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Second charge repossessions drop 37%

In Q4 of 2009, second-charge mortgage lenders repossessed 233 properties – a 37% drop compared to Q4 2008.

Figures released today by the Finance & Leasing Association, show overall almost 10% fewer properties in 2009 were repossessed than in 2008.  

Second-charge mortgage lenders repossessed 1,458 properties in 2009, 9.2% down on 2008, and below than the FLA’s original forecast of 1,522.

Fiona Hoyle, head of consumer Finance at the FLA, says: “Second charge lenders are doing all they can to help customers in financial difficulties and this is reflected in the low number of repossessions. 

“But many people are still struggling with repayments and this looks set to continue during 2010.  Repossession will remain a last resort.

“The small number of properties repossessed shows that the current regulation is working well –lenders are able to lend responsibly and keep repossessions low.

“We still remain to be convinced that government proposals for transferring regulatory responsibility from the Office of Fair Trading to the Financial Services Authority are needed.”

 

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  • Steve Walker 11th February 2010 at 3:21 pm

    I can see how the reduction in secured lending may alter the figures favourably and what is stated above is sensible. Lenders prefer to stick rather than twist as they are so exposed. The worry for those in arrears will come when property values start increasing and lenders will again be in a position to get their money back. will they still sit tight? I doubt it so expect a big hike in repo’s

  • John Scully 11th February 2010 at 2:55 pm

    Another case of a spokes person not being in touch with reality?

    There’s no second charge lending currently – and hasn’t been for the past year, so “lenders are able to lend responsibly and keep repossessions low” is far from the truth let alone the fact that the majority of lending was far from responsible!

    The reasons repossessions are low for second charge lenders has nothing to do with responsible lending, it’s all to do with simple fact that there’s no value in the security if the second charge lender was to take possession then sell. If the second mortgage is in arrears you can be assured the first mortgage will be likewise. Even at time of advance the LTV exposure would have been very high; with falling market values, coupled with arrears on both mortgages, its shortfall time!

    Can we keep the spin out industry comment?

    Some of us who have worked in front line of recoveries keep our feet on the ground and have to face the facts of life. Many borrowers are in deep financial stress; they are lumbered with enormous debt and are hanging on by their proverbial finger tips. It’s better to treat them fairly and offer as much support as possible, aim to rehabilitate and the lender “might” get some cash back. Repossess now and all you suffer are write-offs delivering zero return now and in all probability the same in the future. Borrowers who took second mortgages were in the main high risk, their credit profiles will not suddenly improve post possession, irrespective of limitation period.

  • steve 11th February 2010 at 2:49 pm

    I agree. The FSA could totally wreck the loan market through the cost and restrictions of over regulation. The present Nanny State is resulting in no consumers being responsible for their own actions. This applies in financial matters and daily life. It’s always soemone elses fault and this attitude is affecting the whole country. Regulation must be reasonable and proportional – words the FSA and the current government have forgotten.

  • John Hatton 11th February 2010 at 2:16 pm

    I too am concerned about the Governments proposals. The FSA in my opinion have already demonstrated their inability to play fair in the mortgage marketplace. Placing an extra burden on them just can’t make things better for Consumers, Brokers or Lenders. Regulation for Regulation sake just doesn’t work. In my opinion the Loans market should be left squarely with the OFT.