The Mortgage Rescue Scheme (the ”MRS”) closed to applicants in England in March 2014. The Scheme was originally brought in by the Government as a response to the recession in order to help borrowers remain in their homes, shortly after the introduction of the Pre-Action Protocol for Mortgage Repossession Claims (“the Protocol”).
The MRS website advises borrowers that the scheme is no longer available and that if they are experiencing problems paying their mortgage, they should seek independent legal advice and/or talk to their lender.
The closure of the MRS coincides with recent announcements that the number of homes repossessed by mortgage lenders fell to its lowest level since 2008. The number of borrowers who had fallen into arrears has also decreased.
Whilst previous recessions have typically led to a rise in repossessions, during the recent economic downturn, borrowers benefitted from historically low interest rates which reduced the incidence of arrears. The continuing work of lenders since the downturn in 2008 and following the implementation of the Mortgage Market Review this year means that repossessions are unlikely to reach such levels again.
The anticipated interest rates have yet to materialise though it is inevitable that the Bank of England will implement such an increase in the near future.
For a significant amount of borrowers, often on interest-only mortgages and with no contingency to cope with rising bills, their finances are finely balanced and are reliant upon the historically low interest rates. Any interest rate rise will clearly have an impact upon borrowers and whilst repossession is now, for many lenders, the last resort, the withdrawal of schemes such as the MRS, will reduce the options available to borrowers who become parties to repossession proceedings.
Whilst the withdrawal of the MRS can be viewed as a positive sign that the economy is healthier, it does remove a level of protection for borrowers. The emphasis therefore is on lenders to ensure that they do everything possible to assist customers who are in arrears by complying with the MMR and the TCF provisions.
Whilst repossession is considered the last resort, the experienced team of Barlow Robbins is able to assist lenders during this process, assisting them in ensuring that the TCF principles remain at the forefront of the procedure to avoid criticism from the Court. This approach is followed right through to the sale of properties in possession.