. Learn more about ISMI.

3. A two-year interest holiday (the Homeowner Mortgage Support Scheme)

This heavily-publicised mortgage-rescue scheme allows homeowners who have lost their jobs to take a payment holiday from mortgage interest for up to two years. Anyone qualifying for this scheme will have their mortgage interest added to their home loan. Ultimately, if they are unable to pay this deferred interest, then the government becomes liable for it.

What's the catch? Only those on middle incomes with a mortgage of up to £400,000 and savings under £16,000 will be eligible.

As yet, the full details of this scheme have not been worked out but, on first glance, I expect it to be an administrative and logistical disaster. Learn more about this scheme.

4. A six-month breather

Some mortgage lenders (notably Royal Bank of Scotland/NatWest) have agreed to double their grace period -- the time delay before they bring legal action against defaulting borrowers. RBS et al will no longer begin legal action against borrowers until they have built up six months of arrears. This pledge will last until at least the end of this year, as I revealed here.

5. Treating customers fairly

City watchdog the Financial Services Authority (FSA) is increasingly concerned at some lenders' willingness to repossess first and ask questions later. Hence, the FSA has written to all mortgage lenders, reminding them of their duty to treat customers fairly, and warning that "repossession should be a last resort". With any luck, this will improve industry practices and put a brake on trigger-happy lenders.

6. Sell to a housing association

The government has pumped £200 million into a scheme whereby struggling owners can sell their homes to local housing associations in order to avoid repossession. The idea is that under threat of repossession can sell some or all of their more to a local housing association and stay put by paying rent. This scheme is already under way in England, with local authorities in Wales, Scotland, and Northern Ireland are set to follow suit. However, the government estimates that will help no more than six thousand homeowners, which comes to over £33,000 per case. Ouch!

7. `Sale and rent back' schemes -- AVOID

Desperate homeowners who are deeply in arrears may seek the help of one of the scores of `sale and rent back' companies which have sprung up in the past two years. Frankly, many of these firms are nothing more than vultures, preying on vulnerable owner-occupiers. As we warned in this article, they buy homes at a substantial discount to market prices, say, a third (33%) off. What's more, some offer only a one-year tenancy to the former owners, which enables them to be turfed out after twelve months. My advice is to avoid these firms like the proverbial plague!

What's the point?

You may be reading this and thinking: if you don't lose your home when you don't pay your mortgage, then what's the incentive for you to be a good payer? Especially when you consider who will foot the bill for these initiatives. In most cases, the answer is... taxpayers.

Ultimately, you, me and Joe Bloggs will be responsible for bailing out reckless and feckless mortgage borrowers, as well as the deserving and vulnerable cases. Is it fair that sensible savers and cautious renters should pay more taxes in order to bail out those who lost out in the great housing gamble? I must say that I think not!

More: Find a cheaper mortgage today | Ten Top Mortgage Deals | What This Bailout Means For You And Me

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Comments (55)

  • mackem1942
    Love rating 0
    mackem1942 said

    I presume you mean "third quarter of 2008"!?......otherwise, you are are very good prophet!

    The 92% may well come to pass in the third quarter of this year as well!

    Report on 22 January 2009  |  Love thisLove  0 loves
  • Staintunerider
    Love rating 0
    Staintunerider said

    It's just Cliff Doommonger of the Housing market getting ahead of himself ! I just know it's Cliff again by the headline before the page opens and I see his name(again). You see if someone doesn't get reposessed because of new measures, it means the like of Cliff can't buy the house for a song with the money they stashed when they exited the market to rent.

    The best part of this article is the advice to avoid sale and rent back schemes as these are vile and operated by unregulated companies to prey on the vulnerable.

    If you have a mortgage under 200k why wouldn't you want to claim ISMI that the government pay rather than take a payment holiday ? Can you do the first and then switch to the next ?

    And homeowners have got to be a better cause than the banks, at least all they wanted was a home not to get rich while completely destroying the economy aka Fred Goodwin(why hven't they stripped the knighthood) and Andy Hornby and the rest of the vampires !

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  • LateDeveloper
    Love rating 22
    LateDeveloper said

    I recently rang my mortgage lender, to sort out a missed payment (bank at fault) and was surprised to hear that the implementations broughe in bu the Government last year was not being implemented by the lender, just a message saying that the lender had not set up these schemes as of yet. :S

    Now to me, that just looks like stalling of these rules, basically because they stand to make more money out of a repossession, than thet would by any other means.

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  • jheenan1
    Love rating 0
    jheenan1 said

    Its all very well complaining about the cost to the tax payer of keeping someone in their home. However the cost to the taxpayer afterwards is high. HM government will then have to pay housing, council tax allowance, dog walking allowance and shopping allowance, I will vote for Brown allowance etc.

    As much as I despise Brown and his Scottish scorch and burn government, surely it does make sense to try and keep people in their homes for a up to a year by reduced payments

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  • pdcovers
    Love rating 1
    pdcovers said

    I do wonder just how much of the failure rate is due to to BTL market where unwise people overreached themselves.

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  • livethelifeulove
    Love rating 0
    livethelifeulove said

    Yawn! Another badly written doom and gloom article from Cliff.

    Sorry, but it looks like with a range of schemes aimed at supporting homeowners (I think you describe us as 'reckless and feckless mortgage borrowers') it doesn't look like you are as likely to profit from the misery and misfortune of others.

    We all know that there are plenty of people who borrow beyond their means - and banks who allow/encourage them to do so. But I think you will find Cliff that the majority of peopole who fall into difficulty with their mortgage do so becasue they lose their job which is probably not their fault.

