A government review of housing stock options has cast doubt on the role of the Housing Corporation in saving stock transfer organisations from bankruptcy.
The uncertainty arose as part of a questionnaire issued by the Office of the Deputy Prime Minister to housing consultants.

They were asked whether the government should let lenders repossess stock from transfer associations that are in financial trouble, removing the corporation safety net. It would be done, the review team suggested, to demonstrate a genuine transfer of risk on such deals.

The question was not put to lenders in their survey. Insiders suggested it was asked merely as a “reality check” to rule out outlandish ideas.

The Council of Mortgage Lenders said the system of corporation intervention to bail out organisations that get into difficulties is crucial to the continued success of the sector. CML deputy director general Peter Williams said: “I hope it doesn’t imply a shift in government policy because there would be considerable consequences.” Lenders would be forced to raise the cost of loans to reflect the higher risk involved, he said.

Deputy prime minister John Prescott will announce the questionnaire’s findings, and future policy, in January.

Source

Housing Today