A worthy code to limit the number of home repossession cases reaching court was issued on Wednesday. It won praise from all sides — lenders, ministers, housing charities, opposition politicians. That alone tells you something is not quite right.The “pre-action protocol” includes all the right things to make repossession a “last resort”. But it does not change the rights of borrowers or lenders. Rather it offers a code for lenders to follow if they want to be more lenient than required by law.

So it says a lender “could” offer to extend the term of a mortgage from, say, 25 to 35 years. But if the lender decides this is a silly idea that will lose him money, a judge lacks the power to make him do it when it comes to court. Cash strapped homeowners have no more legal protection today than they did last week. No wonder lenders are happy.

Gordon Brown wants repossessions to be a “last resort”. This code will certainly help to delay or avert some repossessions. But as Robert Jordan, the judge who led the drafting process, said: “the protocol did not change the courts’ limited powers to deal with these cases.”

Which begs the question: why is the government so reluctant to change the law?

October 23, 2008 10:37am in Banks, Gordon Brown, Housing, UK economy | Comment