    Oh and for the record I don't appreciate being called (or it being implied) that I'm 'reckless and feckless'. I suspect most other borrowers would feel the same. Your apology is awaited (but not actually expected).

    Just so we know - are you ever likely to write an objective article about the housing market?

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  • bimber
    Love rating 44
    bimber said

    Livethelifeulove, please note the words "as well as" in the final paragraph.

    Quite right, Cliff. Why should someone who was prudent during the good years have to bail out those who didn't save for a rainy day or who withdrew equity to pay for holidays and gadgets thay couldn't afford? It's bad enough having an artificially low savings rate to transfer wealth to debtors, but having to bail them out with taxes is one step too far.

    If there is no bailout then the money spent on propping up house values will be spent on rental accommodation more appropriate to people's financial situation. Their houses will be sold, causing prices to fall, this will mean Britain can become more competetive (because people don't have to charge such high wages to afford the basics in life) and those who lost their homes will be able to refind work and buy a new, cheaper house.

    This needs to happen before we get back on our feet as a nation and delaying the inevitable will not stop the pain, it will only increase it.

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  • yocoxy
    Love rating 132
    yocoxy said

    I think we can all see who the article is by, just by the headline.. Hooray, you property investing fools are getting your come uppance!! hahahaha..

    Let's ignore the fact that property remains a much better investment than equity over the last few years and even more so in the last 12 months.

    That may change and we all make our investment decisions for our own reasons based on our own judgement. So far I'm happy with my balance between property and shares.. However, this one sided mantra is predictable and boring and I'm surprised that MF still pays for it to be re-written every couple of weeks..

    In the interests of full disclosure, I own my own home (mortgage free), have a holiday home with a big mortgage and two small investment properties which are still above the price I paid in 2006 and still profitable (even more so with the mortgage reductions. I have significant share investments (trackers) that have had an apalling year but that's what spread risk is all about..

    BTW Cliff what is your investment spread? All in shares that are down by 30% and paying rent to a landlord so that he can pay his cheap mortgage and keep the change?

    Keep hoping..

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  • derekafarmer
    Love rating 0
    derekafarmer said

    The problem chicken that has come home to roost in the lives of small businesses and home-owners, is that there was no required separation of activity in British banks between domestic activity, and activity based outside of the UK.

    There should have been separate balance sheets and separate capital requirements for this wide diversification in business activity..... unfortunately, totally overlooked by the FSA.

    As to lender assistance and compassion towards mortgage borrowers, Let me warn you of my dire experiences with CitiFinancial, a foreign-owned bank that closed all of its branch outlets leaving me with no relationship management, refused to send me direct debit payment instructions by email (I work abroad), and then took me to County Court due to the ensuing missed payments amounting to some £3,000. (their fault) employing solicitors as their agents, and refusing all communication with me.

    Does this strike you as responsible behaviour ?

    And what is the FSA doing about it ? Precisely nothing.

    Just more government spin.

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  • margprice13
    Love rating 0
    margprice13 said

    Due to a bank error I had 1 missed payment with the Britannia Building society which I alerted them too. I was going through a divorce & had been with the society for over 25 yrs. Trying to sort our finacial agreement due to the Britannia was a nightmare. It took months to sort out & cost me thousands. Thanks to the Abbey National they saved the day.

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  • LittleSteve
    Love rating 0
    LittleSteve said

    I lost my home in the late 90s, when the base rate was in double figures. There was no government help back then.

    In the 5 years it took me to repay the negative equity, I saw the base rate plummet, loan-to-income multiples rising to 3, 4, 5 times income, loan-to-value ratios rising from 85% up to 125% and house prices rising almost tenfold. There is virtually no chance of me buying a house again, so I know from exerience that repossession is not to be taken lightly.

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  • Staintunerider
    Love rating 0
    Staintunerider said

    I noticed on a previous article our dear friend Mr Cliff D'Arcy, is a MF shareholder. Come on Cliff as the man said are you ever going to write an objective article on nthe housing market. You will note from these posts many others are now seeing through the veil. Or are you going to remove my critical posts as you have done before. Yes i do intend to be a thorn in your side until you revert to the sensible chap you most likely are, but I personally I think you are drunk on the current problems and what they mean for you to be able to purchase property if it plays out your way. This is not objective and has no place in journalism and you are letting yourself and all MF fans down.

    I'm not saying you have to about turn because obviously everything is a car crash at the moment, but we need level heads to analyse the situation for where we are and and look at the possible multiple outcomes(and there are possible multiple outcomes). You only have one outcome to promote which we have deduced from your many articles and they are all Armageddon for the property market. This is not obviously objective.

    We know you rent, we know you exited the market, was it 03/05, you have stated you wish to buy again. You want the most home for your cash. All of these things make you want a crash of apocalyptic proportions regardless of the misery it would cause. However you can do nothing to bring this about other than try and use non-objective journalism thereby letting your trade down and MF readers.

    Your influence is still limited and could never be the catalyst to create this hence it would make sense to revert to Objectivity. However things eventually play out you will make your move accordingly but if you continue as you have being doing, you do yourself, journalism, MF Readers no favours.

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  • MadMaxMel
    Love rating 0
    MadMaxMel said

    I find this article irresponsible, insulting and of little value.

    In May 2008, I was made redundant, and as you can imagine, I am concerned about losing my home; a home that is shelter to my wife and our two year old daughter.

