Simon Read: We must do more to stop the misery of repossession

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The Independent Online

The number of home repossessions has fallen again, from 9,800 cases in the first quarter of the financial year to 9,400 in the second quarter. That was way below the 11,800 repossessions recorded in the second quarter of 2009, a report by the Council of Mortgage Lenders (CML) said this week. The figures encouraged the CML to slash its estimate of the total number of repossessions this year from 53,000 to 39,000.

Of course, while that is great news, the figure is still alarmingly high. Remember that behind each repossession statistic is a human tragedy. We had a powerful reminder of that this week with the heartbreaking story of Barry and Amanda Harrison, whose semi-detached house in Coventry was repossessed last year after they were both made redundant from a car factory.

The resultant spiral of debt and depression proved too much for Mr Harrison and last weekend the 47-year-old apparently took his own life after killing his wife. His actions left the couple's sons Aiden, five, and Owen, three, orphaned.

I have no idea whether Mr and Mrs Harrison could have avoided having their home repossessed and I'm not going to speculate on the miseries they may have gone through. But I do know that very often lenders do not do enough to help struggling people, which is inexcusable when you consider the consequences.

Even more shocking is the fact that, rather than dealing with borrowers who get into arrears with sensitivity and understanding, some lenders often get heavy and make unreasonable payment demands. An Independent reader called me this week to relate the story of the terrible times he was having with his lender.

Having taken the trouble to tell the lender when he realised he was getting into difficulties, he asked to have his mortgage switched to interest-only for a while to help him through some rough times. He was advised by the lender (not one of the mainstream high street banks or building societies) to miss some repayments. "Only then will we be able to help you," he was told.

The net result is that rather than being helped by the lender he is now being hounded and threatened with repossession. As he pointed out to me, "if they take my home they won't get anywhere near for it what I owe them. Why would they do such a thing and lose money?"

Why indeed. In Barry Harrison's case, figures from the Land Registry show that the home for which he paid £110,000 in 2005 was sold for £67,950 four years later. Whichever lender he was with almost certainly lost money by repossessing the home and selling it. Apart from anything else, "distressed properties" – as repossessed homes are known in the estate-agent speak – sell for less than they would otherwise. And with many mortgage-holders in negative equity at the moment, any lender which hurries to repossess knows that it is going to make a hefty loss.

Lenders should want to avoid repossessing for these financial reasons. But some seem keen to push people out of their homes to get the problem of dealing with arrears off their books. On top of that, the threat of a double-dip recession could mean many more families end up struggling with mortgage repayments.

The problem was recognised by the Financial Services Authority in January when it proposed to compel lenders to use repossession only as a last resort. It's time to turn those proposals into strict rules. Only by forcing lenders to play fair will we avoid more human tragedies.

Check small print to ensure ethical investment is good

It is easy to assume that all ethical investment funds have a good conscience, but a report this week by a specialist financial adviser, Barchester Green, warned that some funds invest in stocks which may be totally at odds with the aims of the average ethical investor.

The Zurich Environmental Opportunities Pension Fund, for instance, has holdings in Shell, BP and Rio Tinto, any of which could put it high on an environmental investor's blacklist. Meanwhile, Jupiter Environmental Opportunities has 10 per cent of its funds invested in the discredited banking sector.

The problem is that many so-called ethical funds invest in companies which may do a little towards helping the environment. So BP could qualify for a fund because it is developing alternative energy sources. But, if you're ethically minded, would you want to support the company whose Deepwater Horizon disaster caused the oil spill in the Gulf of Mexcio?

Investors must closely examine a fund's criteria and scope. The funds that win the approval of Barchester include Jupiter Ecology and the IM WHEB Sustainability Fund.

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