Released on = March 6, 2006, 12:50 am

Press Release Author = First Mortgage Trust

Industry = Real Estate

Press Release Summary = Time is running out for the successful introduction of home
information packs (HIPs) in June 2007. There are still many unanswered questions,
and the government has yet to publish a detailed timetable setting dates for
resolving key issues.
. Among all the uncertainty, lenders have continued to give a clear and unequivocal
message.
The introduction of HIPs will not alter the need for a reliable valuation, which is
a fundamental
requirement for prudent lending and provides security for lenders and borrowers.

Press Release Body = Along with the forthcoming implementation of HMO\'s (houses of
multiple occupation) and now Home Information Packs are these initiatives in the
public interest. A 6 month pilot scheme within the Bristol area has been seen as
somewhat lightweight and still leaves many questions unanswered.

The government has assured everyone working in the industry that it will not
introduce HIPs until it is absolutely clear that they are going to work. How will
the property market be affected either side of the proposed launch in June 2007.
There are good reasons for expecting a glut of properties on the market before June
2007 - as sellers rush to avoid paying up to £1,000 for a pack - and a shortage
thereafter. The benefits will be a more efficient method of buying and selling
property - but the benefits need to be measured against the significant costs for
the industry and consumers.

In contrast to all the uncertainty about the government's plans, there is a very
clear message from lenders about HIPs. The reality is that they will not change
their fundamental requirement for a reliable valuation of a property providing
security for a loan. A valuation provides an independent, reliable, indemnified and
timely assessment of a property's worth. It is an immutable requirement for prudent
lending, protecting both lender and borrower. Is it therefore likely that a property
for sale will require two valuations?

Lenders are likely to need a valuation report for both low and high value
properties, for properties in rural locations or other areas where comparing the
value of another property is difficult. Properties built using non-traditional or
unusual materials or methods of construction. Older properties, or ones where the
buyer wants to borrow a large sum relative to its value and borrowers with credit
risk or other problems. Some 40% of all mortgages for house purchase have a
loan-to-value ratio of 80% or more. In these cases, lenders are likely to require a
separate inspection, regardless of the Home Information Pack.

The Danish equivalent of HIPs had affected the number of transactions in that
country. The chief executive of the Danish Association of Estate Agents, Palle
Ulstrupp, said that packs had deterred speculative sellers of property and that
there were consequently up to 25% fewer homes on the market since their
introduction. He also said that there was a fundamental mistrust by buyers of HCRs
commissioned by an estate agent marketing the property.

But if the implementation plans are flawed or cannot be completed in time, the
government must be prepared to re-consider its proposal for introducing HIPs in June
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