    As someone who is prudent, I took out MPPI (and Lifestyle Protection Insurance so as cover my household bills and my loan for the family car), but these will run out in September and then I will possibly need to do all of the seven actions mentioned.

    Naturally, I am scared.

    Scared I might lose the roof over my families head because, try as I might, I am unable to find suitable work - and believe me, I am not sitting on my bottom waiting for work to find me nor waiting for the government to bail me out – that’s just demeaning and demoralising!

    Fearful we might not be able to negotiate a repayment schedule that we can afford with my mortgage lender.

    Worried that as we are almost definitely in negative equity, if our home is repossessed, the value attained for it (presumably at auction) will be far less than our mortgage taken out on it, so we will end up not only homeless, but owning the lender tens of thousands of pounds!

    Note: we are with Nationwide (a responsible lender), and our mortgage was less than 90% of property value at time of purchase in Feb 2008 – so we were not “irresponsible or reckless” in obtaining 100% or more, nor did we self-certify, etc.

    So, in my opinion, this article does very little in providing assistance to someone like me, and instead it just appears to inflate the ego of the writer.

    Instead of trying to foretell the future, or predict demise of a government schemes intended to help everyone, including tax payers (which I was too when I was employed, and hopefully will be again), or appear to wallow in your own self-importance (e.g. “as I revealed here”), why don’t you put all your experience and understanding into an set of articles that provides useful, constructive and insightful help for those of us who face the horrible, demeaning and quite possibly bankrupting possibility of losing our home?

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  • shepherd2008
    Love rating 0
    shepherd2008 said

    Give Cliff a break! Anyone can make a simple 'typo'.

    Pity it ran on through the rest of the article though!

    We all know where i stand. If Cliffs article is to be believed and if things pan out the way he implies then it benefits me greatly. Loads of bargain properties to be had.

    However, those now in difficulty will continue to be in difficulty if they allow this sort of article to snowball! Word of mouth and rumour arethe best marketing tools on the planet. Give it to the media or say it enough on the street then it will happen!

    Stop spreading it around, refuse to talk about it, stop feeding it and it wont happen!

    Unfortunately we just cant help a bit of juicy gossip and talking ourselves into a mess!

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  • shepherd2008
    Love rating 0
    shepherd2008 said

    MadMaxMel - I sympathise with your predicament and sincerely hope things work out for you any many others.

    Unfortunately you are a typical example of what can easily go wrong. Probably through no fault of your own and having done all you could to ensure that your personal circumstances at the purchase of your property where right!

    However, as i have said on here time and time again, the initial purchase of a propery is where most people lose the money!

    Paying far over the odds by listening to much to those selling it - i.e the vendor, the estate agent and of course the 'lender' (who is selling you a mortgage product).

    Anyone purchasing a property since 2004 ish, is probably into or going into negative equity. Simply because they paid over the odds for it in the first place, even at 90% LTV!

    The day you all stop following the hype and learn to barter more is the day things will sell at a more realistic price!

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  • bimber
    Love rating 44
    bimber said

    Guys, Cliff is not making the crash happen, he's just reporting it. Houses are falling not because people say they are too expensive (people were saying that for years) but because they _are_ too expensive. This article is designed to help people in trouble with paying their mortgage and is heavy on facts, low on opinion. The opinions stated - that government schemes might be inefficient or that bailing out reckless people with taxpayer money is a moral hazard - are not exactly heavyweight. So what's the problem with this article?

    Of course I feel sorry for MadMaxMel but at the same time I can't help think that if they had listened to Cliff they would not be in that situation. Keep up the good work Cliff! For every MadMaxMel there will be others who you have saved.

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  • MadMaxMel
    Love rating 0
    MadMaxMel said

    shepherd2008 - thank you for your sympathy – I too hope it will work out, and I will do my level-best to avoid losing my family home.

    I agree with you, that we all paid over the odd for our homes, and I did negotiate – hard, and p*ssed the estate agent off ; I stood my ground, offering £12,000 less than the asking price, right at the time when others were offering above asking price. We got the house for the price we offered. But I didn’t see our house as an investment, but as a family home that could stay in for the rest of our lives (even though its only got two dbl and one single bedrooms), so negative equity was never a concern as long as we didn’t want to, or needed to, sell.

    We may never be able to afford something like it again, so having depleted all our savings, and when the insurances we have been paying for over the years stop paying out to cover out mortgage, and having paid my fair share of tax over the past 14 years I have been in work, I will have no shame in receiving help from the government whilst the economy recovers and hopefully enables me to find a job I can do that covers my outgoings.

    I actually think most of those commenting on this article would do the same if the same happened to you!

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  • bimber
    Love rating 44
    bimber said

    "Instead of [appearing] to wallow in your own self-importance (e.g. “as I revealed here”), why don’t you [write a] set of articles that provides...help for those of us who face the...possibility of losing our home?"

    Can cliff do anything right? Following the link in the “as I revealed here” text leads to an article titled "Good News For Worried Homeowners". He can only do so much, the rest is up to ourselves.

