Appeal to mortgage firms on debts

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A new system to help homeowners who fall behind with their mortgages has been urged as UK repossessions reach their highest level for eight years.

Welsh housing charity Shelter Cymru says research finds mortgage holders with problems find lenders inflexible.

Shelter wants ministers to look at an arrears "protocol" to encourage dialogue and examine alternatives to prevent people having to go to court.

But lenders said they had a "rigorous approach" before taking court action.

The number of people whose homes were repossessed last year in the UK rose by 21%.

The Council of Mortgage Lenders said 27,100 homes, the highest since 1999, were taken over by lenders after owners fell behind with repayments.

Our research - and other evidence - shows that often lenders are not encouraging borrowers to look at their options John Pritchard, Shelter Cymru

In Wales, repossession claims rose by 12% in 2007 compared to 2006, with north Wales seeing the biggest rise of 18%.

The Welsh housing charity said it expected repossessions to continue going up.

Report author John Pritchard of Shelter Cymru told BBC Radio's Eye on Wales programme that he expected the situation to worsen as more people came to the end of fixed-term deals in 2008.

He said: "Our research - and other evidence - shows that often lenders are not encouraging borrowers to look at their options, they're not giving borrowers enough options, so they're not dealing with individual cases on the individual basis of that case.

"This protocol would encourage more pre-action contact between the borrower and lender in order to try and avoid repossession of properties where possible."

Shelter Cymru wants to see the Welsh Assembly Government cooperate with the Ministry of Justice and MPs to explore the possibility of such a protocol being introduced.

We are very keen to avoid possession... when you end up in front of a judge they will want to make sure that everything possible has been done to avoid this Graeme Yorston, Principality Building Society

A similar scheme already operates when people in social housing fall behind with their rents.

The charity said sub-prime lenders - where money is lent at a higher rate - repossessed 10 times more properties than high street mortgage companies.

They accept higher risk borrowers but at higher rates of interest.

Even though industry guidelines on how lenders should deal with customers who fall into arrears were in place, Shelter Cymru said those rules were not always followed.

Graeme Yorston from the Cardiff-based Principality Building Society accepted the industry as a whole could do more to explore ways of keeping borrowers in their homes when things go wrong.

But he stressed it was in the interest of lenders to ensure they had followed guidelines before taking a borrower to court.

"We are very keen to avoid possession. When you end up in front of a judge they will want to make sure that everything possible has been done to avoid this," Mr Yorston said.

"This is the last thing the courts want to see in front of them - it's the last place we want to be.

"So there is a very rigorous approach to making sure we have done as much as we can before we take that last step," he added.

Eye on Wales is broadcast on Monday, 10 March at 1832 GMT on BBC Radio Wales