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Signs Of Hope On Repossessions - Financial Times

Government efforts to force lenders to negotiate deals with homeowners who have fallen behind on mortgage payments may be curbing foreclosures, with the number of possession orders sharply down in the first three months of 2009.

Data from the Ministry of Justice yesterday showed 17,054 mortgage possession orders in the first quarter, down 43 per cent from the previous quarter and 39 per cent below that of the first three months of last year.

The ministry noted that the results coincided with the introduction of a mortgage pre-action protocol last November, which brought in procedures for negotiations that must take place before courts will consider repossession applications. Officials said it was not clear whether the protocol prevented repossession or simply slowed the procedure.

However, figures from the Council of Mortgage Lenders, using data likely to have covered a period before the government's protocol took effect, showed foreclosures continuing to rise. Repossessions were shown to climb to 12,800 in the first quarter, up nearly 50 per cent from a year earlier, and roughly 20 per cent higher than the fourth quarter of 2008 .

Significantly, 27 per cent of all repossessions were "voluntary repossessions" as people simply handed back the keys to the lender.

But the CML said it was becoming more optimistic about the housing market and planned to revise down its estimate of 75,000 repossessions for 2009.

The Royal Institution of Chartered Surveyors said its forecast for foreclosures in 2009 was now 50,000. "[New] data provide further evidence government policies are working," said Simon Rubinsohn, chief economist at Rics. New schemes to support homeowners who lose their jobs had not yet begun to take effect, he said.

However, the number of mortgages three months or more in arrears rose in the first quarter to 2.39 per cent of all loans from 1.18 per cent a year earlier and from 1.88 per cent in the fourth quarter of 2008