by Calculated Risk on 2/20/2009 01:40:00 AM

They are taking a different approach to help homeowners in England.

From The Times: Homeowners will get £500m in mortgage assistance to counter rise in repossessions

[T]he Homeowners Mortgage Support scheme ... will allow borrowers with mortgages up to £400,000 to take a payment holiday if they have suffered an “income shock”, such as losing their job or having their hours cut.

It is expected to announce today that the scheme will allow borrowers to defer payments on up to 70 per cent of their mortgage interest for up to two years. The repayments of a borrower in the scheme with a £150,000 mortgage at 3.5 per cent interest would fall from £437.50 to £131.

The Government will also pledge to guarantee 80 per cent of the deferred payments if borrowers fail to cover their mortgage payments and subsequently lose their homes. If the repossessed property is sold at a loss, the lender will claw back money from the Treasury.

The borrower will have to pay back the interest (with interest), so this is really a NegAM scheme. For homeowners with negative equity, this will just put them further underwater.

This scheme is intended for homeowners who have suffered an "income shock" during the recession, unlike the U.S. plan that includes homeowners who used excessive leverage during the bubble.