Northern Rock responsible for 10% of all repossessions

Published 18th Nov 2008

Nationalised mortgage lender Northern Rock expects to be responsible for 10% of all repossessions this year as it races to repay its loan from the taxpayer and tries to return to the private sector.

At a hearing with the Treasury select committee of MPs, senior executives from Northern Rock said they were working on an industry-wide solution for mortgage "forbearance" to help customers at risk of losing their home through new "mortgage rescue packages".

Gary Hoffman, the new chief executive, admitted some customers were in such difficulty that they handed back the keys to their homes without discussion with the lender. One third of all the homes it had repossessed were "voluntary", said Hoffman.

"Everyone of these I will regret," said Hoffman, who was hired from Barclays on a £700,000 salary.

The bank's repossession rate of 0.56% of all loans is running at three times the industry average and is largely caused by its controversial Together loans, essentially mortgages of 125% of the value of a property.

While Together loans represent just under 30% of Northern Rock's mortgage book, they account for 50% of its arrears and around 75% of all repossessions.

Hoffman and Ron Sandler, Northern Rock chairman, insisted repossessions were not the main way the lender was racing to repay its loan. They insisted repossessions generated just 1% of all income in the first nine months of the year.

Northern Rock had taken possession of 4,201 homes by the end of September, up from 3,710 at the end of June. Most of these homes were repossessed in the past 18 months, Hoffman said.

He said: "We want to make sure people remain in their homes."

On average, a customer in difficulty has been in discussion with Northern Rock for 15 months before their home is repossessed.

Hoffman and Sandler appeared before the treasury select committee after executives from the recently nationalised Bradford & Bingley, who admitted the number of staff dealing with customers having difficulty repaying home loans would double to 400 by next year.


The government owns B&B's mortgage book, which is largely buy-to-let and self certification mortgages, but has sold its 200 branches and £20bn of deposits to Spain's Santander, which owns Abbey and A&L.

Source: ' Guardian '

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