Mortgage Express or Mortgage Distress?

by Mark Alexander

12:33 PM, 6th September 2013
About 5 years ago

Mortgage Express or Mortgage Distress?

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Mortgage Express or Mortgage Distress?

The Mortgage Express exit strategy has been a hot potato since at least 2011 when they first met a group of 70 landlords at an event organised under the Property Tribes banner. Mortgage Express or Mortgage Distress

They have been slated by landlords for imposing terms and conditions which were buried in small print and which are no longer adopted by the mainstream buy to let lenders.

The bottom line for MX though is that their loan book is now the property of the UK tax payers and the organisation is pretty much run by Civil Servants, accountants, debt collectors/councillors and insolvency practitioners.

The Government have imposed tough targets and deadlines on the new MX team to reduce the loan book and therefore, it was inevitable that strong arm tactics, which many would describe as bullying, would be used.

Naturally they have gone for the easy targets and started by selling the concept of making over-payments to people who were too naive to work out that repaying a loan which typically costs 2.25% rarely makes sense. It’s possible to get a better return on that with a cash ISA or a deposit account in a bank or building society!  MX appear to have had scant regard to advising their clients to pay off more expensive credit first and they were never going to suggest investing any surplus into anything but reducing a debt with them were they?

The strong arm tactics have extended to imposing their “Right to Consolidate” which their contracts say allows them to use 100% of any sale proceeds to repay debts owed to them. It has even been implied on many occasions that if a borrower redeems one mortgage with Mortgage Express they can call in the rest! I’ve not seen these terms challenged in Court yet but I have come across borrowers who had stood up to Mortgage Express and there are quite a few examples on internet forums of MX having backed off. Bullies don’t like people who fight back.

Mortgage Express Reviews

General sentiment of landlords is that Mortgage Express borrowers should avoid reviews like the plague. The conspiracy theorists, of which I am one, are that MX have a very simple agenda and it’s not based on helping borrowers despite how they pitch it. It would appear the entire purpose of the meeting is for MX to persuade you to pay off or reduce your debt and/or to look for you to trip yourself up by admitting to breaching mortgage conditions which you were not necessarily aware of. Examples include:-

  • living in a property financed as a BTL
  • Letting a property which was financed as a private residence
  • letting to tenants which are now claiming benefits
  • where a property is an HMO

Would you know whether your tenants were claiming benefits though? What if they started claiming benefits after the tenancy started? What if the property became an HMO due to your local authority imposing selective or additional licencing?

Is it fair that MX could find one little problem, call in that loan and then call all the others in based on their right to consolidate conditions?

My Preferred Mortgage Express Exit Strategy

It has been mooted on several forums that MX have a target to collect a percentage of their loan book. I’m not aware whether the percentage target has ever been published but I’ve heard figures as low as 25% banded about. I suspect it’s much higher than that, otherwise, why would they carry the heavy administrative costs of their current activities as opposed to simply selling their loan book for 25% of it’s value? Perhaps they could and it’s a simple case of government ineptitude and politics preventing this from occurring? More likely, in my opinion, is that the government want to be seen to try to recover as much as possible of the tax payers bail out money.

If we knew what the desired recovery percentage was we could make suggestions. Let’s suppose the figure is 60%. Most buy to let landlords would happily refinance if their loans were discounted by far less than that. I’d certainly consider moving for a 25% to 30% write off of debt. Not every borrower would want or be in a position to go for such a deal but if only half did so, the remaining book, which I suspect would include a lot of toxic dent and low value assets due to negative equity, could still be shifted. They may only get 40 pence in the pound for these assets as a block sale but those extra 10% to 15% figures they would get from borrowers taking up their offers directly could well make up the balance.

Why don’t Mortgage Express just exit now?

