Mortgage Express Harsh Realities re Mortgage Arrears

by Mark Alexander

11:56 AM, 16th December 2013
About 7 years ago

Mortgage Express Harsh Realities re Mortgage Arrears

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Mortgage Express Harsh Realities re Mortgage Arrears

It would appear that Mortgage Express are now operating a zero tolerance policy on buy to let mortgage accounts which fall two or months into arrears.

In recent months I have heard of several landlords who feel hard done by.

After just two months of mortgage arrears have accumulated Mortgage Express have called in their loans. Repayment of arrears does not appear to save people at this point. It’s too late! Mortgage Express have called their loan in and that’s their right to do so. Mortgage Express will happily accept payment for the mortgage arrears but they are not legally compelled to reverse their decision on calling in their mortgages. Some lenders are more tolerant but tot Mortgage Express it would seem. They have their instructions and they are sticking to them. Their objective is to recover as much money as possible – END OF STORY!

In the examples I have seen Mortgage Express has called in LPA Receivers to collect rents until such a point as tenants can be evicted and the property is then sold. Any surplus of sale proceeds over and above the mortgage and accumulated costs is then offset against any other Mortgage Express accounts which are also called in under their rights to consolidate. Once all Mortgage Express accounts are cleared any surplus balance is then returned to the borrower. However, in all of the cases I have seen to date there has been a deficit and Mortgage Express have then pursued this too, in many cases leaving their former borrower with little if any choice other than to consider personal bankruptcy.

Mortgage Express Harsh Realities

I have been asked by several borrowers whether I would be prepared to fight this for them. Whilst I think the situation is particularly harsh on both borrowers and tenants, now that I understand what is actually happening here I cannot see that anything illegal is being done by Mortgage Express.

It’s harsh but apparently it’s what all Mortgage Express buy to let borrowers signed up to.

The message therefore is do not fall into arrears on your Mortgage Express accounts.

It seems clear to me that Mortgage Express are now coming under massive pressure to call in mortgages which are in default. In my cynical opinion, that is the only reason they want to meet with their borrowers. It’s a fact finding exercise whereby they present opportunities for their borrowers to admit to being in default, other than for mortgage arrears.

My advice to all Mortgage Express borrowers is to read your terms and conditions very carefully and to follow them to the letter. If Mortgage Express want a meeting then ask them to confirm in writing what gives them the their rights to insist on a meeting and immediately seek professional advice. Also remember that if your tenants don’t pay you that’s not an acceptable excuse for not paying your mortgage. In fact, there is NO acceptable excuse I can think of other than Mortgage Express not taking payment. Therefore, if you haven’t got a decent liquidity fund I strongly recommend that you fully reference your tenants and purchase insurance against the risk of your tenants not paying your rent.

If it makes you feel any better the latest take on the word Gangsters in Banksters!



Comments

tony

22:26 PM, 16th December 2013
About 7 years ago

I would like some advice on the following matter.LPA Receivers were in control of my property prior to the tenants vacating the property. Who were issued with a Section 21 Notice between 18th and 30th August 2013 by the receivers, which was for a period of no less than 2 months. Therefore the tenants vacated the property one month into the Section 21 Notice without notifying myself (The Landlord) nor the Receivers.
the tenancy was not renewed when it expired on the 16/12/2011 therefore since this date the tenancy became a Periodic Tenancy.
As the tenants vacated the property without notifying the LPA Receivers or the Landlord and after only 1 month into the Section 21 Notice period of 3 months. are they in breach of the tenancy agreement and also the Section 21 Notice.
There is a dispute between myself and the tenants for the deposit as they did not actually give notice and they moved out i month within the section 21 notice period of 3 months. and with out paying rent from the date they moved out.
are they entitled to there deposit back or not? from the DPS please advise.
thanks.

Mark Alexander

7:32 AM, 17th December 2013
About 7 years ago

Reply to the comment left by "Tony Church" at "16/12/2013 - 22:26":

Hi Tony

Providing that you complied with the DPS scheme rules fully in terms of protecting the deposit, issuing the deposit protection certificate and prescribed information I see no reason why the DPS would rule against you given the circumstances you have outlined. You should also consider pursuing your tenants for the remainder of their debts to you - see >>> http://www.property118.com/good-debt-recovery-agent/44679/
.

Romain Garcin

7:57 AM, 17th December 2013
About 7 years ago

Tenant can end the periodic tenancy whenever they want provided they serve a valid notice to quit, irrelevant of any s.21 notice.
In this case, I think the reasonable thing to do is to hold tenant liable for rent in lieu of notice from the date they left up to when a notice to quit would have expired, which may before the s.21 notice's expiry.

