Simon Read: No Minister, repossession is not the best option

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The Independent Online

Mortgage lenders pronounced themselves pleased with the 2009 repossession figures published on Thursday. But with the number of people having their homes snatched climbing 15 per cent in a year to their highest level since the mid-1990s, there's little to cheer. Michael Coogan, the boss of the Council of Mortgage Lenders, took comfort in the fact that the figures were lower than he had expected. Is that really good news? Of course not.

In fact, Mr Coogan had the cheek to claim that "the fact that mortgage arrears and possessions did not rise as much as we feared in 2009 is testament to a great deal of concerted effort by lenders, government and the advice sector to help borrowers to address financial difficulties when they occur."

How much effort do lenders really put in to ensuring that hard-up families remained in their property? Do they take any account of the human factor – the fact that being made homeless can ruin families and lives – when making financial decisions?

I don't believe they do. Lenders may pay lip service to the concept of helping struggling lenders, but their only concern is protecting their investment. To be fair, repossessing a property is not the best option as the process costs and having to sell the property in a "distressed" condition almost certainly results in getting less than the market value.

For that reason it makes sound financial sense for lenders to try and ensure people stay in their home. That's been especially true in the depressed property market in the past two years where snatching back a property in negative equity will give the lender an even greater financial headache.

So the recession has probably meant fewer people have been booted out of their homes as lenders have tried to avoid taking the debt on to their books. However, if house prices start rising dramatically this year, then that situation could change and lenders may well be tempted by the chance to get rid of late payers while making a quick profit on their homes. The truth is that whatever the likes of Michael Coogan claim, mortgage lenders are in the business to make money, not to house people.

Mind you, Mr Coogan's comment was nothing compared to the insensitive bleatings of John Healey, the Housing Minister. Speaking on BBC's Radio 5 Live on Thursday he said: "For some people it can be the best option for them to allow their home to be repossessed." He explained his view by adding: "Sometimes it is impossible for people to maintain the mortgage commitments they've got. It may be the best thing in those circumstances."

It's true that some people may be unable to keep up their mortgage payments, especially if they've lost their job or had a massive cut in income. But repossession is never the best thing.

In fact, the only person who said something sensible about repossessions this week was Shelter boss Campbell Robb. "It is completely unacceptable that 46,000 homeowners lost their home through repossession last year," he said."Behind each of these numbers is a heartbreaking story of a family having to rebuild their lives. The tragedy is most people simply do not need to be repossessed."

With more support from lenders and politicians, many borrowers could have avoided losing their homes. The half-baked schemes that have been introduced so far have had no effect. It's time for real support by such schemes, like freezing interest charges. Only then could lenders make any claim to be helping struggling folk.

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