I suspect it’s only a matter of time before Mortgage Express start offering golden goodbye deals to borrowers, it’s just a case of satisfying the tax payer that they’ve tried everything else first. Mortgage Express were given 7 years to exit and it is because we are into the final states of that period we are seeing them apply increasing pressure. Those of us who can survive the next few years will, I suspect, come out of this with a great deal but in the meantime we should expect the unexpected as well as underhand tactics.

What would you do if you were Mortgage Express?

What do you think Mortgage Express borrowers should and should not do to protect their interests?

Don’t be bullied by Mortgage Express

Before you agree to do anything with Mortgage Express talk to your fellow landlords. Go along to Landlords Association meetings or post comments/questions below or on Property Tribes. If Mortgage Express do bully you, fight back. If you don’t want to meet them don’t meet them. If they get aggressive with you just bear in mind that there are thousands of other Mortgage Express borrowers who are likely to have had similar experiences. Focus on the ideas that are legal and make the most sense. There are reported to be in the region of 50,000 Mortgage Express buy to let borrowers.

Via this link we have an excellent story as it unfolds of a landlord who was being forced to sell his home by Mortgage Express. It’s a very long discussion thread which was contributed to by several landlords and property professionals. To cut a long story short the landlord got his MP on side and Mortgage Express backed off.

Mortgage Express problems - You are NOT alone

 



Comments

Glenn McDowall

13:20 PM, 6th September 2013
About 5 years ago

Mortgage Express.

What all MX clients need to grasp is that MX is no longer a Bank and should not be compared to any other UK institution. MX went bankrupt and it is now run by UK Asset Resolution, which in turn is owned by UK Financial Investments which is owned, controlled by and reports to George Osborne the Chancellor.

UKAR is nothing more than a Government owned grubby little debt collector, with all of the ethics and morals associated with this sector of society.

With this in mind, all former customers of MX are warned not to attend any meetings or enter into any dialogue with staff of UKAR, unless they have an external representative with them. Regrettably many solicitors are not suitable for this type of work, as they would have never come across the type of tactics employed by UKAR.

UKAR is very clever, in that they put out PR statements that are economical with the facts, as experienced by many of their former customers. However, as they are bringing the cash into the Treasury, the view from the Government is that unless this blows up into a PR disaster then the Politicians prefer to look the other way. After all, in a country of 60,000,000 bankrupting 50,000 small investors is a small price to pay, especially so if they do not complain about it.

The old adage in law is that any solicitor who represents himself has a fool for a client, and this is true for former MX customers as well.

UKAR does not want to negotiate, they do not want to be reasonable, they just want to turn YOUR property into cash, by any means possible!!

You have been warned.

Regards

Glenn.

Mark Alexander

13:54 PM, 6th September 2013
About 5 years ago

Reply to the comment left by "Glenn McDowall" at "06/09/2013 - 13:20":

Superb response Glenn, thank you.

I have just read that UKAR made £529m pre-tax profits and recovered taxpayers money amounting to £1.3bn. Well at whose expense and by what tactics used we might ask ourselves?!!!

I consider the following press release extract to be nothing but cheap propaganda .....

"Richard Banks, chief executive of UK Asset Resolution (UKAR), said that the two taxpayer-owned institutions were still on alert for any signs of a future rise in interest rates that could push some of their 584,000 customers into repayment difficulties.

"A lot of our customers are fragile. They borrowed the most they could at the top of the market," said Banks, who has started writing to customers with interest-only mortgages to encourage them to prepare repayment plans.

A third of UKAR's customers have mortgages worth more than the value of their homes – partly due to the Together mortgages granted by Northern Rock before the crisis which allowed customers to borrow 125% of the value of a home.

While more than 90% of mortgage customers are up to date with their repayments, more than 2,400 customers were referred to debt advisers in the first half of the year, a similar number to the previous year.

Some 18,000 of the 27,000 customers UKAR has identified with interest-only mortgages maturing within 10 years have been contacted, Banks said."

