The Government has stepped in to protect homeowners at risk of repossession, making seizure of the family home a last resort for lenders. It is also taking action to bring so-called "sale and rentback" schemes under supervision by the Financial Services Authority.

The Master of the Rolls, Sir Anthony Clarke, has today approved the Civil Justice Council's new protocol for the courts in mortgage repossession cases. This sets out clear guidance on the steps that lenders are expected to take before bringing a claim in the courts to ensure that repossessions are a last resort.

Lenders will now be expected to demonstrate that they have tried to discuss and agree alternatives to repossession when borrowers get into trouble with their mortgage repayments. If a case reaches court, lenders will be required to tell the court precisely what they have done to comply with the protocol.

CML Director General Michael Coogan said: "Despite the fact that the rate of repossession is modest, we recognise that there is significant public concern about this subject.  The new guidance should help to reassure consumers that lenders are genuinely committed to seeing repossession as a last resort, and that the checks and balances that protect consumers are in place."

At the same time the Government has announced that it is to publish  a consultation paper on bringing sale and rentback under FSA regulation. The move is a response to recommendations from the Office of Fair Trading's (OFT) study into the sale and rentback market ,which was published last week.

The CML said it welcomed the move on sale and rent back, a practice which allows unscrupulous purchasers to buy a home for under its market value and then rent it back to the vendor. Cash-strapped householders believe that they will be able to remain in their homes for life, simply paying rent to the purchasers, but they have no security of tenure in many cases, particularly if the person or company that has bought their home runs into financial difficulties.

Chief Secretary to the Treasury Yvette Cooper said: "We need to make sure we help those who might be hardest hit in the tougher times ahead, ensuring repossession is the last resort, not the first. We also want to make sure that vulnerable homeowners are protected from exploitation and dodgy deals."

The CML, however, added that it believed the changes to Income Support for Mortgage Interest (ISMI) due to take effect next April, and which will reduce the initial waiting period on eligible claims from 39 weeks to 13 weeks, will be helpful but should be implemented sooner.

It also called on the Government to consdier widening ISMI, which at the moment does not help joint-income households where only one borrower loses their income.  The CML  argues that individual entitlement - rather than household entitlement - would be an effective and useful change that would help households for whom lack of income, rather than lack of advice or forbearance, is the fundamental problem.

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