Government on Side

by Mark Johnston

Chief executive for Shelter said that the Mortgage Market Review will make borrowing safe again.  With the massive cuts made by the Government in the housing market over the last few years, we believe that he is going to have his hands quite full.

As a charity, Shelter is at the forefront of many of the issues in the mortgage market today.  They help borrowers on a range of subject from lending 101 to pesky landlords and the range of issue is daunting.  Shelter often finds itself of a different opinion to the way the Government seems to rule. 

Shelter is currently campaigning against some of the Government cuts due to the heavy backlash they have experienced in their line of support.  They are, however in favour of the Financial Services Authority’s (FSA) proposals for mortgage reform and improvements suggested to regulations. “There’s a lot of heat in the mortgage regulation debate and not a lot of clarity,” says Robb. “We believe the FSA is moving in the right direction and we need to take a common sense approach.”  Going on to say that the MMR should be about ensuring borrowing is a safe and fair for all involved and that they ensure that lending is done for the right amount at the right time. “All of the indicators from 2008 onwards show more self-cert mortgages are in arrears than others, as are those with high LTVs,” and that “We’re just asking for some simple things and the FSA is right to keep going. Considering the opposition it is disappointing that the mortgage industry hasn’t come forward with its own proposals. What has surprised me is that there seems to be a blanket opposition to the changes although they appear to be simple things.”

Rob goes on to comment, quite rightly that the proposals would put in place safety measures that would make borrowing and lending not just safe today but safe in the future too. “If you had put in these checks, using FSA figures we can see that about 17,000 people wouldn’t have been repossessed,” he says. “We deal every day with people being repossessed and it’s not just a number. It’s a family who are in a house one day and not the next it is a huge dislocation for them.”

Recently a few lenders have had a slap on the wrist for their management of borrowers who fell into arrears and Rob has come out in support of the tough stance the FSA has shown and the stricter guidelines that have been implemented on the back of this situation. “Everyone in the housing market understands that people will do just about anything to stay in their home,” he says. “Their home is the most important thing. Our clients and borrowers have responsibilities too but some are vulnerable and need support before, during and after the loan is made.

“Some of the selling was so aggressive that people were not making decisions they understood. That’s why the FSA proposals are good because we can put in rules to stop it happening again.” Going on to say that repossession should be the last resort and while we hope this is the case, our recent article on the increase in home repossessions gives an alternative picture.

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