The reason I don't buy into this propaganda is that there is clear evidence that interest rates will stay low for a considerable period of time and that property prices are recovering fast. There is every chance that even those MX customers with horrendous negative equity will be in a position to exit if UKAR can simply be made to wait for a few years. Instead, UKAR are charging the tax payer a fortune to collect money which may well have been repaid naturally. One has to wonder what percentage of the £1.3 billion recovered has actually come about as a result of their bully boy tactics and at what cost to society and the tax payer generally?

Mark Alexander

13:55 PM, 6th September 2013
About 5 years ago

Puzzler

16:27 PM, 6th September 2013
About 5 years ago

I have a MX mortgage on one property so get their newsletter.

Two points:

1) with respect to not knowing whether the following apply

Living in a property financed as a BTL
Letting a property which was financed as a private residence
Letting to tenants which are now claiming benefits where a property is an HMO

Any landlord should know these are not permitted if s/he had done their homework (ok maybe not necessarily about the benefits but certainly the others)

2) whatever you think of their tactics, there were some bad debts which is why they had to be bailed out. The profit made by UKAR would have been made by B&B if the crisis and bail-out hadn't happened so it is at no-one's "expense" and the government is entitled to be repaid as would B&B have been.

What I don't get is why the govt doesn't sell off the loan book - not at a discount but for a fair price. As landlords it would be nice to have a discount but as taxpayers we should prefer a fair price. What I also don't get is why they don't put up the rates to make people move their accounts. Although I am very happy with 2.25%, as you say it's no incentive to move, is it?

I agree it's unfair to strongarm borrowers for repayment of all loans when selling up one property - I don't even see the logic behind it as it will prevent people selling any.

Mark Alexander

16:47 PM, 6th September 2013
About 5 years ago

Reply to the comment left by "Puzzler " at "06/09/2013 - 16:27":

Just suppose you purchased an MX mortgage to finance a shared property in let's say Oxford. It had three tenants. Nothing wrong with that, all works out nicely and fits MX criteria at the point of application back in glorious 2007.

However, Oxford CC then decide to implement additional and selective licencing and all of a sudden your property is now a licensable HMO. Then one of your tenants loses his job. Oh dear! What do you say to MX at the next review meeting?

You are quite right to point out that MX shoot themselves in the foot with their tactics, generally just before reloading and shooting themselves in the other foot whilst speaking to anybody who is anything other than naive or vulnerable. Sadly though, the lots of landlords who took MX mortgages were genuine people and still beleive they are dealing with a Bank mortgage lending institution. That makes them naive and vulnerable, they start out just being naive and become vulnerable after having an MX review meeting and explaining what's happened to the 3 bed shared property described above for example. That's when MX begin to reveal the true monster, like a shark they will smell blood in the water from a mile away. Before long they taken your legs!

The reason MX don't put the interest rates up is that their contracts don't allow them too. Their typical margin of 1.75% over based is contractually fixed at that rate for the term of the mortgage. If they thought they could charge more they would.

A fair price for another financial institution to pay for the MX loan book is currently around 20 to 40 pence in the pound in my opinion. There are two factors dictating the value. First is the margin, it's about half of the commercial margin now being charged, hence the asset value has also halved. The second element impacting the market value of the loan book as a saleable asset is the average LTV which is much higher than lenders are now comfortable with.

Does that help to answer your questions and give you a better idea of what you are up against?
.

Ed Atkinson

18:59 PM, 6th September 2013
About 5 years ago

Thank you for this. I knew they were eager to get me to pay off my loans, but didn't know about these tactics. The warning about paying off just one loan is especially helpful

Colin McNulty

7:55 AM, 7th September 2013
About 5 years ago

Have you thought about a Freedom of Information request to ask MX some of the questions you have?

Vanessa Warwick

10:21 AM, 7th September 2013
About 5 years ago

Hi Colin,

I have written to MX with the following questions:

http://www.propertytribes.com/mortgage-express-getting-tough-t-8904-3.html#pid100904

These were curated through the very long thread on Property Tribes which currently has 98 replies.