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  • elainesteed
    Love rating 0
    elainesteed said

    Mad Max Mel

    Under the duty of care to consumers by banks

    If you contact your lender Nationwide and explain your situation You then offer to pay £50-£75 per month Under the treating customers fairly regulations FSA they cannot pass a repossesion order ( although you must not miss 1 payment or pay late even by a day )

    Should they ignore the law, and take it to court make sure that you appear at the court ( wherever the court may be) in person with all the paperwork that you have sent and recieved DOT NOT try to organise this over the telephone unless everything is put in writing afterwards ( If you have to make any telephone calls to the Nationwide note the date and time as all calls are recorded) the court is not benches and men in wigs it is just a small offfice with a court official so not too scary)

    If you state your case and explain to the court that you have tried they will NOT rule against you They will probably ask the Nationwide representative why they are wasting the courts time

    The Court will then arrange a payment shedule dependant on your income and expendeture at the time

    a repossesion in fact takes anything up to a year unless of cours the repossed people have buried their head in the sand and not contacted their lender Good Luck

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  • MadMaxMel
    Love rating 0
    MadMaxMel said

    bimber – you are right – point taken – I was being unfair to Cliff.

    To be fair to Cliff, he, and others have provided some useful information elsewhere.

    It is just that this specific article has a good deal of opinion biased running through the factual stuff, and that lead me to get frustrated with what looked like people “having a go” at some of us (that might well need government help) who are likely to fall fowl of the system through no fault of our own, and potentially lose our homes that we have worked hard to get.

    I appreciate that there are others out there that will simply “sponge” off the government and make no effort to support themselves.

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  • MadMaxMel
    Love rating 0
    MadMaxMel said

    elainesteed – thank you – that is very interesting.

    I appreciate the sentiment of what you are saying – do you have any web sites or articles that provide the legal/factual framework for this, specifically the “£50-£75 per month Under the treating customers fairly regulations”?

    BTW – Whenever I call any organisation I always make “file notes” on one of their letters or statements, so I can then provide my notes as evidence of the call details. File notes I take include, time, date, number called, person spoken to (which if only first name, then extension number as well) and actions agreed.

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  • Hardtruth
    Love rating 66
    Hardtruth said

    Cliff calls it out and some of you slate him for it trotting out the same old prejudices on every article the guys pens. Why? It's getting boring folks so move on, come up with something new or don't bother reading and getting wound up by the realities of the pookey the country is in.

    To MadMaxMel best of luck to you and your family, proof if ever it is needed that behind every sad stat there is an anguished human story.

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  • McLeodC
    Love rating 13
    McLeodC said

    It's also worth mentioning that if you've previously made overpayments on your mortgage, some lenders (e.g. Nationwide) allow you to take a payment holiday against the amount overpaid. This could provide a valuable cushion against a drop in income or an unexpected outlay - one of many reasons why it's a good idea to make overpayments if you can afford to do so.

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  • elainesteed
    Love rating 0
    elainesteed said

    When your mortgage was finalised you should have recieved a booklet with all the standard mortgage related documents

    If you cannot find this then

    If you contact the customer services department of Nationwide and ask for a copy of there rules and conditions If this is not forthcoming tell then you will contact the banking ombudsman

    Make sure you do this prior to trying to make special arangments to pay

    Yoy will find at the back of the booklet what you should do if you have financial difficulties

    I will check the blogg later to see if |I can be of any help

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  • chasbmw
    Love rating 5
    chasbmw said

    So Staintune..............What is your position?

    property investor perhaps. do you have your own axe to grind?

    Certainly where i live I am now seeing actual sales prices at the same level as the property sold for in 2004, so maybe Cliff is ahead of the game.

    PS My divorce got finailised and house sold in July 2007. I am very happy renting, giving me the chance to sort out what I do next.

    With the general economy moving into a really nasty recession, we all need to as flexible as possible.

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  • chasbmw
    Love rating 5
    chasbmw said

    From another commentator

    DeEfactoblog.com

    "Meanwhile, the FSA revealed its latest data on property repossessions and arrears. In Q3, no less than 339,700 mortgages were in arrears. That’s 25 per cent upon the year before, but more worryingly, 10 per cent up on the previous quarter. 3,161 mortgaged properties were taken into possession by lenders in the quarter, and this was… well, take a deep breath, the next stat isn’t good. Q3 saw a 93 per cent rise in the number of properties taken into possession compared with the same period a year ago.

    The government is trying its best to reduce the number of properties taken into possession, but latest estimates suggest no more than 15,000 households will benefit from the current schemes available. So really, compared to the third of a million mortgages in arrears, that 15,000 is just tiny. In the early 1990s, property repossessions peaked at 75,000 a year. Capital Economics reckons we will see this number surpassed this year, and it’s hard to disagree."

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  • yocoxy
    Love rating 132
    yocoxy said

    Hard truth..

    Respondents "trotting out the same old prejudices" hahahahahahaha!!!!

    ChasBMW

    Which part of the country have prices risen by only 14% since 2004? that's all they've fallen this year.. they're still above '06 prices where I am.. and way ahead of shares in performance, so I'm not sure how you conclude that Cliff is ahead of the game..

    He also would need to take a 21 year mortgage now to get back where he would have been with a 25 yr mortgage in '05. In addition to property inflation, that also increases his costs... oh and his share value has dropped by 30+% too this year (if he's in trackers as MF advocates)so he's also short of the equity that he had back then..

    I'm sure he'll keep hoping and gloating..

    One small defence of Cliff though.. I think most of us property defenders reacted mainly to the headline which may have been written by a sub editor..

