Since the end of last year, there have been warnings from a number of groups that there would be a dramatic increase in the number of homes being repossessed throughout the course of this year, due to rising arrears and defaults on mortgages and homeowner loans.

The Council of Mortgage Lenders (CML) predicted earlier this year that we would see around 450,000 being repossessed this year alone and although we have not yet reached this level, there has been a sharp rise in the number of possession orders issued by lenders.

During the course of the second three months of 2008 there were a total of 28,658 possession orders issued on mortgages, an increase of 24 per cent from the same period last year and 4 per cent higher than the first three months of this year. To date, there have been a total of 57,166 orders granted by the county courts this year and 18,900 homes have actually been repossessed.

A lender is able to apply to the courts for a possession order once the arrears have built up on a homeowner loan, or it is in default. Before this stage is reached, both the lender and borrower should endeavour to do everything they can to avoid the situation and it is therefore essential for a home owner to contact their lender as soon as problems start on their loan, in order that the situation may be rectified before the arrears build up too much.

Once a possession order is granted by the court, this will state the date when the home owner must vacate the property and the borrower then has until this date to either bring the loan account up to date, or sell the house to avoid the repossession taking place.

The Financial Services Authority has recently investigated lenders with regard to their repossession policies and has stated that they must treat customers fairly in their proceedings, ensuring that repossession is only considered as a last resort.