Householders with troubled credit histories are being forced out of their homes because of the 'irresponsible' actions of sub-prime lenders, according to the Citizens Advice Bureau. The Times
It said that irresponsible lending decisions and 'aggressive arrears management' by sub-prime lenders were causing increasing numbers of homeowners with credit problems to miss mortgage payments or to have their homes repossessed.
Numbers of home repossessions, already at a seven-year high, are expected to rise by 50% this year to 45,000, according to the Council of Mortgage Lenders.
Sub-prime lenders are responsible for a greater proportion of repossessions than their share of the mortgage market and, in some regions, are responsible for ten times more repossessions than leading lenders, figures show.
Citizens Advice also attacked sub-prime mortgage brokers, saying that some of their advice was 'dubious'. In some cases, they had failed to check that borrowers would be able to afford monthly repayments.
One in five people who sought advice on mortgage or loan arrears from Citizens Advice relied on means-tested benefits, while a third had household incomes below the UK poverty line. A childless couple with a weekly income of £217 would be on the poverty line. Tenants encouraged to buy their council flat under the right-to-buy scheme were particularly vulnerable to rogue brokers and bad lending decisions.
Nearly 60,000 people sought advice on mortgage and loan arrears from Citizens Advice in the year to April 2007, and it expects next year’s figures to be even higher.