Northern Rock 'aggressive' in repossessing homes

The Northern Rock bank was today criticised by charities for its “aggressive” attitude towards repossessions.

The lender was twice as likely to repossess homes as other banks, the BBC reported.

Some 19,000 homes were repossessed in the UK in first half of this year by mortgage lenders and banks as a whole.

Charity Credit Action said that the bank was not being flexible enough with customers who defaulted on their mortgage repayments.

Chris Tapp, Director of Credit Action told the BBC: “There’s not a lot of flexibility being shown by Northern Rock.

“They are also not giving people a lot of time, they seem to be moving for repossession quite quickly as a resort.

“They are being quite aggressive in terms of their use of the courts in going for repossession, but for a lot of people they don’t need to get to that point, if only Northern Rock would be more flexible with them in the first place.”

Earlier this week the nationalised lender said it was “well ahead” of its Government loan repayment target, having paid back more than half the £26bn (€33.4bn) owed, to leave £11.4bn (€14.6bn) outstanding as at September 30.

Before running into funding problems last summer, Northern Rock was one of the UK’s biggest and most aggressive mortgage providers, advancing loans worth as much as 125% of home values.

But it was forced to turn to the Bank of England for emergency support after the money markets froze, leaving the group facing a funding crisis.

Northern Rock’s nationalisation in February led to 1,500 job losses as it scaled back activity to pay back the Government.

The lender has been reducing the size of its mortgage book in order to pay back its government borrowing, and repaid £15.4bn (€19.8bn) during the nine months to September 30.

But the group’s mortgage arrears figure jumped by nearly 60% during the last three months, reflecting the fact that it has been left with poorer quality loans.

The percentage of its estimated 600,000 mortgage accounts more than three months in arrears was 1.87% at September 30, up from 1.18% at the end of June.

Northern Rock also saw the number of properties in its possession jump 491 during the period to 4,201.

Most of the repossessions were for properties secured with a “Together” mortgage, which allowed buyers to borrow up to 125% of the property’s value.