Mum's stark warning over home repossessions

Feb 2 2008 by Abby Alford, South Wales Echo

“SORRY girls, we’re losing the house.”

That was how mum-of-four Dawn Newbury broke the news to her daughters that she had fallen behind with the mortgage payments and bailiffs were coming to repossess their home.

Now, the 45-year-old, from Pentwyn, Cardiff, who once had bailiffs drilling through her back door to claim repossession, wants everyone to learn from her story and seek help with mortgage problems before it’s too late.

The Welsh Water customer services assistant spoke out as the housing charity Shelter exclusively revealed to the Echo that in just two years, the number of people seeking help to save their homes has more than tripled and is set to rise again this year as the credit crunch bites and the global financial picture becomes gloomier.

In 2005, Shelter staff in Cardiff, the Vale of Glamorgan, Caerphilly, Rhondda Cynon Taf and Merthyr dealt with 22 cases where mortgage arrears were the primary problem.

That rose to 72 last year.

In 2005, staff dealt with 87 cases where mortgage arrears were a secondary problem – usually as a result of spiralling debts – and that rose to 150 cases in 2006 and 155 in 2007.

Sian Sexton, Shelter’s area services manager for South East Wales, said the number of cases will probably rise again this year as many people come to the end of fixed-term deals.

She added an additional worrying feature is that almost three quarters of those who ask for help are already on the brink of losing their home.

“More than 70 per cent of the households who come to us for help are already facing or have actually gone through possession proceedings. The earlier people get advice the better.”

Shelter Cymru said so-called sub-prime lenders – companies that lend to people with poor credit histories and low incomes and which charge higher interest rates and charges than high street banks – are largely to blame for the startling rise.

Dawn said she thought one sub-prime lender was the “answer to her prayers” when she originally fell behind with her mortgage payments.

“Myself and my husband originally bought our four-bed semi-detached house in Ty Cerrig in 1994 for around £54,000. But we added £28,000 onto our mortgage for home improvements and we bought a new car,” she said.

“Then my husband left me and, as I worked only part-time and he had been the main wage earner, I got into arrears in 2001.

“At that point the mortgage was with a high-street lender, but they wouldn’t help me when I asked them to take my husband’s name off the mortgage.

“The only way I could get his name off the mortgage was to refinance with a sub-prime lender. And, at first, the monthly repayments were about the same and I thought it was the answer to my prayers.

“But then the interest rate started going up and up and, with all the extra charges and penalty fees for late payments on top, things quickly spiralled out of control.”

Over the last couple of years Dawn – mum to Jodie, 13, Lucy, 16, and twins Samantha and Rebecca, 19 – has faced repossession three times but, each time, has successfully fought and won a reprieve in court with the help of Shelter Cymru.

However, the message she had won her case did not get back to her lender after one hearing and Samantha and Rebecca were left terrified when bailiffs tried to gain access to the house by drilling through the back door.

They had also brought a “for sale” sign to put up in the garden.

Dawn, whose mortgage debt has now climbed to £120,000, has now refinanced with another sub-prime lender and her mother Yvonne Newbury, 73, and her aunt Gillian Willis, have had to sell their house and move in to help her make ends meet.

“I now have an interest-only mortgage and all my money goes on keeping up the repayments.

“My mum and aunt have to buy our food,” said Dawn.

“I was naive and I want everyone to learn a lesson from my situation and to be careful when dealing with sub-prime lenders.”

Shelter’s Clare Williams, who helped save Dawn’s house, said at least half of the cases she has seen in Cardiff involve sub-prime lenders.

She said irresponsible lending, coupled with a lack of financial literacy – many people fail to grasp basic rules, such as failure to keep up mortgage payments could result in the loss of their home – has created a significant and largely hidden problem in the city and surrounding areas.

Sian Sexton said: “Shelter Cymru believes much more could be done by lenders and Government to reduce the impact of growing repossessions in Wales.

“We support calls for lenders to soften the impact of people coming off fixed-term mortgages by phasing in higher payments.

“Also our research shows many of the repossession actions in Wales are being initiated by sub-prime lenders and we believe there should be greater regulation in this sector.

“Longer term actions to reduce repossessions and homelessness in the future include better information for people on the consequences of different mortgage options, ensuring mortgage literacy is taught in school and that courts introduce protocols that ensure households have had debt advice and other assistance before a repossession is agreed.”

For free debt advice from Shelter Cymru contact 029 2055 6120.

Our view – Page 18

abby.alford@mediawales.co.uk