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  • elainesteed
    Love rating 0
    elainesteed said

    The government is not trying to do anything it is all talk and no do

    Promising in parlement that people can rollup there interest for 2 years without paying

    there mortgage will never got off the ground

    It would in fact make a mortgage holder think "thats OK I dont have to pay for 2 years" without the banks legal authority this will push them into repossesion

    With bank permission which is unlikley

    As an example I a £100k mortgage on interest only at an average rate of 5% if this was capitilised ( rolled up) due to compound interest the debt would be £153000

    It would NOT be a simple I owe £417.66 per month therfore over 24 months th amount added would be £1000 approximate figures

    You must assume it would be the same as paying your mortgage debt like your credit card at 5%

    I am not sure the Chancellor had quite worked these figures out before his puppet master had told him to announce this in the commons

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  • elainesteed
    Love rating 0
    elainesteed said

    Sorry the last figure should have read £10000 after 2 years NOT 1000

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  • bigdogfan
    Love rating 0
    bigdogfan said

    I have to say I thought Cliff's article was helpful for a lot of people. He didnt mention anything about possible switching to an interest only payment to enable people to ride out the storm - reverting to a capital repayment mortgage when their situation improved. In the meantime people would be effectively renting their home with the option to become buyers at a later stage.I recognise that for some people this isnt an option either because they cant get an interest only deal or that even with the recent interest rate cuts their monthly repayments would still be too high. I was in a secure job when I became ill. When it became a possibility that I would have to stop working - but whilst I was still employed - we switched to an interest only deal with the option to make capital repayments. My other half worked extra hours and I have taken on work from home. The alternative was to lose our home. We have hung in and are now making massive overpayments with the money we have gained from the fall in interest rates.

    We have always been a two income family as neither of us initially earned enough to comfortably raise a family and buy a home on one income. By the time our incomes increased due to various promotions our youngest son was at a local university. We've not been profligate. We remortgaged to get better deals and raised money to pay for home extensions etc. We still have - even with price falls - substantial equity in our house. My advice to anyone out there struggling is to hang in and seek out all options before giving up a treasured home. That might mean taking on work you'd never normally consider or perhaps a mother going back to work sooner than planned or even switching parental roles. (we did this in the 1970's for a period). Be flexible and be prepared to think outside the box. I feel desperately sorry for those, who even after trying all possibilities end up losing their home. For those who keep harking on about taking the medicine and the follies of the irresponsible - what I would say to you is - who knows what is around the corner for you personally? Have you never made a mistake or a poor error of judgement? Well if you're unblemished - lucky you - go and polish your halo whilst the rest of us deal with life as normal, fallible human beings.

    Report on 23 January 2009  |  Love thisLove  0 loves
  • bimber
    Love rating 44
    bimber said

    yocoxy, when comparing capital returns from property and shares you need to consider the capital invested and the effect of leverage in a falling market. If £100k is invested in a tracker and the market falls 30% then the loss is 30%. If £100k is invested in property with 80% LTV and the market falls 16% then the loss is 20%. The equity investor can survive another 50% drop but the property investor sees his capital wiped out after another 6% fall and has to keep financing the debt.

    Whilst renting was cheaper than buying, 13,161 families or investors would have been better off in shares in Q3/08.

    Report on 23 January 2009  |  Love thisLove  0 loves
  • mahdave
    Love rating 0
    mahdave said

    DI YOU NOTICE, the seizure up 92% in Q3 2008 appears as for 2009 on the main e'mail summary page?

    Report on 23 January 2009  |  Love thisLove  0 loves
  • elainesteed
    Love rating 0
    elainesteed said

    Bigdogfan

    A really good blog well done

    Report on 23 January 2009  |  Love thisLove  0 loves
  • MadMaxMel
    Love rating 0
    MadMaxMel said

    McLeodC - RE: overpayments - thanks

    Indeed we made three overpayments (on new mortgage) before I got made redundant – and the ability to do this was one of the reasons we went with Nationwide.

    Prior to moving to the new house (Feb 2008) with the new mortgage, we had made the maximum overpayment each month on the old mortgage on the old house – so again, we were trying to be prudent there, but we couldn’t afford to this on the new mortgage once I got laid off from work.

    I am a little more hopeful, having read some of the comments and other information elsewhere; that the Nationwide might well be open to renegotiating one of the two mortgages on our house to perhaps “interest only” (we currently are on capital repayment for both mortgages), especially in light of the fact we made so many overpayments on the old mortgage with them – that same mortgage was ported over to the new house – so they have all our history of payments available to them!

    Report on 23 January 2009  |  Love thisLove  0 loves
  • MadMaxMel
    Love rating 0
    MadMaxMel said

    bigdogfan - thanks - very helpful and encouraging

    I totally understand what you are saying about being “flexible and be prepared to think outside the box.” and “hang in and seek out all options before giving up a treasured home. That might mean taking on work you'd never normally consider or perhaps a mother going back to work sooner than planned or even switching parental roles.”

    I am starting to consider alternative career options, such as “teacher” or “policeman” – starkly different from what I was doing – but at least I would have some job security that would allow me to make (reduced) repayments on our mortgages. Additional work is also an option – taking on a second job in the evenings, like working at our local postal sorting office for example.

    As for the wife, she already works 3 days and even with our plan for her to go full-time it wouldn’t make the necessary income to meet our mortgage commitments as my salary was carrying around 75% of the repayment/liability.

    My wife and I are starting to formulate plans that maximise our income – we have already started to minimise our expenditure - shopping at Asda, driving less and driving most efficiently, turning off the heating in rooms not used, etc. but the “recession” is making finding a job much more difficult and the more people become unemployed the worse it will get, so whilst I am still hoping I never need to ask the government for help, I am happy to hear they are making an effort to do something to help people like me.

