Preventing repossession events

Manchester, Leeds, Nottingham & London events – combined workshop notes feedback

Workshop A – MRS close down and replacement schemes

Cases in the pipeline

LAs report varied timescales for completing cases. Average from the events appears to be around 6 months, but with some LAs indicating significantly longer timeframe to close cases caused by delays in accessing information, poor communication with other partners or engagement from customers.

Dudley & Northampton have become syndicated providers to complete their MRS cases.

Interest only households where the term is coming to an end will need careful consideration when assessing MRS eligibility and the ‘inevitability of any repossession’ – would need to be at risk within 3 -6 months as a guide.

Barriers to MRS programme:

-Across the country a number of LAs reflected on their local RP closing the scheme to them some time ago

-In Relationship breakdown cases, problems have arisen from gaining consent of an absent partner.

-DV cases are taking longer to resolve. HCA to consider whether DV cases can be viewed as an exceptional case which may take longer than the proposed cut-off MRS completion date.

-Client engagement. Some delegates felt it is really difficult to engage with customers early enough in the process – a good example from Warrington Homes was cited - using households who have already gone through MRS to mentor pipeline cases

-Households put off by fear of intentionality if MRS application failed

-Too much equity - solution downsizing??

-Under occupancy - should be assessed before submitting an application

-Leaseholders in parts of the country, although some London authorities have been able to resolve this.

-Repairs. RPs set their own decent homes standard which increased costs above the threshold and resulted in cancellations

-LA capacity. Staff starting to work on other jobs

-Price caps. Many LAs have had success at getting cases through working with the HCA

-Lenders require signed client consent forms [dated no longer than 6 months old] can cause delays.

Support required to complete cases:

-Improvedcommunication between partner agencies is critical!

-There needs to be a more effective supply chain of advice and support for homeowners - for example:

Lenders notify LAs of court action > Authorities encourage households to seek advice > but when households have come forward and the LA has tried to contact the lender to discuss the matter, certain lenders will not discuss the customer account or details.

Conversely for lenders they need better and more consistent access to local authority staff and need LAs to provide a more consistent approach

-Kensington Mortgages toolkit – used for early intervention and assessing MRS suitability (Inc vulnerable households)

Action: Need to determine the best contacts/improved/regular updated contact lists especially with lenders- NHAS to speak to CML re lender contacts. Plumlife and LAs in NW would like to extend an invitation to lender representatives to their regional meetings to improve partnership working.

Preventing Repossession Funding

Some LAs indicated they had small amounts of funding left to use – to cover shortfall on the redemption costs for example, although some advised the fund had been spent and they had nothing further to replace this with. They asked NHAS to contact the DCLG to establish if any further monies might be made available.

NHAS has spoken with the DCLG, who advise there will be no additional PRF monies specific to preventing repossessions for homeowners, however every LA has an allocation of PRF for 2014/15.

Action: NHAS to share examples of the use of PRF and the Breathing space model.

MRS close down communications

-Using County Court User groups to flag the close down process

-Working with relevant agencies

-Lender notifications – can client’s phone number be added to letter that the lender sends to the LA [are there Data Protection implications? Santander rep agreed to look into this]

Action: County Court schemes as at March 2014

Business Case for vulnerable households e.g. households with disabled family member, larger families

-Potential groups to targeted: larger families affected by the benefit cap issues [Milton Keynes], households with disabilities

-In some LAs significant numbers of MRS scheme applicants were ex Right To Buy households

-Greater pressure on LA homelessness repossession fund

-Will lenders change their approach especially as house prices increase – use of Financial Conduct Authority thematic review recommendations

-Concerns around increasing number of speculative private landlords able to buy properties and run an alternative sort of MRS scheme. However occupants aren’t always aware they are unable to claim housing benefits for 5 yrs!

-Households at high risk of being targeted by quick sale companies offering circa 30% value of the property – need comms in local area to combat this

-One LA has agreed with on older client to accommodate them in sheltered accommodation and then lease their property as TA – so protecting the asset for the homeowner, while using the stock effectively and preventing further arrears

Action: NHAS to supply business case modelling ideas and cabinet office data unit costs

Responses/Post PMR alternative solutions:

MRS lesson learned – it would be helpful for local authorities to capture the profile of MRS cases they have dealt with – this may help them to map household types, who may be at risk in the future and develop a strategy to prevent homelessness for those households who may be at risk

Money advice continues to be invaluable

-Potential to use AVS for larger households [LAs find the use of the AVS varies subject to the lender]

-Santander have reduced interest rates for a short period of time in an example given around a vulnerable, elderly couple, whilst exploring alternative options.

