MORTGAGE RESCUE by arnold2

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									SOCIAL HOUSING GRANT PROGRAMME
MORTGAGE RESCUE SCHEME

GUIDANCE TO HOUSING ASSOCIATIONS
AND LOCAL AUTHORITIES




                        Issued August 2008
                 SOCIAL HOUSING GRANT PROGRAMME
                    MORTGAGE RESCUE SCHEME

The Mortgage Rescue scheme is funded by the Welsh Assembly Government
through the Social Housing Grant (SHG) programme in partnership with
housing associations and local authorities.

This guidance is intended to assist housing associations and local authorities
in the administration of the grant scheme. There is an information sheet
available for members of the public.

Purpose / Objectives

The Mortgage Rescue Scheme is intended to help homeowners avoid
mortgage repossession where this will result in homelessness.

It cannot be used:

      to release equity for any other purpose e.g. to clear debts.
      after the mortgagee has repossessed the property.

The scheme is not intended to assist all homeowners who are in financial
difficulties. Social Housing Grant is only available to assist in the most urgent
hardship cases where repossession will lead to homelessness and will cause
additional pressures on social housing waiting lists in an area. Priority will be
given to families but SHG may also be used where owners currently live in
specially adapted housing.

Outline of the Mortgage Rescue Scheme

Funding

In 2008/2009, the Assembly Government is making available additional SHG
of up to £5 million to support purchases through the Mortgage Rescue
scheme.

Due to the nature of the scheme, it is not appropriate to proceed by
allocations of funding in advance. Applications will be dealt with by the
Assembly Government on request subject to the eligibility criteria being met.
Such applications will be dealt with promptly given the purpose of the funding
and the time-criticality of intervention.

Options

SHG may be provided in two ways:

Homebuy

Under the Homebuy route, the housing association will purchase an equity
share in the property, to enable the outgoings of the householder to be
reduced to a manageable level. The Homebuy equity loan is repayable to the
housing association on the future sale of the property or may be repaid
voluntarily if financial circumstances of the householder improve
subsequently. The property value should be within limits published by the
Assembly Government. The limit may be waivered in exceptional cases
where the local authority and housing association considers there are
particular circumstances that would make access to the scheme appropriate.

Tenancy

Where continued home ownership is not a financially viable option for the
family, the housing association can purchase the property outright and the
former owner becomes an assured tenant of the housing association.
Properties purchased will be subject to the normal rent benchmark
regulations.


Standards

Design Quality Requirements (DQR)

Design Quality Requirements will not apply to the Mortgage Rescue scheme.

Welsh Housing Quality Standards (WHQS)

WHQS will not apply where Mortgage Rescue is progressed through the
Homebuy equity loan route.

Where a property is being purchased outright to provide an assured tenancy,
housing associations can decide whether or not to improve property to Welsh
Housing Quality when submitting for funding. Given the emergency nature of
the support, the ability to upgrade a property to WHQS should not be a
deciding factor in whether to offer mortgage rescue. Where it is possible to
upgrade to WHQS, SHG will be available towards the cost of these works up
to the overall maximum grant limit. Where practical, housing associations
may choose to defer works to a later date and instead undertake them as part
of a planned stock improvement programme. No further grant funding will be
available in future where works are deferred however.



Zoning

Existing zoning arrangements will apply to the Mortgage Rescue scheme.
Applications will be considered only from housing associations zoned to
operate in a local authority area. LSVT housing associations will be zoned to
operate in the relevant local authority area on estates with existing
stockholdings.
Participation in the Mortgage Rescue scheme is not compulsory. Some
housing associations may consider that they do not have the capacity or
resources to administer the scheme effectively.

If appropriate, a local authority may choose to nominate one or two housing
associations to operate the scheme throughout the authority area.


Eligibility

There is no right to mortgage rescue and purchases are subject to availability
of funding.

Applicants for the Mortgage Rescue scheme should be directed to seek
independent advice on their circumstances from organisations such as
Shelter or Citizens Advice (if they have not done this already) as it may be
possible to resolve financial difficulties without the assistance of the scheme.

Mortgage Rescue should only be considered if:

      The lender has commenced legal action to repossess the property or
       that the lender has agreed to postpone legal action to allow a Mortgage
       Rescue purchase by a housing association to proceed.

      The family will be homeless if the property is repossessed

      The property is the only or main residence of the family

      The property is clear of any legal actions that would prevent it being
       sold

      The family is unable to sell the property and buy a cheaper home
       locally


Confirmation of Eligibility

As the strategic body responsible for meeting housing needs, eligibility for
assistance through the Mortgage Rescue scheme must be endorsed by the
local authority.

