WAG Criteria
"'Good to the Welsh Assembly, that's what they should be in government to be looking after us when things go wrong. Hafod were really approachable and helpful"'
Mr & Mrs D, Rumney, Cardiff
We have extracted relevant data from the Welsh Assembly Government's
SOCIAL HOUSING GRANT PROGRAMME
MORTGAGE RESCUE SCHEME
GUIDANCE TO HOUSING ASSOCIATIONS AND LOCAL AUTHORITIES
July 2009 Guidance:
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.
Options
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.
Eligibility
There is no right to mortgage rescue and purchases are subject to availability of funding.
It may be possible to resolve financial difficulties without the assistance of the scheme. It is, therefore, essential that before a Mortgage Rescue application is progressed that the applicant has:
• Pursued all options to resolve financial difficulties with lenders
• Sought independent advice from organisations such as Shelter or Citizens Advice or other appropriate independent source.
Mortgage Rescue will only be considered where the lender has :
- Commenced legal action to repossess the property; or
- The lender has agreed to postpone legal action to allow a Mortgage Rescue purchase by a housingassociation to proceed or;
- The lender has confirmed in writing that no further action to resolve the difficulties is possible and that repossession is the only remaining option.
The household must include someone with priority needs as defined in the Housing Act 1996 (as amended by Priority Needs Order (Wales) 2001):
1 - A pregnant woman or a person with whom she resides or might reasonably be expected to reside
2 - A person with whom dependant children reside or might reasonably be expected to reside
3 - A person who is vulnerable as a result of old age, mental illness or a handicap or physical disability or other special reason, or with whom such a person resides or might reasonably be expected to reside with.
"Mortgage rescue will be eligible to those ‘applicants who are disabled and whose homes have been adapted to meet their needs.'"
• The applicant 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
• It is not possible 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.
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.
Properties where the debts of the household are greater than the open market value of the property i.e. cases of negative equity, will not be supported through the Mortgage Rescue Scheme.
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%
Rent
If continued homeownership is not sustainable, the housing association can consider purchasing the property outright and offer the owner an assured tenancy.
