Government Moves Will Not Prevent Widespread Repossessions Says Burgesses

Government moves to prevent widespread home repossessions are doomed to failure, says one influential commentator.

Braintree, Essex (PRWEB) November 27, 2008 -- Government moves to prevent widespread home repossessions are doomed to failure, says one influential commentator.

Sara-Ann Burgess, MD Burgesses

So unless the government measures were to last for at least a year, when the most optimistic commentators predict the upturn will begin, then what you are doing is simply postponing the inevitable as banks will be able to apply for repossession after the three months has expired.

Unfortunately it is going to be the self employed and the small businessman that is the first to feel the effects of any downturn and in need of help

Other measures such as an increase in the upper limit for mortgage interest support, which now rises to 200k, and an extension of the mortgage rescue scheme were confirmed at the same time.

Sara-Ann Burgess is a longtime professional working in the insurance industry. As managing director of Burgesses - a leading independent provider of mortgage payment protection insurance (MPPI) - she is well-placed to pronounce on the latest moves.

She said: "The government's well-intentioned initiatives will only serve to postpone the inevitable for struggling homeowners. Unfortunately for many that means they will eventually be made homeless despite the raft of new measures.

"That's because as the economic crisis deepens, and more and more firms go to the wall, there simply won't be the jobs in the marketplace for those that have become unemployed to target.

"So unless the government measures were to last for at least a year, when the most optimistic commentators predict the upturn will begin, then what you are doing is simply postponing the inevitable as banks will be able to apply for repossession after the three months has expired."

Another major failing of Chancellor Alistair Darling's announcement is that it only applies to borrowers that have loans through the major lenders.

The past decade has witnessed a boom in the numbers of people obtaining loans through the sub prime or secondary market. The Chancellor has been unsuccessful in persuading most of these players to back his plans.

"These institutions are much more likely to want to quickly repossess properties to shore up their battered balance sheets. It's also the case that these are the firms that were most attractive to the self-employed and those with poor credit ratings.

"Unfortunately it is going to be the self employed and the small businessman that is the first to feel the effects of any downturn and in need of help," added Burgess.

Burgess also pointed out that since savings rates in the country are at their lowest ever levels, many people would be placed in the invidious position of choosing between paying the mortgage and putting food on the table and paying for kids' clothes.

"The government has to be seen to be doing something. Unfortunately little of what has been proposed is of real help. Just like most mortgages will not be given the green light without buildings insurance being in place, it should be incumbent on lenders that they ensure that mortgage borrowers have adequate insurance in place to keep the roof over their heads should the worst happen and they are unable to make the repayments because of unemployment, accident or sickness."

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