No need for tax payer support of government guarantees caused quite a stir!

Last week Saffron was the first mortgage lender to declare that we would not be signing up to the government’s latest housing market initiative, the Homeowner Mortgage Support Scheme. There was not an intention on our part to snub the initiative, but having reviewed the 200 plus pages of documentation, our decision to opt-out was based on the following:

• The borrowers who qualify for the scheme will in our opinion be pretty few and far between, nationally, let alone amongst our 6,000 mortgage members
• The rules of the scheme from the customers perspective are quite prohibitive
• It would involve system changes and significant reporting back to the government, which I would suggest does not represent good value for money for our members bearing in mind that we may have only one or two borrowers who make the scheme hurdle
• Fundamentally we believe that all borrowers in difficulty should get fair and inclusive treatment

Therefore in a press release which we issued last Thursday I said:

“As a regional lender, with an expectation that very few of our borrowers would qualify for the scheme, we feel we would better serve our members by maintaining our excellent current processes. That isn’t to say that we believe the basis of the scheme to be wrong, in fact I commit that saffron will at least do all the things the scheme suggests for relevant borrowers in difficulty. But our duty is to serve our entire membership in a fair and appropriate way at a time when they need us, regardless of whether or not they qualify under a national scheme. In addition, opting out of the scheme allows us to continue operating independently of Government and taxpayers’ assistance - as a well-run, risk-averse business, we are proud to champion our self-sufficiency.”
This release was picked up by the Times on Friday and led to a pre-record for Working Lunch on BBC2 that day and a live interview on BBC Radio 5 Live in the evening. Throughout the process I could not really see too much comment disagreeing with the position we took, except for one comment from “Which” suggesting that the government force all lenders to adopt the scheme.
Well if this voluntary scheme becomes compulsory, of course we will embrace it, but in my opinion ministerial efforts would be better placed ensuring that all mortgage lenders treat all their borrowers in difficulty fairly and only repossess peoples homes as an absolute last resort. This should not involve the provision of lender government guarantees effectively provided by the tax payer, but should involve a high dose of common sense, pragmatism and empathetic treatment of borrowers.