    Report on 23 January 2009  |  Love thisLove  0 loves
  • bigdogfan
    Love rating 0
    bigdogfan said

    Madmaxmel - looks like you're already thinking outside the box! Teaching is a good option - especially if you can offer something in science / maths / languages as some schools will offer incentives to get teachers in shortage subjects. You can even train on the job. I was in teaching for 30 years so would recommend getting some voluntary / practical experience behind you to see if it's a right choice for you - also good on a cv. They also like more mature graduates and previous experience will enhance your starting salary. The financial downside of mothers working of course is childcare costs which can be seriously high in some areas as I'm sure you're already aware but you can get tax credits towards the cost. Hang in - with your positive attitude I'm sure you'll see through. Elainesteed's advice was practical and sound so I guess you'll follow it up.

    Report on 23 January 2009  |  Love thisLove  0 loves
  • nitnot
    Love rating 5
    nitnot said

    To whom are the banks planning to sell all these repossessed houses? If they won't grant mortgages or loans then these properties will just remain empty, won't they? Why can't they simply let the original 'owners' stay put as tenants - with an option to purchase when the good times return? Of course they could offer them to property cash-investors like me - but in the present climate I certainly wouldn't touch the rental market, neither would any investor I know!

    Report on 23 January 2009  |  Love thisLove  0 loves
  • elainesteed
    Love rating 0
    elainesteed said

    nitnot

    You are quite right why reposses a property that cant be sold?

    We cannot seem to learn from America that this is exactly what has happened there, millions of empty

    properties and people with no homes.

    This goverment will take so long to decide on any course of action that there dithering will cause a full scale depression.

    Brown cant make a decision he follows thriough on let alone save the world especially while sitting on his hands

    Report on 23 January 2009  |  Love thisLove  0 loves
  • queenie2008
    Love rating 0
    queenie2008 said

    its all very well talking about the schemes the govt is planning to keep homeowners in their homes.

    But what about us tenants who ave rents to pay?

    What scheme is being put in place to help them. As a tenant and a taxpayer I have to say I feel very annyed by the fact that my taxes are subsidizing some of these schemes for homeowners.

    i was sensible and made sure i didn't take on a huge mortgage i couldn't afford

    but then in this country tenants really are considered inferior aren't they? even though we have helped support the housing market over the years

    Report on 23 January 2009  |  Love thisLove  0 loves
  • queenie2008
    Love rating 0
    queenie2008 said

    its all very well talking about the schemes the govt is planning to keep homeowners in their homes.

    But what about us tenants who ave rents to pay?

    What scheme is being put in place to help them. As a tenant and a taxpayer I have to say I feel very annyed by the fact that my taxes are subsidizing some of these schemes for homeowners.

    i was sensible and made sure i didn't take on a huge mortgage i couldn't afford

    but then in this country tenants really are considered inferior aren't they? even though we have helped support the housing market over the years

    Report on 23 January 2009  |  Love thisLove  0 loves
  • Cliff D'Arcy
    Love rating 26
    Cliff D'Arcy said

    Staintunerider, if you don't like my articles, then I have a simple remedy for you: stop reading and commenting on every one! ;0)

    Foolish best,

    Cliff

    Report on 23 January 2009  |  Love thisLove  0 loves
  • bigdogfan
    Love rating 0
    bigdogfan said

    queenie2008 - we can all have a gripe about taxpayers money and how it is spent. eg I've never smoked but my taxes are paying towards the cost of treating and supporting people with smoking related diseases. Likewise I'm not involved in any dangerous sports so why should I pick up the tab when they end up injured?....! We've all heard these arguments. The bottom line is as a civilised society we have collective responsibilities - sometimes recognised more effectively than others - (I'm ashamed that Government after Government has failed to compensate our servicemen who have been injured in the line of duty - such as the ones exposed to radiation in the 1950's)I'm glad my taxes are going to be used to help people in the current crisis. I wouldnt want to live in a society which turned it's back on people in need - and no not all of them have huge mortgages - they've lost their jobs or had big drops in income through no fault of their own. Rest assured if you lose your job and cant pay your rent tax payer money will be used to help you out!!

    Report on 23 January 2009  |  Love thisLove  0 loves
  • Cliff D'Arcy
    Love rating 26
    Cliff D'Arcy said

    livethelifeulove,

    Please read my article again, because you have the wrong end of the stick. I wrote,

    "Ultimately, you, me and Joe Bloggs will be responsible for bailing out reckless and feckless mortgage borrowers, as well as the deserving and vulnerable cases."

    Tell me, how does this accuse you of being reckless and feckless?

    Also, for the record, the biggest single reason for repossessions is plain old financial mismanagement, which accounts for almost a quarter (24%) of cases. Gotcha! ;0)

    Cliff

    Report on 23 January 2009  |  Love thisLove  0 loves
  • Cliff D'Arcy
    Love rating 26
    Cliff D'Arcy said

    Hi yocoxy,

    To you, I offer the same advice as that I just gave to Staintunerider. ;0)

    All the best,

    Cliff

    Report on 23 January 2009  |  Love thisLove  0 loves
  • Cliff D'Arcy
    Love rating 26
    Cliff D'Arcy said

    MadMaxMel, you misunderstand me. Having witnessed home seizures in the housing crash of the early Nineties, I have tried to do everything in my power to prevent people from losing their homes since.

    However, how can I be blamed if the public chooses to ignore my warnings of the financial hurricane which has now arrived?

    I sincerely hope that things work out for you, and would add that my goal is to provide "the greatest good for the greatest number" and not to 'punish' or castigate the unfortunate and vulnerable in my column!

