He said an analysis of repossession orders issued by Leeds Crown Court last year showed that for every order granted to a building society, two had been granted to secondary lenders.
'The evidence, albeit in the North, seems to be that secondary lenders are now out-stripping the building societies in calling their money in and getting repossessions.
'While the Government is concentrating its grip at the top of the problem, with the building societies, there is a leak at the bottom, through these other people.'
Mr Battle's view was supported by the National Association of Citizen's Advice Bureaux (NACAB) which reported last month that some secondary lenders had 'commenced possession proceedings for as little as pounds 292 arrears'. A NACAB spokeswoman said: 'Yes, that is definitely our experience; we are getting increasing numbers of people being repossessed at the instigation of secondary lenders.'
The CAB service has called for an amendment to the 1974 Consumer Credit Act, to give people who take out loans of more than pounds 15,000, secured against their homes, protection they are not currently given because of the pounds 15,000 ceiling.
Mr Battle said: 'Compulsory debt counselling before repossession orders are placed would alleviate many of the problems currently experienced by families struggling with debts from secondary lenders who face losing their homes.'
The increased concern about the activities of secondary lenders emerged during a statistical battle between Jack Straw, the Opposition environment spokesman, and housing ministers over the trend in home repossessions.
Mr Straw said that while there had been a 16 per cent fall in repossession orders - from 55,563 to 46,422 - in England and Wales between 1991 and last year, there had been a 6 per cent increase in suspended repossession orders, comparing the first nine months of last year with the same period in 1991.
That 6 per cent national increase covered much larger regional increases - 26 per cent up in the North, 18 per cent in Wales, and 16.5 per cent in the West Midlands - and within the regions, there had been some very large increases, including a 74 per cent rise in Leicestershire, 67 per cent in Clwyd, 63.8 per cent in West Yorkshire, 56.9 per cent in Tyne and Wear, and 50.7 per cent in Cumbria.
In a report, Sword of Damocles, Mr Straw said that meant that scores of thousands of families faced the threat of repossession. 'These could become actual repossessions in the future,' the report said.
'That is because suspended orders give lenders the option to repossess, which they could exercise when the market picks up and the homes of families in arrears could be sold profitably.
'The temporary help to borrowers currently in arrears - and therefore staving off a full-scale repossession order in the courts - could then be withdrawn.'
Labour called on the Government to adopt best practice from existing schemes to reduce repossessions: with debt counselling, and repossession taking place only when other approaches had been exhausted and where there was a wilful refusal to pay.
Although the Abbey National has forecast that building society repossessions are unlikely to fall significantly for at least three years - because of the expected combination of a continuing rise in unemployment and the slow recovery of house prices - the Government challenged Labour's analysis yesterday.
Tony Baldry, the junior housing minister, said: 'There are beginning to be encouraging signs of a revival in the housing market. The last thing that owner-occupiers, who want to sell or are having difficulties paying their mortgage, need is negative and pessimistic publicity such as that produced by Jack Straw.'
Offering entirely different statistics, Mr Baldry said that the number of court actions started in the third quarter of last year (the latest available quarter) were down by 32.5 per cent, compared with the same three months in 1991.
'The number of possession orders made was 23 per cent down, comparing the same two quarters, and of these, the number of suspended possession orders was 17 per cent down.'
He said the Council of Mortgage Lenders had estimated that joint action taken by the Government and lenders over the last year had resulted in 50,000 fewer repossessions than there would otherwise have been last year.Reuse content