Credit Crunch

Calls for Northern Rock to stop repossessions

Finanacial campaigners have recently called upon the Treasury to stop Northern Rock from repossessing property so readily.

Charity group ‘Credit Action’ reported that the now nationalised lender was twice as likely to repossess homes than other lenders, and added that Northern Rock wasn’t being flexible enough in its approach to borrowers who have defaulted on their mortgage payments.

In excess of 19,000 homes were repossessed in the first six months of this year and around 4,000 of those were instigated by Northern Rock. Earlier this year the bank reported that it was ‘well ahead’ of its loan repayment targets and had paid back more than half of the £26 billion it owed, leaving just over £11 billion outstanding on September 30^th.

The charity’s director, Chris Tapp, said that Northern Rock’s keenness to repay the government loans meant that it was being too harsh with customers who are in difficulty.

“As soon as people fall behind, they have moved to start repossession proceedings” he said.

“We’re not talking about people who are trying to avoid paying, but people who are struggling in the short term.”

However, Northern Rock’s chairman, Ron Sandler, said, “I refute any suggestion that our position has been anything other than commercial and consistent with the way this bank has operated in the past.

“I would deny strenuously that we have been overly aggressive in terms of repossessions”

At the same time, a spokeswoman for the Council of Mortgage Lenders (CML) said that the Financial Services Authority regulations required mortgage lenders to opt for repossession “only as a last resort.”

The CML predicted that around 45,000 properties would be repossessed by the end of this year; that’s up from 26,200 in 2007, and at a level not seen since the 90s when repossessions peaked in 1991 and saw around 75,500 properties reclaimed.