-Northampton LA – Shared ownership scheme

-Croydon shared ownership applications enabled

-Orbit, registered provider is considering developing a shared ownership scheme model, for homeowners at risk of repossession.

-Wakefield – Breathing Space loan scheme. Wakefield Breathing Space has recouped loans to allow scheme to continue Suggest Pre Action Protocol includes clearer guidance on time to sell and allow enough time for this to happen.

-Suggest alternative to Equity Loan – reduced or no monthly payment but charge sits on property (same as Wakefield Breathing Space) but longer duration e.g. sits on property until disposed of – relatively small amounts e.g. £10k

-Wakefield has used regeneration relocation support costs as a model for Breathing Space loan

-Redcar and Cleveland working with Coastal Housing Group – new scheme will apply to properties value up to £80K which is a big limitation – scheme will have to be self-funding by the provider

-Calderdale Credit Union plans to provide small loans for short term problems.

-Suggested scheme: Ex Right To Buy, buy backs target for future local delivery – LA borrow money

Action:NHAS will email LAs post April to see what schemes they may have or plan to set up.

Good practice examples

Croydon LA good practice:
-Households with older people: the authority has worked successfully with Age Concern to enable the household to access equity release. In order to do this they need the agreement of the family members. The equity release cleared £69,000 of debts and allowed the elderly client to remain in their home.
-Preventing repossession fund-the authority plans to set up a loan scheme whereby the household has missed two mortgage payments. They may be entitled to a small loan if it will stabilise the household. The details for this scheme are still being developed and the authority will consider if households need to repay them or not. The loans will be interest free.
-Shared ownership - the authority can register households on the Registered Provider’s website who may wish to consider becoming shared owners, whereby part of the property is purchased by the provider and the remaining amount is with the homeowner. This means the authority will not need to borrow money against the property at the funding will come from the provider.

Future proofing households, who’ve been through the process?

-Tenancy support/knowing where to go for help/financial inclusion support [more funding for CAB required]

-In the past LA has been able to offer possible to offer households free financial health check

-Post MRS households need specific targeting of budget and financial capability training e.g. Barnsley advised they have a undertaken this sort of training in the past

-Money advice

Issues to consider in the future:

-Consider adjusting the Equity Loan model as it does not help households who cannot meet the monthly interest fee and other loan fees applied

-Providing support and advice to interest only mortgage households.

Preventing repossession events

Workshop B – Money advice support & resources

Mortgage Rescue Scheme

  • MRS gave time to consider advice options once court process begun
  • Gave time to do more/breathing space (adjourn for advice) – this was extremely useful – what do we replace this with?
  • Also the bureaucracy and time taken re MRS has reduced the ability to ask for an adjournment – District Judges put off by previous MRS failures
  • “Promote more” the advice options and proactive work we do
  • Direct referrals it allowed for seen as a positive & it raised the profile of advice
  • MRS was resource intensive
  • Introduced common terminology that meant something for clients, lenders, advisers and court etc.
  • “Affordable” v “make the problem go away” – client expectations
  • Have lost a “concrete” advice option
  • Where MRS being explored proved useful in then going back to lender to assess what previous forbearance options had been considered – often found these options had been missed and so able to negotiate solutions at this stage without MRS. But MRS been an important trigger.
  • MRS brought improved partnership working – links with lenders, others, partners
  • MRS brought funding for posts and assisted with direct referral mechanisms
  • Some clients actually tried negotiating their own MRS – then got advice
  • Look at finding some limited funding for special cases (disabled adapted property)
  • Bureaucracy
  • Referral criteria brought people together
  • Clients don’t always think have a “debt” problem if have mortgage arrears – MRS has helped bring people to the right adviser
  • Stockport looking at developing a local MRS scheme
  • Maintain the contacts developed through good MRS work
  • Lenders would like the ability to refer direct to advice agencies
  • MRS been particularly good for vulnerable clients especially Disabled Facilities Grant – look to set aside some national funding to allow these cases to continue in the future

Preventing Repossession Funding

  • Use of PRF funding – really need more
  • PRF been used for posts, to pay off arrears (loans/grants), rent, to allow MRS to proceed, deposits and loans for non priority debt
  • Can we use MRS national underspend as PRF funds?
  • Has helped people stay in their homes
  • Anticipating will use more as MRS gone
  • Need to be creative with it
  • Can’t be replaced from elsewhere

