A report issued by the Ministry of Justice showed a fall in the number of mortgage and landlord possession orders presented to the County Court in the first quarter of 2009, following the introduction of a new protocol.
Overall, the report found that 22,609 mortgage possession claims were issued during the first three months of 2009. This represents a fall of 42% compared to 12 months earlier and is 13% less than in the previous quarter.
Out of this figure, 17,054 of the claims resulted in the County Court issuing a mortgage possession order. These statistics for the first three months of 2009 represents a 39% decrease when compared to the first quarter of 2008. In comparison to the previous quarter, mortgage possession orders are down 43%.
It is important to note that these figures only represent the claims and orders issued by the County Court and the number of repossessions that have actually taken place may vary. As many as 47% of all mortgage possession orders were subsequently suspended, roughly comparable to the 45% suspended in the final quarter of 2008.
There were 35,745 landlord possession claims issued in the first three months of 2009 using the standard and accelerated possession procedures. This represents a fall of 5% compared to the first quarter of 2008 and a fall of 1% in comparison to the final quarter of 2008.
Of this claims figure, there were 27,485 landlord possession orders issued in the first three months of 2009 using the standard and accelerated possession procedures. This also decreased by 5% when compared to the first quarter of 2008, but is 3% less than in the last quarter of 2008.
Similar to the figure for mortgage possession orders, as many as 44% of the landlord possession orders through the standard and accelerated possession procedures were subsequently suspended. This figure has shown little change in comparison to the 2008, and was 42% in both the first and final quarter of 2008.
The introduction of a new protocol came into force on the 19 November 2008, and has coincided with the large decrease of mortgage possession claims and orders in the first quarter. The Mortgage Pre Action Protocol has been designed to provide a clear set of guidelines with regard to what the court expects of both borrowers and lenders prior to the issuance of a claim. There are now fundamental requirements that each party is fair and reasonable.
The Mortgage Pre Action Protocol created a new set of rules in relation to two areas. Firstly, mortgage and home purchase plan arrears that are regulated by the Financial Service Authority (FSA) under the Financial Services and Market Act 2000. Secondly, second charge mortgage and secured loans regulated by the Consumer Credit Act 1974 on residential property.
Possession orders are normally made eight weeks after a claim is issued to the court. This means that the effect of the new rules was not seen until early 2009. It has become apparent that there has been a fall of approximately 50% in mortgage possession claims brought to the County Court.
It is not yet clear with regard to whether these cases have been delayed or abandoned as there isn't yet enough data to go on. However, homeowners who have been struggling with debt and finding it difficult to make mortgage payments are clearly being afforded more time by creditors before legal proceedings are brought against them.
The Financial Services Authority (FSA) and the Council of Mortgage Lenders (CML) produce a quarterly report with regard to the actual number of repossessions that have taken place. It will take several months to determine the effectiveness of the changes, but the underlying figures appear to be promising.
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