“Mortgage Rescue” scheme

The government has announced a special scheme to help some households with serious mortgage problems to remain in their own homes.  This is called the “Mortgage Rescue” scheme and it is open to people who would be in priority need of re-housing if their home were to be repossessed.  

Under the scheme it may be possible for the local council to arrange for a housing association like CDS to purchase an equity share in your property.  this will reduce the amount of your mortgage and should also cut your monthly payments.  In exceptional cases it may be possible for the housing association to buy your home outright and for you to remain in the property as a tenant.   

Or you may be already a shared owner with say a75% share or a 50% share in your home.  If you are struggling to meet the mortgage payments on the home it may be possible for a housing association (like CDS) to purchase back some of the equity in your property with an equity loan so that you have a lower mortgage to pay.

This scheme is only open to a limited group of applicants. The household must include someone with priority needs as defined in the Housing Act 1996 (and Priority Needs Order 2001): 

1. a pregnant woman or a person with whom she resides or might reasonably be expected to reside
2. a person with whom dependant children reside or might reasonably be expected to reside
3. a person who is vulnerable as a result of old age, mental illness or a handicap or physical disability or other special reason, or with whom such a person resides or might reasonably be expected to reside.

The government has chosen 60 councils to pilot the scheme, with others following in a few months time.  The pilot authorities are listed below.

If you think you may qualify for the Mortgage Rescue Scheme you should first contact your lendar and also your local council's homelessness service (sometimes known as "Housing Options") and ask to speak to the person responsible for administering the scheme in your area.

Even if you are not eligible for this scheme but are experiencing difficulties in meeting your financial commitments please contact our arrears control officers and let them know your circumstances.  It will not help you if you delay dealing with this and the sooner you reach an agreement with both CDS and your lenders the easier it will be to implement an agreed budget which allows you to meet your commitments and retain your home.

Frequently asked questions about the Mortgage Rescue Scheme 

When will the scheme be operational?

We are fast tracking the scheme through 60 local authorities and expect these authorities to be taking applications from early December 2008, for all other local authorities we expect them to open for business in early January 2009.

Is there a simple message for worried owners?

Yes - talk to your lender. If you are still worried talk to your local Citizen's Advice Bureaux (CAB) or council.

How do people apply?

• Households in financial difficulty, at risk of repossession and threatened with homelessness should seek advice from their lender in the first instance
• Further advice and support will be available from local housing authorities, local Citizens Advice Bureaux or other advice agencies.
• Referrals to a local housing authority may be made by advice agencies, courts or lenders. Households can also self-refer.

What are the eligibility criteria?

 On referral to the local housing authority, an assessment of a household's eligibility will be made in the same way as for homelessness assistance. The household must include someone with priority needs as defined in the Housing Act 1996 (and Priority Needs Order 2001): 

• a pregnant woman or a person with whom she resides or might reasonably be expected to reside
• a person with whom dependant children reside or might reasonably be expected to reside
• a person who is vulnerable as a result of old age, mental illness or a handicap or physical disability or other special reason, or with whom such a person resides or might reasonably be expected to reside.

 The following criteria will also apply: 

• all owners of the property must agree to being considered for the mortgage rescue scheme
• equity owned in the property must be worth enough to cover priority debts and living in the property must be sustainable after mortgage rescue
• the household must have a clear need to stay in the area and it is not practical for them to trade down to another property in the area
• the property must be suitable for the needs of the household (e.g. it is not overcrowded)
• owners must have sought debt counselling and advice, agreed to debt rescheduling and discussed alternative options with mortgage lenders before admission to the scheme
• applicants must not have a second home (including abroad)
• caps will be set on the value of the property (at regional level) and on the household's income level

What actually happens to eligible applicants?

The process is as follows:

• On referral to the local authority, the household's homelessness eligibility is assessed.
• If eligible, the lender is alerted.
• Money Advisors (MAs) are engaged.
• Money Advisors draw up and agree with the household a debt management plan or other financial solution setting out their realistic affordable housing costs.
• Registered Social Landlord (RSL) or HomeBuy agency is engaged.
• The property is visited to ensure it is structurally sound.

• Decision is taken on the suitability of a shared equity option or mortgage to rent.
• Deal is made with lender by RSL or Money Advisor.  

Why have you expanded the scheme to include people with second charges?

We have consulted our delivery partners on the criteria published in September and listened to their concerns. By extending the criteria in this way we are able to target the scheme more effectively at the most vulnerable households in need of support. 

Does this include people in Freehold and Leasehold?

Yes - homeowners of freehold and leasehold properties are eligible for the scheme.

Fast tracker authorities 

South East

• Cherwell (SE)
• Tunbridge Wells (SE)
• Tonbridge and Malling (SE)
• Slough (SE)
• Maidstone (SE)
• Dartford
• Shepway
• Eastbourne
• Portsmouth
• Rother
• Gosport
• Guildford
• Adur
• Worthing
• Wycombe

• Wealden
• Crawley
• Hastings

London

• Lewisham 
• Waltham Forest
• Westminster City Council
• Havering
• Greenwich
• Harrow
• Hillingdon
• London Borough of Camden
• Brent

East

• Broadland
• Bedford
• Basildon
• Fenland
• Mid Beds
• Brentwood
• Norfolk

East Midlands

• Northampton (EM)
• Leicester (EM)
• Rutland
• Nottingham City
• Kettering
• Staffordshire Moorlands