Court desks

  • Not always easy to know who running them/links with which can make referring to them difficult, varied coverage and quality
  • Getting client to attend – simplify comms (3 bullets instead of long detailed letter)
  • Court closures and split admin – a problem
  • Court closures an issue for clients having to travel distances and additional costs (has reduced attendance) Particular rural problem
  • Court desk a vital role however – the ultimate backstop
  • Legal Services Commission changes have reduced important follow up work

Assisted Voluntary Sale

  • Being pushed/promoted more widely
  • Lenders don’t always know about it – can be called different things
  • Particular problems when negotiating AVS with more than 1 lender
  • Standard scheme would be useful
  • Lender champion for AVS
  • Council of Mortgage Lenders to lobby for a standard core AVS offering
  • Finding lenders who do it - Clients may not be confident talking to the lender re AVS

Interest only

  • Change to or explore shared ownership with a Housing Association making a small investment?
  • Breathing space?
  • Extend term?
  • AVS an option?
  • Equity release?
  • Shared ownership?
  • Lender writing to all clients with 10 yrs to go (requirement)
  • Converting to other products?
  • New group of people needing advice who not needed advice before?

Support for Mortgage interest

  • Under-claimed and misunderstood
  • Waiting time problems
  • Problems as it runs out – end of 2 years claim
  • Difficulty getting it

Financial Statement

  • Important that they are “realistic” not “idealised”
  • Use of trigger figures – shouldn’t just be the trigger figures but also an acknowledgment that lenders need to allow broader figures for longer term sustainability
  • Need to trust another agency’s FS
  • Lender pressure on a FS – sometimes asking for extra paperwork (bank statements)
  • Impact that financial capability and money advice can have if provided together

Resources

  • Reduction in funding for advice agencies and court desk
  • Reductions in resources are leading to longer waiting times for advice
  • Statutory funding?

Lender related

  • Be useful to have lender named contacts – creditor liaison
  • Forbearance champion/liaison officers
  • Level of bureaucracy/procedures when trying to set up arrangements & time taken
  • Willingness to negotiate – looking at larger perspective of the advice options and offer posed
  • Particular client group needs – mental health issues and consideration of, interaction with. Vulnerable client team?
  • On pre- action protocol letters add “the lender contact is…”
  • Prevention advice/early advice – get lenders on board with it
  • Stage at which moves to legal team, often want to talk to the lender and not the legal team
  • Could lenders list the last known telephone number on the S55 letters they send to the LA?

Engagement

  • How difficult this was
  • Different levels of success with S55 letters – some hand posted for 3 months and very little engagement
  • Need to raise awareness – letters to clients, make then look different “birthday cards”
  • Still need emergency drop-ins for advice – especially mortgage related
  • Having the right people to deal with at the right time all in one place
  • Link with partners locally – posters, media, job centres
  • 20 minute gateway plus – so the client gets something and then can do further work
  • Free mortgage health checks – with a guaranteed appointment
  • Rochdale (LA & CAB partnership) S55 letter asks client to get in touch and offers support – client gets an appointment for follow-up. Is successful and has further funding as a result

Other suggestions/queries

  • Tenants letters not always going to them or being sent to the landlord – can they go earlier to the tenant? – mixed feelings from the group due to data protection, sometimes arrears cleared quickly and so why upset the tenant etc.
  • Positive examples of LA and CABx working together – CAB sessions at housing options premises has improved take up and joint working/understanding
  • How useful when can offer Financial Capability and money advice together (advice and longer term support/empowerment)
  • Realistic client outcomes – need to challenge and manage expectations
  • Can CML give the heads up (20,000 mortgages coming to an end of term, where are they – useful to know?) Also interest changes?
  • Importance of managing client expectations
  • Explore links with Independent Financial Advisers (IFAs) for equity release etc.
  • With loss of MRS and lender issues look to preparing the case to a District Judge whose ultimate decision it will be
  • Complain where appropriate & where going wrong – Ombudsman etc.,
  • Lobby and importance of social policy work
  • Welfare reform and impact of changes and SMI – loss after 2 yrs, rate and complete loss if working under Universal Credit
  • Discretionary Housing Payment – any chance we can look to have the discretion to use for mortgage arrears again as used to especially as PRF going
  • Call for pre-mortgage health check and advice assessment
  • Pre-action protocol needs more teeth
  • Being ready for all the new cases as interest rates change

Requested resources

  • Central pack for each lender with contact names & criteria
  • For lenders to know more about the services that are offered by LAs and advice agencies
  • Assisted Voluntary Sale information
  • Continued opportunity/forum to discuss good practice, tactics, issues etc. - 2x year

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