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Mortgage scheme saves less than half of borrowers targeted

The government’s Mortgage Rescue Scheme helped fewer than half the number of people avoid repossession than originally planned, according to a damning report by the National Audit Office.

The scheme, which was launched by the Department for Communities and Local Government in January 2009, was expected to help 6,000 households avoid repossession at a cost of £205m, but only helped 2,600 at a cost in excess of £240m.

Under the scheme, home owners with 25% equity in their home can apply to their local council for a low-cost equity loan to help them reduce their monthly mortgage payments.

There is also the option for a registered social landlord to buy the house at 90% of its value and the person remain as a tenant.

The NAO report says the DCLG did not adequately test the demand for the scheme and that it could have acted sooner to improve value for money.

Amyas Morse, head of the NAO, says: “The department made assumptions about the level of demand for the Mortgage Rescue Scheme and made the wrong call.

“Spending more than expected and delivering less means that the department has not provided value for money.”

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  • Martin Buszaky 11th October 2011 at 1:34 pm

    It was a poor scheme from day one. Dogged in paperwork, reliant on volunteers and under trained and under funded local government staff.
    I am afraid a typical Gordon Brown scheme, designed to raise hope and his own “caring” profile with no hope of success.
    It came about as good old GB forced onto the back foot stated in Parliament their would be a scheme. And then thought about it afterwards. The scheme was badly designed to fit an wholly inadequate budget.
    It helped completely the wrong people, and added to the sense of injustice.It needs putting out of its misery, and something that combines Housing Benefit , SMI, MRS and the HMSS schemes into a sensible balanced support scheme that is fair to all tax payers who find themselves in a little difficulty. Not just the lefts politically correct band of people.

  • christina cuttridge 10th October 2011 at 2:15 pm

    in oct 2010 my husband and i started the process of getting help from the MRS,after a very indepth and lengthy process our local authority sent our application off,only for it to be sent back and we were told there was no more funding,we are now hoping to get help when the next years budgeting is decided,it really is very distressing,as you wouldn’t apply unless things are desperate,fingers crossed for next year.