Not that long ago, Northern Rock were getting serious grief over their heavy handed approach to defaulting homeowners.
This was because they had repossessed nearly 1,500 homes in the first 6 months of this year.
However, now it appears that the Rock is taking a more softly softly approach in its treatment of mortgage customers in arrears, according to a debt charity.
The mortgage lender which has also been heavily criticised for keeping its mortgage rates punishingly high is rethinking the way it approaches bad debts.
Malcolm Hurlston, chairman of the Consumer Credit Counselling Service (CCCS). said:
"We are seeing big changes at the Rock. Before, they took a tough approach with borrowers in arrears but now there is a road to Damascus scenario; they are being more sympathetic."
In a summit last week with leading debt and housing charities, including the CCCS, Credit Action, Shelter and the Money Advice Trust, Northern Rock set out its plans for increasing help for those of you facing repossession, with Jemma Rundle,a spokeswoman for the company saying:
"We are looking to work through problems with our customers on a case-by-case basis. Where appropriate, we will offer payment holidays, reduced monthly repayments and conversion to interest-only mortgages.”
Northern Rock debt advisers will call those of you in arrears to see what extra help can be offered, rather than simply writing letters to you. This follows the spirit of a new mortgage-industry protocol which comes into force on Wednesday, setting better standards for how those of you facing repossession should be treated by mortgage lenders.
- Rock getting heat from the Government?
It may be that the Northern Rock hierarchy could be facing political heat over its attitude to repossession. Despite Treasury ministers insisting that the Government only has an "arm's length" relationship with the Rock, the bank's new chief executive, Gary Hoffman, may be keen to stop the negative publicity and so please his new political masters.
Northern Rock and four of its biggest mortgage lender rivals have been worried by the huge rise in the numbers of us voluntarily giving up our properties because we are unable to meet our mortgage repayments.
- Voluntary repossession is not the answer
Beccy Boden Wilks of debt charity National Debtline said a surge in voluntary repossession was a sure sign of people’s mounting desperation:
"Perhaps they think by handing over their keys they will at least ensure that the property is sold at auction by the lender and that it gets the best possible price. They figure that if they leave it, then the price will fall further and they could be left still owing part of the mortgage."
But entering voluntary repossession is no solution, as Ms Wilks pointed out:
"It can take months to sell the property and it could be at a knockdown price, so there could be a shortfall to pay. The lender can come back years later and ask for its cash."
And it's not just over repossession that Northern Rock seems to be having a change of heart. They have said they will look over all the the individual voluntary arrangements (IVAs) they have previously rejected.
In an IVA, you agree to repay a set amount a month over five years. You get to write off up to 75% of what you owe, but the lender, (who must agree to lower monthly payments) gets the remainder.
- Worried about repossession?
Read our 10 steps to lower your risk of repossession
If you are struggling with your finances then do not panic. You can seek advice and support from these organisations:
You should also speak free of charge to a debt adviser who can provide you with advice and solutions to help you resolve your debt and credit problems.
New fixed rate mortgage from the Rock
Some good news from Northern Rock is that they have launched a new fixed rate mortgage.
You now have the option of a 1 year fixed rate mortgage at 3.99% available for up to 65% loan-to-value (LTV) and it comes with a £995 product fee.
You can also choose to fix your interest rate and monthly payments from a choice of 1, 2, 5 and 10 year mortgages. In addition, Northern Rock will now offer three LTV tiers for borrowers at 65%, 75% and a maximum 85% LTV.
The new range will also continue to offer a free basic valuation and free standard legal work for remortgages.
Are you a Northern Rock customer facing repossession?
How have you found their attitude towards you?