Julian Knight: Mortgage rescue? Save us from false promises

Struggling borrowers are being invited to put their faith in a government scheme hatched in haste and providing no details

Fresh from bailing out the banks, Gordon Brown, Peter Mandelson and Alistair Darling are fast becoming addicts to the opiate of intervention. Every other day, it seems, the banking bigwigs are being told what the Government wants them to do next. They should probably apply for a Whitehall parking pass for their chauffeur-driven Mercs, they are there so often.

No bad thing, you may say – they got us into this mess in the first place (even if we as consumers weren't forced to borrow so much money), so why shouldn't Labour order the banking bosses about?

And fair enough, this column has long been arguing that action on repossessions needed to be taken by the Government and regulators. After all, people have been losing their homes too quickly and have been charged unfair fees for going into arrears. Some banks have been sheer bloody minded, for instance preventing homeowners from converting their mortgage to interest only temporarily.

In the past few weeks, we've had big lenders signing up to what amounts to a code of conduct on repossession. Northern Rock – a serial offender when it comes to seizing people's homes unnecessarily – and Royal Bank of Scotland now say they won't repossess until six months of arrears have been clocked up.

We have also heard the Financial Services Authority saying it will come down on lenders that don't "treat their customers fairly".

Therefore, it was a welcome move by the Government last week to bang the heads of the UK's biggest eight lenders together and get them to agree to its mortgage rescue scheme, under which the Government will underwrite missed repayments. But I fear that the initiative could be more style than substance. I know that is the way with politics – and Labour has one eye on a potential early election – but these are people's homes we're talking about. If the scheme doesn't meet expectations, it will be as cynical a political act as I can remember.

After the announcement, I received an email from a reader who has been battling repossession. The tone was one of relief: he thought the mortgage scheme would provide a breathing space while he got back into work. Two days later and the relief had gone: his lender had told him the details of the scheme were undecided and repossession would proceed.

No one is sure how the scheme will work in practice. Will you have to be in receipt of benefits? How can you prove you are doing everything you can to pay the mortgage? What if you have even small savings? How do you show that your earnings have fallen enough to qualify for help? Are all lenders going to apply the same rules, or will it be on a case-by-case basis? And if it's the latter, as seems likely, how will fairness be ensured? Will it depend on something as random as how you get on with the bank worker at the other end of the phone line?

There are questions galore and few answers because the scheme was drawn up in double-quick time, presumably so the Tories could be wrong- footed. The banks had a maximum two days' notice and now some are grumbling privately that they were bounced into agreeing. What's more, the deal only covers 70 per cent of the market, so what about the other 30 per cent? Many of the repossessions are, after all, being brought by sub- prime and remortgage lenders that aren't in on this scheme. There is a risk that after the initial "hit" of the rescue announcement, many borrowers will be left to go cold turkey.

News
scienceExcitement from alien hunters at 'evidence' of extraterrestrial life
Life and Style
Customers can get their caffeine fix on the move
food + drink
News
newsRyan Crighton goes in search of the capo dei capi
Extras
indybest

PROMOTED VIDEO
Arts and Entertainment
Actors front row from left, Jared Leto, Jennifer Lawrence, Meryl Streep, Ellen DeGeneres, Bradley Cooper, Peter Nyongío Jr., and, second row, from left, Channing Tatum, Julia Roberts, Kevin Spacey, Brad Pitt, Lupita Nyongío and Angelina Jolie as they pose for a
film
Sport
sport
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
News
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Life and Style
news

As Voltaire once said, “Ice cream is exquisite. What a pity it isn’t illegal”

Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Market Administrator (1st line Support, Bloomberg, Broker)

    Negotiable: Harrington Starr: Market Administrator (1st line Support, Trade Fl...

    Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

    £35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

    Data Support Analyst (Linux, Solaris, Windows Server, Reuters)

    Negotiable: Harrington Starr: Data Support Analyst (Linux, Solaris, Windows Se...

    Helpdesk Support Engineer (Windows, MS Office, Exchange)

    Negotiable: Harrington Starr: Helpdesk Support Engineer (Windows, MS Office, E...

    Day In a Page

    All this talk of an ‘apocalyptic’ threat is simply childish

    Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

    Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
    Mafia Dons: is the Camorra in control of the Granite City?

    Mafia Dons: is the Camorra in control of the Granite City?

    So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
    Emmys look set to overhaul the Oscars as Hollywood’s prize draw

    Emmys look set to overhaul the Oscars as Hollywood’s prize draw

    Once the poor relation, the awards show now has the top stars and boasts the best drama
    What happens to African migrants once they land in Italy during the summer?

    What happens to migrants once they land in Italy?

    Memphis Barker follows their trail through southern Europe
    French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

    French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

    The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
    Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

    Frank Mugisha: 'Coming out was a gradual process '

    Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
    Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

    Radio 1’s new top ten

    The ‘vloggers’ signed up to find twentysomething audience
    David Abraham: Big ideas for the small screen

    David Abraham: Big ideas for the small screen

    A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
    Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

    Florence Knight's perfect picnic

    Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
    Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

    Horst P Horst comes to the V&A

    The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
    Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

    Mark Hix's summery soups

    Soup isn’t just about comforting broths and steaming hot bowls...
    Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

    Tim Sherwood column

    I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
    Eden Hazard: Young, gifted... not yet perfect

    Eden Hazard: Young, gifted... not yet perfect

    Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
    Tim Howard: I’m an old dog. I don’t get too excited

    Tim Howard: I’m an old dog. I don’t get too excited

    The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
    Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

    Tom Peck on Match of the Day at 50

    The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition