The protocol appears to have had some effect, with repossession claims falling by 50% from October to December. But we should not be lulled into a false sense of security.
As a recent report by the Ministry of Justice points out, this decline does not mean claims will never be made – it is possible they have just been delayed as a result of the protocol.
The Council of Mortgage Lenders is standing by its forecast of 75,000 repossessions this year and no amount of protocols will prevent the inevitable if home owners can’t afford their mortgage payments.
The introduction of the Homeowners Mortgage Support Scheme has been delayed, although many consumers assume it is already in place.
With less state aid and fewer consumers taking out mortgage payment protection insurance, the problem of repossessions could be exacerbated.
So lenders need to focus on gearing up for handling cases as efficiently as possible. There will be an impact on their capital adequacy calculations and in terms of resource, most are poorly prepared for the levels of repossessions expected.
We have worked with lenders for more than 15 years offering an outsourced asset recovery process. Lenders must get their houses in order now and outsourcing is a sensible option.