HMSS Scheme

5th May 2009

Property lawyer says new government scheme will have little impact on browsers

A Black Country property lawyer says that a new scheme to keep some mortgage borrowers in their homes if they fall on hard times is having little impact with lenders.

The Homeowners Mortgage Support Scheme (HMSS) allows borrowers to defer up to 70 per cent of mortgage interest payments if they lose some of their income. 
In the two weeks since it was launched six lenders have announced that they will join the Government scheme, but Barclays, HSBC, Nationwide, Abbey and Alliance & Leicester have so far declined.  So far, National Australia Bank - which owns Clydesdale Bank plc and Yorkshire Bank - and Cumberland Building Society are the only lenders participating in the scheme that are not under some form of Government control. Lloyds Banking Group -which owns Halifax and Bank of Scotland - Royal Bank of Scotland and Natwest have signed up, while Northern Rock and Bradford & Bingley are also on board.
Neil Stockall, a partner in Higgs & Sons' residential property team, believes the temporary support measures do not go far enough.  "After five months of waiting for this scheme to come into operation, it's very disappointing to see that it is initially only being supported by a limited number of banks and building societies. This would appear to be due to the complexities of the scheme, whose rules run to 200 pages, and that most lenders will already be offering qualifying borrowers similar support.

"The scheme is only a temporary measure, with qualifying homeowners able to defer some of their interest payments for up to two years but they must convert to an interest only mortgage.  After this period the amount deferred will be added back onto the debt and repayable with interest."

The idea behind the government's scheme is to try to help people who have suffered a temporary loss in income, such as joint borrowers relying on one income instead of two. To qualify, applicants will still need to have some income and be able to repay at least 30 per cent of their interest payments; have a mortgage of less than £400,000; and have savings of less than £16,000. Borrowers must have first discussed other options with their lender and, even if they are eligible for the scheme, the lender may decide that it isn't the best option.
Another government-backed initiative, the Mortgage Rescue Scheme, launched in September has also found itself in difficulties.  The flagship £200m scheme is said to have helped just one family since it went into operation in January this year. The government admitted the initiative, announced last autumn, was intended to allow recession-hit homeowners to switch to become a housing association tenant at an affordable rent.  Alternatively, the association would buy a share in the threatened home - allowing some of the mortgage to be paid off - or provide a bridging loan to allow payments to be reduced.   The government claimed the scheme would help 6,000 people over a two-year period.  But figures have shown that despite 452 households applying to take part in the scheme from January to March, it is reported that only one household has so far been helped by it.
Higgs & Sons operates from three locations; Brierley Hill, Stourbridge and Kingswinford.  The firm is one of the largest in the West Midlands.

Further information:
Hazel Crawford-Upton
Connect PR
Tel: 01902 714957



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