Industry Observer

8:22 AM, 17th December 2013
About 7 years ago

@Mark and Romain and for Tony

The answer here is very easy. For ease of example I am going to assume a tenancy that started 1.1.12 and went periodic 1.1.13 with rent payable 1st monthly (though post Spencer v Taylor that element may become immaterial.

When the Landlord gives notice say 1.10.13 he gives 2 months and let's say for ease of dates that the maturity date is 30.11.13 as I don't understand your reference Tony to 3 months though I do see Romain's link then to a NTQ.

Tenant finds new property 31.10.13 or few days before and only one month into the 2 month notice period given by the Landlord and has to move immediately to secure it. So they leave, citing the fact Tony has given them notice to leave anyway, so all they are doing is complying with his notice but leaving a bit earlier but without paying the November rent.

This they are entitled to do, Tony can't lock them in the property but he can lock them in the agreement and its terms including terms of notice, so they cannot leave penalty free.

Tony has served 2 months and requires the property 30.11.13 not 31.10.13. If he decides to accept early surrender as it suits him to then fine the tenants are off the hook. But if he does not he is entitled to the rent for November.

If the tenants want to give notice as Romain says as they are entitled to, let's be generous and say Tony accepts it by email (which he doesn't have to as it should be in writing and signed) and counts it from 1.11.13 so they can leave penalty free 30.11.13 - after paying the November rent of course .

Mark is also correct in theory, but given how dopey the Scheme Adjudicators are and the bleating, weeping story the tenants will weave and also OFT opinion on notice and tenants rights I think it may be an uphill struggle to get DPS to award the November rent to you.

Best of luck with it but above is the legal position

Romain Garcin

10:03 AM, 17th December 2013
About 7 years ago

A s.21 has no effect on the tenancy and does not entitle the tenant to anything. Here the tenant didn't serve any notice so, indeed unless landlord has in effect accepted surrender, they are liable for rent in lieu.

(note that an email is in writing, just that service by email must be agreed upon beforehand)

Industry Observer

14:04 PM, 17th December 2013
About 7 years ago

Romain

Please quote authority where a Court has accepted email as service. All my legal advice is that it still has to be an original signature, not electronic. From memory the last case that reaffirmed this involved sharers where one was maliciously trying to give notice using someone else's email address.

I assume you only mean a s21 notice has no effect when served by either party in this specific case, not generally, as all that happens in an LPA appiintment is that the Receiver steps into the Landlord's shoes but acting for their appointor.

Puzzler

15:52 PM, 17th December 2013
About 7 years ago

SO...if a borrower has no arrears at all and never has and decides to sell one property, then MX won't compel the sale of the rest?

If that is the case and the borrowers who are complaining have at some time defaulted on their payments they don't really have a leg to stand on.

If it's not the case then MX are being very unfair.

Being a "good" landlord is a serious business and if payments cannot be made when due that is not good business practice nor is it ethical. I don't like the banks either but they get the same respect from me as any other creditor (not least because they can affect my credit rating).

I understand that sometimes circumstances get in the way but then they need facing not blaming the other party and crying "unfair". This is one of the differences between amateur and professional landlords. They may be taking a very hard line but no lender is keen on poor risk borrowers.

Maximizing borrowing is only OK if you can be sure you are not over-extended. A buffer against defaulting tenants is a requirement in this business, whether salary or a small cash pot.

Puzzler

15:55 PM, 17th December 2013
About 7 years ago

Maybe Tony Church's question could be in another thread, that was a bit confusing...

Colin Childs

16:17 PM, 17th December 2013
About 7 years ago

Reply to the comment left by "Puzzler " at "17/12/2013 - 15:52":

The thought crossed my mind as well if this really is a dividing line between the amateurs and professionals in the letting business. There's no reason for the amateurs to be given protection. With business comes risk as well as reward. I suspect there's going to far more sob stories in the future. Given that many people give scant regard to any form of business plan when setting off on what is a long term plan. The "boom" years may well have clouded peoples judgement as to the true returns on letting property, and until the late 90's it was predominately the preserve of those with capital to invest .

tony

17:29 PM, 17th December 2013
About 7 years ago

Hi All thank you for your feed back,yes I have fully complied with the DPS scheme, and the tenants deposit is with the DPS my main point is, is the tenant entitled to there deposit back if they have not complied with the notice period and moved out within 1 month instead of staying and paying the rent for the full 2 months of the section 21 notice?
As the tenant is disputing that they are entitled to there deposit back and wishing to claim her full deposit back from the DPS.
I believe that the DPS should come down in my favor.

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