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June 2009

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Update June 09
Item The Law Society Practice Note on Mortgage Possession Claims (4th June 09)
Reference http://www.lawsociety.org.uk/productsandservices/practicenotes/mortgagerepossession/2827.article
Summary From time to time the Law Society issues Practice Notes for the use and benefit of its members. They represent the Law Society’s view of good practice in a particular area. The Law Society issued a Practice Note on Mortgage Possessions on 15th January 2009, which it subsequently updated on 13th February 2009. The latest Practice Note provides advice to solicitors who are asked to advise borrowers whose mortgages are in arrears and are facing mortgage possession proceedings and the loss of their homes.
Details The Practice Note begins by summarising the aims, status and scope of the Pre-Action Protocol for Possession Claims based on Mortgage Arrears. It then addresses some of the key requirements of the Protocol: the information to be provided by lenders to borrowers; the content of discussions between lenders and borrowers; offers to pay, requests for changes to payments and referral to other agencies; and the commencement of possession claims. The Practice Note helpfully addresses enforcement of the Protocol including sanctions for non-compliance by reference to the Practice Direction on Pre-Action Conduct which, amongst other things extends to the award of indemnity costs and orders in respect of interest. The Practice Note also deals with a number of other issues which frequently arise in practice – issues over costs and how to assess them; issues about the rights of borrowers tenants and also the use of Part 36 offers. Finally, the Practice Note addresses some of the recent Government initiatives – the Mortgage Rescue Scheme, the Homeowner Mortgage Support Scheme and changes to Income Support rules. Some of these topics are also helpfully covered in a House of Commons Briefing Note on Mortgage Arrears and Repossessions – recently updated on 6th May 2009. One topic which is also covered in the Practice Note concerns the exercise of the lender’s contractual power of sale, including reference to the recent case of Horsham Properties Group v Clark [2008] EWHC 2327 (Ch). The Note will inevitably need to be updated to reflect (1) the Council of Mortgage Lender’s Voluntary Statement which provided that CML member lenders would not seek to sell a mortgaged residential property or appoint a receiver to sell a property without first obtaining a court order for possession, and (2) the draft Home Repossession (Protection) Bill currently going through Parliament which will make it a condition precedent to the exercise of the lender’s power of sale that the lender first obtains the court’s permission, and that on any such application, the court will have the same powers to stay or suspend any order on terms etc as those currently contained in s 36 Administration of Justice Act 1970.
Item Market Report - Quarterly Statistics
Reference Council of Mortgage Lenders Market Forecast: http://www.cml.org.uk/cml/media/press/2321 Ministry of Justice Statistics: http://www.justice.gov.uk/publications/docs/stats-mortgage-land-q1-2009.pdf
Details On 22nd June 2009 the Council of Mortgage Lenders updated its housing market forecast for 2009 with a reduction in the forecasted number of mortgage repossessions from 75,000 (matching an all-time high in 1991) to 65,000 due to the introduction of a range of Government and industry initiatives aimed at keeping borrowers in their homes. Although welcome, the figures still reflect a significant quarterly increase in the number of repossessions in the first quarter of 2009 – up to 12,800 compared to the 10,400 in the fourth quarter of 2008. It should be noted that the CML reflects about 98% of all first charge residential mortgage lenders in the UK. More extensive figures are published by the Ministry of Justice. Rather confusingly, their published figures for the first quarter of 2009 show that seasonally adjusted, 22,609 mortgage claims were issued (42% lower than the first quarter of 2008); 17,054 mortgage repossession orders were made (39% lower than the first quarter of 2008) and that 47% of mortgage possession orders were suspended (broadly the same as in the first quarter of 2008). The Ministry of Justice comments “The introduction of the Mortgage Arrears Pre-Action Protocol coincided with a fall of around 50% in the daily and weekly numbers of new mortgage repossession claims being issued in the courts as evidenced from administrative records. As orders are typically made (where necessary) around 8 weeks after claims are issued, the downward impact on the number of mortgage possession orders made was seen in the first quarter of 2009. Presently the extent to which the MAPAP has resulted in the issue of claims being delayed rather than abandoned is unclear".