Where a potential case presents directly to a housing association, the local
authority should be notified as soon as possible and agreement to proceed
obtained.


Mortgage Rescue options

It is the responsibility of the housing association to carry out an assessment
of the applicant’s financial circumstances in terms of suitability for assistance
under the Mortgage Rescue scheme. There will be no separate appraisal of
this by WAG as part of the approval process.


Homebuy

The Homebuy route will not be appropriate in all cases but it should always be
considered as the first option.

In considering offering a Homebuy equity loan, the following will need to be
considered :

   the open market value of the property

   the level of debt of the applicant

   the condition of the property and its appropriateness for social housing

   the applicant’s ability to maintain the property

   the ability of the applicant to pay any ongoing mortgage commitments

   the percentage equity loan required. This may be any percentage up to a
    maximum of 50%


If the applicant’s needs can be met through this route, the Assembly
Government will provide SHG to cover the cost of the equity loan provided by
the housing association plus an administration allowance of £530.


Compliance with financial regulations

To participate in the Mortgage Rescue scheme via the Homebuy route,
housing associations must ensure that loan agreements and loan procedures
comply with the current legal requirements of the Consumer Credit Act and
any other applicable legal regulations.


Rent

If continued homeownership is not sustainable, the housing association can
consider purchasing the property outright and offer the owner an assured
tenancy.

The maximum SHG payable will be the current Acceptable Cost Guidance
(ACG) figure for the property type multiplied by the standard grant rate i.e.
ACG x 58%.       ACG supplements may be applied where appropriate for
properties where wheelchair accessibility standards are met.
Costs in excess of ACG may be funded by the housing association on a
voluntary basis.

The property valuation report must contain the current open market value
together with an abated value to take into account the assured tenancy being
offered. However, depending on individual circumstances a lower purchase
figure can offered by agreement with the owner.


Social Housing Grant Application Procedure

Following assessment by the housing association and confirmation of
eligibility by the local authority, the housing association should submit a grant
application to the Housing Directorate of the Assembly Government. As
funding will be available from outside cash limited allocations for new
development, no bidding information will be required.

Where circumstances are particularly pressing, housing associations may
proceed with purchases at risk without prior approval from the Assembly
Government. As long as the purchase complies with qualifying criteria for
SHG funding, and there are remaining resources in the fund, grant will be
paid retrospectively.


Documentation required:

      Standard SHG application form - Form Scheme 1
      Valuation report by an independent, suitably qualified valuer in
       standard format required by Assembly Government Grant Procedures
      Statement of Eligibility from the local authority confirming that the
       applicant meets the criteria for assistance through the Mortgage
       Rescue scheme
      The housing association must certify that all eligibility criteria listed
       under the Eligibility section of this guidance have been met
      No floor layout plans will be required

Grant payable will be the total scheme cost (purchase price, works, VAT and
oncosts) x 58 % or, 58% of the current ACG figure for the dwelling size,
whichever is the lower. Where a property does not fit into the standard ACG
dwelling types as shown in the ACG circular, the Assembly Government
should be contacted for advice in advance of the application being submitted.

If the application meets grant requirements, the Assembly Government will
issue confirmation on Form Scheme 2. Following exchange of contracts,
grant should be claimed following standard grant procedures.
MORTGAGE RESCUE SCHEME
via SOCIAL HOUSING GRANT PROGRAMME

CONFIRMATION OF APPLICANT ELIGIBILITY
To be completed by local authority housing department
and forwarded to nominated housing association


LOCAL AUTHORITY


APPLICANT(S) NAME


APPLICANT’S ADDRESS




NOMINATED HOUSING ASSOCIATION


Eligibility criteria :

This should be read in conjunction with Guidance issued by Welsh Assembly Government in August 2008

To be eligible for assistance through the SHG funded Mortgage Rescue scheme, applicants must meet the
following criteria :

        The applicant’s lender has commenced legal action to repossess the property or that the lender has
         agreed to postpone legal action to allow a Mortgage Rescue purchase by a housing association to
         proceed.

        The applicant will be homeless if the property is repossessed

        The property is the only or main residence of the applicant

        The property is clear of any legal actions that would prevent it being sold.

        The applicant is unable to sell and buy a cheaper home locally

Other information in support of application :




Signed on behalf of local authority:

Name in block capitals

Job Title

Date

								
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