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Mortgages -
Repossession: When Homeowners and Tenants Are Losers
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This year is set be one in which a record number of homeowners could lose their homes. The financial crisis which has so far rocked the mortgage industry to its foundation is heavily impacting on homeowners, with many of them being unable to keep up repayment of their home loans.
While the situation worsens each day compelling lenders to further tighten up the noose on borrowers, even as the latter struggle with this and other rising costs of survival, experts are wont to further probe the problem with a view to proffering solutions.
However, findings in recent times have pointed rather to a more disturbing future for homeowners in particular, and even tenants – those renting homes whose owners are still making repayment.
A look at the mortgage situation reveals the agony in which homeowners reel as they struggle to repay loans. In the past year many have had to put up with a number of increases, which they have found a bit too much to cope with. This has led to a worse scenario in which losing their homes is the ultimate. Reports said there has been a sharp rise in the number of court orders, to almost 20 per cent, in which lenders get legal backing to evict defaulting borrowers and take over properties.
In England and Wales the situation in the first quarter of this year saw a sharp rise to a level not seen in nearly twenty years. And at least there were 27, 530 of such cases. This suggests a 17 per cent rise on the previous year and a 9 per cent increase since the last three months of 2007.
A further shocking revelation is the huge rise in the number of new court actions began by lenders seeking to repossess properties from defaulting borrowers. Figures show that it rose to 38,688 in the first three months of the year – a 16 per cent rise compared to a year ago and a 7 per cent increase on the previous year.
This development will no doubt send cold shivers down the spine of homeowners, triggering fresh fears that they are on the verge of losing their homes. But their fears that this could mean the end of their possession of their properties may not necessarily be the reality, as not all orders granted by the courts for lenders to take over homes of defaulting customers always end in repossession. Nonetheless, experts sounded the warning to keep them mindful of the fact that last year alone the number of homes repossessed soared by 21 per cent, and that a further sharp rise this year is inevitable.
In the midst of increasing repossession threat, there is also a worrying trend of rapid tumble in house prices. A recent survey from Halifax found that house prices had, in April of this year, fallen by 1.3 per cent. They are also down by 0.9 per cent on levels a year ago. With repossession soaring, there is likelihood that the number of cheap, discounted properties made available by lenders would only help in further collapsing house prices.
Although defaulting homeowners seem to be the obvious losers, they are unlikely to go down alone. Hundreds of tenants could also face eviction without notice as lenders repossess homes belonging to defaulting landlords. Housing charities are warning that many tenants would also be affected, usually because their landlords’ deal is not a buy-to-let mortgage, which comes with a six-month tenancy agreement between the lender and the landlord. This, in theory, allows the tenant to remain in the property up to six months after its repossession.
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