Big rise in seized homes as recession bites

Nov 22 2008 by Liam Murphy, Liverpool Daily Post

The statistics from the Ministry of Justice follow months when the cost of mortgages soared – and availability of deals shrank – due to the credit crunch.

A court order for possession of a home does not necessarily mean a family will lose the property. The borrower can plead for the lender to alter payments.

However, the numbers hit with a possession claim – the first stage of threatened action – also soared in some areas, including St Helens (10%), Liverpool (16%) and Birkenhead (35%).

Nationwide, there were 29,938 orders made – up 24% on the same period of 2007 – of which around half were suspended, allowing the borrower time to catch up with repayments.

Separate figures, issued by the Council of Mortgage Lenders, revealed actual repossessions jumped by 12% between July and September, to 11,300 homes.

Adam Sampson, chief executive of housing charity Shelter, warned of “severe shocks to come” – with increases in unemployment, negative equity and defaulting on buy-to-let mortgages.

He said: “Lenders may claim they are using repossessions as a last resort, but they must not pat themselves on the back too soon as both repossessions and arrears are still continuing to rise.”

Both the Conservatives and Liberal Democrats demanded action.

A £200m scheme to allow homeowners in trouble to switch to renting has been widely criticised as inadequate. As few as 200 families in Merseyside and Cheshire would be helped.