Over a year ago, the British government announced a scheme to help families facing foreclosure reduce payments due to loss of income. The scheme has gone into effect, helped very few families, and cost taxpayers millions of pounds.
Homeowner Mortgage Support Scheme
The Homeowner Mortgage Support Scheme, or HMS, was announced over a year ago with much fanfare from the government. HMS was supposed to help struggling borrowers stay in their homes while the economy and unemployment rates were at the worst levels in years. The scheme allows homeowners to reduce their mortgage payments for up to 2 years because of loss of income. The scheme has only managed to help 15 families but has still cost 2.5 million pounds. With the average home cost being $165,000, the government could have saved money by just buying the homes outright for the families.
Where are the Struggling Families?
HMS is just one government program meant to help struggling homeowners. Other programs have helped families get equity loans to reduce their mortgages or to sell their homes and remain in them as tenants. Even though 1 in 1000 households is in danger of repossession, Indian Government Schemes very few have needed the sort of help offered by HMS because other programmes are better suited to their needs. HMS is not as helpful as expected.
Where Did All the Money Go?
Even though the government has spent 2.5 million pounds to help only 15 families, they still defend the program. Much of the money spent was said to have gone to one-time set-up costs and won't need to be spent again this year. Money was also spent on broader policies and development. Currently, there are still thousands of homeowners in danger of repossession that can benefit from HMS and the government believes that the safety net will be needed by more families next year.
Is the Scheme Working?
Even if some of the money spent on HMS was one-time costs of development and policy work, the program may not necessarily be effective. At the current per-family rate, HMS has spent more money helping 15 families reduce mortgage payments for just 2 years then the 15 homes cost. Perhaps the development of the plan was faulted from the start, with initial costs being too high. Continuing the program seems like it will happen and the government says more families will use the safety net in 2010. It is left to be seen if the per family cost will be reduced to a reasonable level that actually makes sense. It is also a wonder that if other programmes are used more often, why this programme is continuing as there are no doubt ongoing costs associated with the scheme.