UK mortgage lenders will have to prove they have tried to help struggling homeowners avoid losing their property, under new rules brought in by the government today aimed at reducing repossessions.
Britain is expected to enter its first recession since the early 1990s this year as the credit crisis spreads from the financial sector into the rest of the economy.
The housing market is already slumping fast and English and Welsh courts ordered more home repossessions in the second quarter of this year than at any time since 1992.
Under the new rules, lenders seeking a repossession court order will be expected to show they have tried to find alternatives when borrowers get into trouble with their mortgage repayments, the Treasury said.
'We need to make sure we help those who might be hardest hit in the tougher times ahead, ensuring repossession is the last resort not the first," said Chief Secretary to the Treasury Yvette Cooper.
'We also want to make sure that vulnerable homeowners are protected from exploitation and dodgy deals,' she said.
The government also wants the Financial Services Authority to regulate firms that buy property cheaply from those struggling to keep up with their mortgages and then rent it back.
