Mortgage Rescue from MHO Keeps Family From Repossession

November 09

Mr & Mrs A were a normal couple buying their first home and thinking of starting a family. They bought their home cheaply as it needed modernising - a new kitchen and bathroom - so, after a couple of years when the value had increased, they took out a second loan secured on the property to do this. They could afford the repayments as they were both working, Mr A as a bus driver and Mrs A as a nurse.

Then Mr A had an accident at work.  He was off work for 6 months but the firm paid his wages, only at the basic rate though with no overtime.  They could manage the mortgage but the second loan was more of a problem. They came to an agreement to pay reduced payments on this until Mr A was back at work.

Mr A tried to go back to work but found that he couldn’t do the job because of his injury. The firm gave him a desk job but at 50% of his former wage. They were unable to pay the agreed payments on the second loan and fell into arrears.

Mr A finally had to give up work entirely, with his income coming from invalidity and disability allowances only.

Mrs A carried on working but they started to fall behind with the first mortgage as well.   Then Mrs A became pregnant and had to take maternity leave on a reduced income. The couple’s financial matters were made more difficult with the onset of the credit crunch, when the value of their home fell. They owed nearly as much as it was worth and so selling up was no longer a viable option.

Mr A’s condition deteriorated to the extent that he was unable to return to work. At this point their lender started court action for repossession and Mr and Mrs A applied to their Local Authority for help from the mortgage rescue scheme.

The Local Authority and the Citizen’s Advice Bureau checked their financial details, confirming that they were on a low income, their house was not too expensive and was the right size for their needs, and that they would be entitled to re-housing by the Local Authority if they lost their home.

When all this had been confirmed they were referred to Metropolitan Home Ownership (MHO), part of the Metropolitan Housing Partnership, to see if their home could be bought by the housing trust and rented back to the couple, as there was no prospect of them being able to pay a mortgage in the foreseeable future.

MHO had the property independently valued, and made Mr & Mrs A an offer to buy their home. The next step was for the couple’s home to be inspected by a surveyor to assess any repairs necessary to bring it up to government Decent Homes standard – this was to ensure that the home was of good enough quality to enable Mr and Mrs A to live comfortably, and to be consistent with existing social housing stock.

When all the necessary work was done, MHO made the offer and arranged for Mr & Mrs A to have an independent financial assessment to ascertain whether selling their home to the housing trust and becoming residents was the best thing for them to do.  Finally, MHO paid the couple’s solicitors fees to carry out their side of the sale process – Mr and Mrs A still had a small amount of equity in their home when it completed, which was paid directly to them.

Vivienne Bateman, MHO Assistant Director said:

“The Mortgage Rescue scheme is about helping people in difficult circumstances at a time when they really need it. This makes a real difference to the lives of the people involved and their communities, it makes good sense to prevent homelessness rather than to try and solve it.”

The whole process was at no cost to Mr and Mrs A, so now they are Metropolitan residents and can claim housing benefit to pay their rent.  The couple don’t have to worry about repairs as the Trust take care of that.  If, in the future the couple’s circumstances change and they can afford a mortgage again, the couple may have the option to buy their home back.”

As Mrs A says:

“It’s a relief to be able to answer the phone again without worrying that it will be someone chasing you for money you don’t have and my daughter can grow up close to her grandparents”.

Get more information on the Mortgage Rescue package from the Homes and Communitites agency here:

http://www.homesandcommunities.co.uk/mortgage_rescue_guidance