Debt charity Citizens Advice has slammed calls for "tough love" against homeowners threatened with repossessions, which were made by the chief executive of UK Asset Resolution.

Richard Banks, whose bank manages around £80bn of toxic assets, which were held by Northern Rock, told a newspaper that the UK faces a "tsunami" of problems for UK borrowers once interest rates rise.

As a result he called for "tough love" against borrowers facing long-term difficulty in keeping up payments on loans taken out when house prices were at their peak and personal incomes were on the increase.

But Citizens Advice, which dealt with more than 100,000 cases involving mortgage and secured loan arrears last year, criticised Banks’ statement, arguing that such an approach would be short-sighted and unhelpful.

Gillian Guy, chief executive of Citizens Advice, said: "Encouraging forbearance is absolutely right and necessary, with the current levels of unemployment and other economic challenges people are facing.

"Of course there will be cases where homeownership is unsustainable, but in that situation it is vital that those affected are helped out of home ownership in an orderly way and that they can get into secure rented accommodation with the least disruption possible. This is the key challenge for lenders and government."

The last set of figures from the Council of Mortgage Lenders (CML) revealed a quarterly rise in repossessions of 15% (9,100 properties) in the first quarter of 2011, up from 7,900 in the fourth quarter of 2010 but 10% lower than the same period a....More on this story: Credit Today online

(Source: Credittodayonline)