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Banks can’t deleverage without clear homeowner support, says Oakwood

The Budget must offer greater clarity over Government support from homeowners as lack of access is preventing investors from acquiring mortgage books, warns Oakwood Global Finance.

Lenders are attempting to sell their books to investors to raise funding as the market for securitisation remains closed, but Oakwood warns the lack of access to Government support for homeowners struggling to repay their mortgages is putting investors off acquiring books.

Chief executive Mike Culhane says this could prevent banks from deleverage and raising new funds for lending.

Oakwood, which owns and manages mortgage portfolios, says investors in non-performing mortgage portfolios, like private equity firms and hedge funds, will not enter into the market if they are unsure as to what the Government can do to help struggling homeowners.

Culhane says: “The Budget is so important in getting some information as to exactly what the Government is going to do to help homeowners. We need complete clarity on what exists right now.”

He adds: “When the Government announced the two-year break for troubled borrowers a lot of people were worried. Frankly, investors just need clarity so they can put some numbers on their spreadsheets that they can rely on.”

The firm, which manages 16,000 mortgages across the books of lenders and investors, says borrowers on its books have failed to receive Government aid due to the levels of confusion surrounding schemes like Income Support for Mortgage Interest.

“We actively tried to see what we could do for all those on the book who may be eligible for Government aid. We tried to put the cases through but there were one hundred little hurdles in our way on every case and not one went through.”

“It’s very, very hard to tick all of the Government’s boxes.”

“We read all the regulations and did all we could to place things with the many Government schemes – the problem is there are so many different schemes.”

He is calling on the Chancellor to offer more clarity over the schemes in this week’s Budget.

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