    All the best,

    Cliff

    Report on 23 January 2009  |  Love thisLove  0 loves
  • bigdogfan
    Love rating 0
    bigdogfan said

    Cliff

    If 24% of repossessions are down to financial mismangement what are the other 76% for? :-)

    Report on 23 January 2009  |  Love thisLove  0 loves
  • matchmade
    Love rating 38
    matchmade said

    queenie2008 - you should be thankful you are renting, because like Cliff, you are in the best possible position of anyone at the moment:

    - rents are low and falling due to over-supply

    - you never have to pay a penny for maintaining or insuring the property

    - the landlord is probably only covering his mortgage costs, so over time you are getting the benefit of the house or flat for much cheaper than you would do as a homeowner (you get the embedded capital effectively for free)

    - you face none of the uncertainty caused by interest rates going up and down

    - you benefit from an incredibly strict regulatory regime aimed at landlords, so the gas and fire safety conditions, for example, in your rented property are much better than those expected of normal owner-occupied homes, many of which are death-traps compared to rental houses.

    I also support bigdogfan's point about we all have to pay taxes for policies we may not agree with.

    Report on 23 January 2009  |  Love thisLove  0 loves
  • livethelifeulove
    Love rating 0
    livethelifeulove said

    hey Cliff,

    I don't need to re-read your article again. If I'm honest I wouldn't put myself through it again. Although I read it properly the first time. And I guess we'll have to agree to disagree because honestly I think the way I read it is the way you meant it.

    But you made a fair point to a fellow poster, so I won't bother reading any more of your articles. I doubt you will do this but you should start reading the articles of your peers (I'm sure they are insulted that I use that term) - and then have a look how many objections there are to what they write, how they write it and their lack of impartiality. Nothing like the negative reaction to yours.

    You won't change though will you? As evidenced by your flippant responses to the readership.

    And whilst the biggest single reason for repossessions may be financial mismanagement we get back in to the debate about reliability of data. The data you choose to use is generally only that which supports your own view - but that's been commented on about you before hasn't it! What period is that data over? The last few years perhaps during a period low unemployment. That statistic will be massively different this year and the largest single reason is likely to be unemployment. Which takes us back to the original point I tried to made.

    I'm impressed at how skillfully you avoided the points that objecting poters made in your responses. Perhaps you should try politics. Actually a lot of politicians are biased, think they have all the answers and don't represent the public view very well - you're already fully qualified if TMF finally replace your nonsense with some decent financial journalism

    Report on 23 January 2009  |  Love thisLove  0 loves
  • irishshamrock1
    Love rating 0
    irishshamrock1 said

    i have just read the article o mr browns help to homeowners keeping their homes to be quite honest do not beleive the gov will help you i know from experience what it's like to be screwed by governments mortgage companies ppi and employers.because i have lived through it over the past fours years in 2004 i was the sole earner working 40hour aweek working my days off and holidays to make life better for my family i am a homeowner who worked hard for what i had to cut along story short i was medically retired i had to be on sick benifit for 29wks and income support for 40wks before i was intittled to housing cost which is the help from income support which mr brown call ismi i ended up having my home repossessed not because i was'nt paying my mort when they started legal proceedings it was for what my mortgage company referred to administration arears basicilly they were charging 60 pounds a pop for letters sent to me the ppi was not paying the full amount of payments as the ppi only covered what the payment where when i first took out my mort some four years prior to taking ill.any way i was able to get another mortgage through a sublime company which helped me keep my home but unfortunetly the don't pass on the reduced interest which means i don't benifit. i am now left in the same boat as i was in 4years ago but worse of as the DSS have now informed me because the bank of England have lowered the interest rate the have reduced the help i was getting to thirteen pounds a week and 10pence income support. if i was renting from council housing or a private landlord i would be getting a least 80/90 pounds per week in housing benifit. so yes more people like me will lose their homes,some may call me reckless and feeckle and i have only my self to blame but let me tell those i still pay taxes becuse the government make sure and take their tax out of my 213 pound a month national health pension. so how about confronting mr brown and the labourer party where's labourers values gone on looking out for the poor and working class at least the conservetives have always been open that with their policies they look after their own ie upper class.the labourer party is becoming more like them look after the money

    Report on 24 January 2009  |  Love thisLove  0 loves
  • natrenev
    Love rating 0
    natrenev said

    Hi,

    I am French and I have listen to a financial program on a french radio. Apparently French are 72% in debts and English 172%. The program was dedicated to the english situation. The pounds dropping, the end of City London as such (London Market is not needed anymore). How Bristish bank operates. Bank assets should be used to help businesses (SME's) to operate as they are the blood of the economy. As a French, my only debt is my mortgage and I have reduced it by 50% in one year (sole priority) on an offset mortgage. As Cliff mentioned, history has a bad habit of repeating too often itself. Look at 1929 or closer 1990's in Europe or Japan. Learn from it. Since July 2007, this is what everybody should have done. Nobody is save but if you have no safety net ... Colateral damages ... Now we are 1.5 years from the fault and very litle has been done by domestic and businesses to be prepared for this long recession period. Because this time it is not an industrial recession but a financial recession (I believe we are closer to 1929 than 1990's). As for renting market, if people cannot afford to buy a home, they may even not afford a rent !!! As Local authorities have lost so much through the collapse of the Island financial system they are not even in a position to buy houses for social purposes without increasing tax and suffocing the middle class already fragile.

    From all of this, I can see some good thinks coming out, sanity in the system. Investment in knowledge (Education), Research, Investment. Development of strategies for the new decade (as for 80 end of heavy industry and developemnt of financial and service sector). We may see the come back of Engineering ....

