The Mortgage Rescue Scheme is a way to help families who are struggling to meet mortgage payments and are at risk of repossession to stay in their homes. The national Mortgage Rescue Scheme is one of a range of measures in place to help ensure repossession is a last resort.
The scheme is funded by the Government and Registered Providers (Housing Associations).  In the Braintree District the scheme is managed by MOAT Housing, although other Registered Providers are also involved.

Anyone who is having difficulty paying their mortgage should contact their mortgage lender first, or the Councils Housing Advisory Service who will offer advice and information.  The Mortgage Rescue Scheme will be considered only when all other options have been exhausted.

In March 2011 the Mortgage Rescue Scheme entered Phase 2 which will be available until Spring 2013.  Funding has been reduced and this option will now only be available for one or two households in the Braintree District each year.

Who may be able to get help from the Mortgage Rescue Scheme?
To be eligible for the scheme your household must include someone in 'priority need'.  This could be:

*A pregnant woman;
*Someone with dependant children;
*Someone who is vulnerable because of old age; or
*Someone who has a severe physical or mental impairment

Due to the reduction in funding only those households who meet one of the criteria above and who would experience specific difficulties with rehousing (for example a household with a need for an adapted property) can now be considered.

You'll also need to meet the following criteria:
*You must have explored all viable alternatives to repossession, including the lenders' hardship options, with your bank or mortgage lender.
*All owners of your home must agree to be considered for the Mortgage Rescue Scheme, and there must be no outstanding charges or ownership disputes on the property that would prevent it from being sold.
*You must have received debt counselling and advice and agreed to arrangements to repay your debts.  You must provide an up to date financial statement obtained from a money advisor which demonstrates that Mortgage Rescue may be an option.
*Your household must earn less than £60,000 a year.
*The value of your home shouldn't be higher than £200,000 for this region.
*You must have a clear need to stay in your home.  This means it would not be practical or reasonable to move somewhere smaller or cheaper, and you are at risk of homelessness through reposession.
*Your home must be suitable for your needs, for example, its not overcrowded with too many people sharing the same space.
*Your home should be of 'traditional' build.  It should not, for example, be constructed from pre-cast panels.
*You shouldn't own a second home, including a home abroad.
*Owners of freehold and leasehold properties are eligible for the Mortgage Rescue Scheme, although locally, restrictions may be applied to leasehold properties - the officer would check this before proceeding with any application.

How the Mortgage Rescue works
You can be referred for help through the Mortgage Rescue Scheme by advice agencies, courts of lenders.  You can also contact us for advice.

If you appear to be eligible, the council will arrange for you to meet with a money adviser.  They will agree with you a plan to manage your debt or some other way that you can meet your housing costs.

Then, the council will involve a Registered Provider or HomeBuy Agent, e.g. Moat Housing, who will assess your home.  Depending on your circumstances, the Registered Provider may help you either with a 'Shared Equity Loan' or through a 'Government Mortgage to Rent'.

If you are in negative equity or having any difficulty making your mortgage repayments, you should:
-Get advice as soon as possible to avoid reposession, keep making payments and talk to your mortgage lender or an independant advice agency as soon as possible.
-See 'Mortgage Worries - get advice to keep your home' for more information.

- Mortgage worries - get advice to keep your home

The Mortgage Rescue Scheme is available in England only. Separate schemes apply to Scotland, Wales and Northern Ireland.

Shared Equity Loan

Home owners who have suffered payment difficulties but are likely to be able to afford home ownership again in the future will be given an opportunity to sell a share of their house to a Registered Provider. This would mean reduced monthly mortgage repayments for the home owner with an option to buy back their share if they choose, sometime in the future. The Registered Provider would give a loan of between 25 and 75 percent of the applicant/s current mortgage. This would be paid direct to the mortgage lender to reduce the amount the applicant/s owes on the mortgage. The Registered Provider would advise the applicant/s the amount that they are proposing to loan them. The applicant/s would continue to meet their monthly re-payments on the remaining mortgage and on the loan to the Registered Provider. The total of these would be less than the applicant/s current monthly mortgage payment. If payments were not made on time to applicant/s could be at risk of losing their home.

The loan would be secured against the property as an equity loan. This would mean that the amount that the applicant/s would have to repay is linked to increases in the value of the property.  If the value of the property increases then the applicant/s would have to pay more back, however if the value of the property falls, the applicant/s would still have to repay the original value of the equity loan.

Applicants for this scheme must have no more than £15,000 in loans secured against the property.

Government Mortgage to Rent

The second option available is the Government Mortgage to Rent Scheme.  This is for those home owners with little hope of sustaining a mortgage.  This option will mean that your entire home will be purchased by a Registered Provider but applicants would be able to remain in the home as a tenant, paying an affordable, below market level rent.  This could however be more expensive than some mortgages.  Applicant/s may be able to access housing benefit from the Council to help them with the rent. The independent advice agency that the applicant/s would have met with would be able to tell the applicant/s about the benefits which they can claim. 

Applicant/s would be given an Assured Shorthold Tenancy by the Registered Provider for the property. The tenancy will be for an initial fixed period of up to three years but provided the applicant/s pay their rent on time and keep to other conditions of the agreement they may be able to reside in the property for longer. If the applicant/s do not pay the rent on time or otherwise break the conditions of the agreement, the Registered Provider could evict them from the property. 

Under the Phase 2 arrangements the Registered Provider will pay the lender 90% of the market value of the property; if this is less than the sum owed then the options for managing the outstanding debt (negative equity must not exceed 20%) are described below. 

Applications can be considered from homeowners in mortgage difficulties where the levels of debt (mortgage and secured loans) exceed the value of the property by up to 20%.  Homeowners with a maximum Loan to Value of 120% who are at risk of repossession can be considered for rescue.

In many cases any overhanging debt may be dealt with by the lender(s) by one of the following:

-writing off the debt which exceeds the value of the property or

-allowing any debt to remain as an unsecured debt (which would need to be repaid if the borrowers circumstances improved) or

-allowing the debt to remain and charging the borrower a nominal charge (again the borrower would need to repay the debt if their circumstances improved).

Lender(s) can consider write off on a case-by-case basis and therefore there is no guarantee that lender(s) will write off the debt, and it is possible the rescue may not proceed.

You’ll continue to receive advice after you have entered the scheme to help you manage your finances.

Homeowners Mortgage Support
This scheme was withdrawn for new applications in April 2011.