UK now focusing on foreclosure workouts

[BeyondGeography]

After showing the way on putting capital directly into the banking system; this is sure to be imitated here as well...

Bank chiefs ordered to cut home evictions

Banks will face new curbs on home repossessions to prevent families from being evicted when they fall into financial difficulties, the Chief Secretary to the Treasury has promised.

The pledge was made by Yvette Cooper in an interview with The Observer as the government braces itself this week for official confirmation that Britain is entering recession for the first time since the early Nineties.

Rising unemployment is expected to trigger a wave of mortgage defaults as people who lose their jobs find themselves unable to keep up payments on their homes. Repossessions have already increased to 19,000 in the first half of this year - a 40 per cent increase on the previous six months. Experts believe the figure will climb to 26,000 in the second half of 2008. The total number of people suffering negative equity is expected to rise to around two million as house prices plunge.

Ministers believe that after pumping billions of pounds of public money into rescuing banks, taxpayers will expect greater leniency from their lenders when they struggle to meet mortgage payments. 'We need a more responsible approach to repossessions,' Cooper said in the interview. 'What we are looking at is something looking much more widely at all of the banks, because I think repossession needs to be lot rarer. We need to do everything that we can to keep people in their own homes.'

However, with figures this week expected to show Britain's economy shrinking over the last quarter - the first of what is widely expected to be the two quarters of negative growth required to confirm a recession - Cooper warned that the government could not stop the economic tide.

'It's clearly going to be tougher times ahead. I don't think any government can prevent economic slowdown, faced with the kind of global problems that we have had,' she said. 'What we can do is step in and, by dealing with the problems in the banking system, prevent the worst of the credit squeeze hitting people.'

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http://www.guardian.co.uk/business/2008/oct/19/banking-repossessions-home-evictions