By Lezanne Janse van Rensburg. 4th January
2010
Homeowners can breathe a sigh of relief as the government
recently announced the amendment of a law enabling lenders
to repossesses property without going to court.
The law, dating back to 1925, allowed lenders the freedom to
sell an occupied home without the consent from the homeowner or
gaining approval from the court. This evident legal loophole
resulted in approximately 48,000 homeowners losing their homes in
2009 due to repossessions.
According to the law, lenders were able to repossess property if
the borrower had a minimum of two months in mortgage arrears. With
the economic meltdown placing increased financial strain on
families, many homeowners battled to meet their monthly mortgage
payments and a sudden jump in repossessions was witnessed.
The rapid rise in immediate repossessions alarmed various debt
charities and a campaign against the law was launched. The law
received much attention shortly after when the High Court used the
legal loophole to grant prime mortgage lender GMAC-RFC permission
to repossess occupied property.
Approximately 48,000 homeowners in
mortgage arrears lost their homes in 2009 due to
repossessions
According to Justice Minister Bridget Prentice, the previous law
gave lenders "the right to repossess and sell a property without
seeking either the agreement of the owner, or of the
courts".
"While there is no evidence that owner-occupiers are being
treated in this way, the government proposals … would close this
loophole and prevent any future instances of "rogue lenders"
behaving this way," she added.
Although a number of resources, including debt advice and
financial assistance, have provided some protection against
last-minute repossessions, so-called "rogue lenders" still managed
to repossess homes due to unpaid mortgage payments.
Authorities are hoping to prevent any further immediate
repossessions by closing this loophole. According to Housing
Minister John Healey, the amendment of the law is of great
importance in order to ensure that "lenders cannot repossess a
property without going through the proper legal process. This is on
top of the steps we're taking so repossession really is the last
resort."
Helpful links:
Claims Financial
How to claim back mortgage arrears
charges
Has your mortgage been mis sold to
you?
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