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Welfare Reform on the Web (November 2010): Homelessness - UK

Limiting possessions? Managing mortgage arrears in a new era

A. Wallace and J. Ford

International Journal of Housing Policy, vol. 10, 2010, p. 133-154

This paper begins by examining the available evidence on the growth of mortgage arrears and their management prior to an in the early stages of the current recession which began in 2006. It finds that practices in managing arrears at that time were unchanged from the 1990s and that defaulters were expected to pay up or be repossessed. However, policies then changed to 'managed forbearance' leading to a slower than expected growth in possessions. This article explores the ways in which commercial considerations, housing market drivers, a more stringent regulatory environment and government intervention have influenced this change. It warns that rising interest rates, labour market shifts, and housing market improvements could prompt lenders to change their business model away from forbearance, prompting a rise in the rate of possessions and subsequent homelessness.

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