By Max Clarke
The Government’s Mortgage Rescue Scheme- intended to help households facing repossession of their properties- overran its budget by £35 million whilst helping less than half the anticipated amount.
"The Department made assumptions about the level of demand for the Mortgage Rescue Scheme and made the wrong call,” commented Amyas Morse, head of government spending watchdog, the National Audit Office.
“There was more need than expected for more expensive support and less for the relatively low cost rescue option.”
The Mortgage Rescue Scheme, launched in January 2009 by the Department for Communities and Local Government, in two years achieved fewer than half of the rescues expected. The National Audit Office has reported that the Department directly helped 2,600 households avoid repossession and homelessness at a cost of in excess of £240 million - but it originally expected to help 6,000 households for £205 million.
Under the Scheme, vulnerable homeowners at imminent risk of repossession who fulfil the eligibility criteria can apply to housing associations to provide them with an equity loan to help them reduce their monthly mortgage payments and retain ownership; or, alternatively, to purchase the home outright with the former owner remaining in the house as a tenant.
Morse continued: “Spending more than expected and delivering less means that the Department has not provided value for money."