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Action is better than inaction

In recent weeks we have seen a number of legislative changes designed to reduce the number of repossessions.

I support any measure to alleviate the suffering that repossessions cause but the devil is in the detail and I fear that this legislation has not been thought through.

Currently, most lenders don’t start litigation until borrowers fall at least three months into arrears and some nationalised lenders are extending this to six months.

This will be welcome news for home owners in trouble but it could also encourage borrowers to bury their heads in the sand – behaviour that tends to increase in times of recession and particularly in relation to specialist products.

The two-year deferment of interest payments for Britons who lose their jobs is another interesting development but again there is a lack of detail about how it will be implemented.

It sounds worryingly like the deferred interest mortgage products of the 1980s that caused havoc for borrowers and lenders. This anarchy contributed to the house price crash of 1991.

Some questions need answering immediately. Will credit reference agencies hold records of deferments? Will lenders have to issue Key Facts Illustrations? Will district judges impose the scheme on lenders through the pre-action protocol process?

Still, I prefer a government that takes action – even if it is ill-conceived – to one that sits on its hands in a crisis.

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