    Problem is the recession is that we don't known what is the size of the iceberg (we are not aware of what is immerged).

    From what I have said above, I am now 10 years ahead of my mortgage (I feel less pressure). Still no credit card nor loan (I need to have the cash to buy a car !!!). As most French 10% of income is going to a saving account (in this instance balance the offset mortgage). Reduced all products that are not essentials from make-up to mobile phone. One strategy ... Clear all the mortgage (ie debt). When the economy will bounce back, I want to be on the front line to profit from it.

    I sympathise with people that have missed the signs in 2007. But for sure I have no sympathy for anybody in the hierarchical pyramid that have profited from the subprime, may be lost their jobs ... As they have created this mess for the rest of us.

    Best thing that the government can do is to maintain the jobs, lending to small businesses (May be create a nationalised investment bank that will help SME's). Just a though.

    I like the article.

    Report on 24 January 2009  |  Love thisLove  0 loves
  • TMFDonna
    Love rating 1
    TMFDonna said

    I have just come across this thread after a hectic week and I have to say, I think some of you on here are being quite unfair to Cliff.

    This article is not about Cliff's personal decision to sell his home before the crash. Or, for that matter, his shares portfolio.

    It is about the rise in repossessions, and the help that is available to people facing repossession.

    Please feel free to use this forum to disagree or agree with his conclusion, or to comment on any aspect of the article as you fit. But please do not use it to make personal attacks. There are surely better things to spend your time on.

    Foolish regards

    Donna

    (Deputy Editor)

    Report on 24 January 2009  |  Love thisLove  1 love
  • RAO3ERS
    Love rating 0
    RAO3ERS said

    as long as your job is safe you have nothing to worry about

    we will get through this we brits always do

    property will pick up again maybee not as fast as it did but come on if you are to be honest with yourself it was overpriced anyway

    lets see where we are in 10 years from now.

    also the renting thing

    if you have a property you cant sell

    if you rent you cant go wrong

    as long as you can afford to take say twelve weeks rent as deposit.

    the goverment dont pay landlords now untill tenant is 8 weeks in arrears.

    also they pay 4 weeks in arrears

    so as you can see you may need to be prepaired to wait 12 weeks if tennant loses his job but you will still get paid.

    but if you have a morguage and lose your job

    you only say have a year to get another one or you may lose your house.

    so as you can see renting property has also got some good points as well better than any stock market in this present climate.

    Report on 25 January 2009  |  Love thisLove  0 loves
  • nitnot
    Love rating 5
    nitnot said

    If you 'have a mortgage and lose your job you only have a year to get another one . . . . " Good Grief, man. You should pull out all the stops and aim to be back in work before the week is out! Here's how I advised a friends daughter (a 30 year old executive secretary) to go about it: Prepare a decent CV on the PC, complete with photographs and copies of certificates and diploma's, etc. Print a few hundred copies and visit trading estates, business parks, shops, offices - anywhere that secretaries are employed. Then knock on doors and ask to see the 'personnel officer' and/or leave a copy of your CV. (In fact she got two 'instant interviews' the first day plus a job offer, but at less money) Within a couple of days she had arranged several interviews and a week later accepted a job paying 20% more than her old one. This involved driving between different branches, so she also got a company car (Merc.) and an expense account! She is convinced that the clincher was her answer "NOW" when asked 'when will you be able to start?'

    Report on 25 January 2009  |  Love thisLove  0 loves
  • TMFVertigo
    Love rating 0
    TMFVertigo said

    Hi livethelifeulove, and everyone.

    I'm one of Cliff's peers at The Fool. Cliff is one of the best and, deservedly, most successful writers in the industry. The quality of his financial guidance and the thoroughness with which he researches it is outstanding, and also rare. He has helped a vast number of people with their finnces over the years and, I assure you, from all the feedback he and The Fool has got, he has many more fans than he has detractors.

    The FT wouldn't have asked him to write their latest personal finance book (out last December, I believe) unless they knew he was good. They could have asked any one of thousands of people, and they asked Cliff.

    I believe that house prices and home repossessions are two subjects that many people are passionate about. Combined with conflicting opinions depending on our own circumstances, this causes the hugely vitriolic-seeming comments that Cliff has received.

    It's not just Cliff who gets this feedback on property articles. Any of us writing anything on property usually get between two and twenty aggressively critical views, as well as some supporters (although bear in mind that many more people comment when they have critical thoughts than they do when they have positive ones -- please write if you have some nice thoughts!).

    I could write a piece tomorrow incorporating all the comments that Cliff's critics here have written, and I'd receive as many critical comments as Cliff did.

    I read this article simply as a piece offering seven possibilities for people facing repossession. Many of you don't read it that way and never will. There are a lot of opinions on this subject, one where emotions run high.

    And that just makes it a typical property-article response from a diverse group of individuals who naturally have their most expensive asset on their minds a great deal.

    Neil (another Fool writer)

    Report on 26 January 2009  |  Love thisLove  0 loves
  • UpHillAllTheWay
    Love rating 38
    UpHillAllTheWay said

    Write some nice things? Well, I can say this with honesty - If there's a TMFCliff fan club, I'm in!

    I have been reading the Fool for the best part of 10 years, and there is no other organisation that I trust more to be honest and transparent. I don't suppose they are always right in their predictions, but I'm sure that what they say comes of genuine belief and considerable research. It is my impression that they're more often right than wrong

    With genuine respect,

    UpHill.

    Report on 01 February 2009  |  Love thisLove  1 love

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