“How Help to Buy can push homeowners into accidental arrears”

“…. A report released in June by the National Audit Office revealed systems to collect the interest on Help to Buy equity loans after the initial five-year interest-free period were not put in place for all homeowners when some of the loans were originally set up.

This led to approximately 739 households falling into arrears potentially without knowing it once their interest-free period came to an end.

Now, some of those same homeowners say they are experiencing a fresh raft of problems.

A report released in June by the National Audit Office revealed systems to collect the interest on Help to Buy equity loans after the initial five-year interest-free period were not put in place for all homeowners when some of the loans were originally set up.

This led to approximately 739 households falling into arrears potentially without knowing it once their interest-free period came to an end. …

Now, some of those same homeowners say they are experiencing a fresh raft of problems.

[The] Government had appointed mortgage and loan servicing company Target to administer the Help to Buy loans.

When a borrower takes a Help to Buy equity loan, their local Help to Buy agent then passes on their details to Target to administer the loan.

… This is Money asked Homes England how long it should take for details to move over from Help to Buy agents to Target. It also asked how many homeowners are still in arrears.

Homes England declined to answer both questions. However, a source close to the organisation said the delay is linked to the time taken to document a new homeowner with the Land Registry.

This is Money then approached Target directly. The administrator was asked how many direct debits had been set up, and what the average wait time was.

Target did not respond to these questions. Instead a spokesman said: ‘We are aware that Homes England has provided a response and we would refer you to that. At this stage we don’t have anything further to add.’

… The report suggested that Target, the organisation administering the loans on behalf of Homes England, was overwhelmed by the volume of queries from homeowners once they started redeeming their loans and paying interest.

At one point, approximately 25 staff were dealing with some 20,000 customer enquiries per month, the report found.

As a result the company had to triple the number of staff dedicated to administering the scheme to keep up with demand.

The report also suggests that the group’s process for recovering outstanding debts wasn’t up to scratch. Target did not use enforcement agents or share information with credit reference agencies, the auditor found.

The group has since responded to this stating that it does use enforcement agents but was unable to in this case due to contractual and policy limitations.

On top of this, Homes England itself had raised concerns over the accuracy and completeness of data held by Target.”

https://www.thisismoney.co.uk/money/mortgageshome/article-7199989/How-Help-Buy-push-homeowners-accidental-arrears.html

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