If MX refuse to answer, I will be evoking the Freedom of Information Act. This was recently used by someone to find out from the government how many rental properties in the U.K. had EPC's. (The answer was 26%!).

For people with MX mortgages, we are discussing the use of debt snowballing to minimise your exposure to the MX debt consolidation campaign.

http://www.propertytribes.com/debt-snowball-method-t-8946.html

MX are on the rampage so its important to understand what's going on and take the necessary steps to minimise the consequences for you as an individual.

Diana Stanger

10:23 AM, 7th September 2013
About 5 years ago

I am experiencing Mortgage Express's exit strategy first hand and I welcome these blogs as a chance to get the facts out in the open.
I had 6 BTL motgages with MEX and four with other lenders. Early in 2011 I was in arrears with my payments and MEX passed 2 properties to the LPA receivers. They were making a healthy profit and the arrears were soon cleared. Naively I expected my properties to be returned into my care but instead they kept them. My portfolio manager is someone I always found helpful and he convinced me this was a positive situation. But, their agents were hopeless at dealing with my Polish tenants and I stepped in regularly to help. Then late in 2012 one tenant left and the 'let' strategy turned into a 'sell' strategy. When my portfolio manager suggested he was confident he could overturn the situation I welcomed his suggestion of a review. I was completely honest with him about my financial situation and he agreed with me on many points. We visited the empty property which the tenants had left spotless and in good decorative order. He agreed with me that a couple of hundred pounds would replace the misted glazed unit and fix the fence, and a new tenant could be in within a week. Alarm bells rang when MEX said it would need £8000 to put the place right and they had a valuation of £52,000 even though a property nearby had just sold for £70,000. (I am in South Yorkshire so not expensive here). They sold this property and I am £20K down on the mortgage. The other LPA property had an excellent long standing tenant with whom I had become good friends. They issued a section 21 notice to quit and she had no choice but to leave. This is now on the market and I stand to lose another £30K.
I haven't the means to employ a solicitor, I went to the Financial Ombudsman who looked into my case. Even after an appeal, they concluded that MEX 'were entitled to make these business decisions' and they 'had done nothing legally wrong'
I haven't much equity in my remaining properties - according to MEX they would probably be negative - but I do have some in my residence. This concerns me and I am at a loss what to do to keep it. I have my adult disabled daughter living with me and we live in a bungalow to suit her needs. The property portfolio was developed because of her - so I would have the time to 'be there' when she needed me, and to have security should I die first. In my early 60s I now have to work another plan.
My observation is, there are other 'villains' who are party to all this with whom we can claim redress. The LPA rexeivers, their agents and the valuers all, in my opinion, are making wildly inaccurate decisions and charging hugely inflated fees, simply because they can get away with it. Obviously they are collaborating with MEX and our money is going to make a lot of individuals in these industries very wealthy. When I complain to MEX they just say they are the experts and they have to go with their opinions. Of course. But they do also say that the LPA is work in for me, on my behalf. As I am very unhappy with the 'service' they provide me, have I not grounds to object and seek compensation?
Sorry, I didn't intend this post to be so long, believe me, it could have been so much longer.

Mark Alexander

12:36 PM, 7th September 2013
About 5 years ago

Reply to the comment left by "Diana Stanger" at "07/09/2013 - 10:23":

Did Mortgage Express actually repossess the two properties with the benefit of a court order? If not, and I might be mistaken on this so please don't take this as gospel, but I don't see what rights the LPA receiver or MX had to sell your properties at such a loss without your consent.

If we assume that the sales were perfectly legal their next step will be to sue you for the £50,000 shortfall on the mortgages. Once they have a Court Order they will no doubt apply to the Court to secure this order as a charge on your house. Again my insolvency law knowledge is very rusty these days so I'm unsure whether they will then be able to force a sale of your home as well.

If there was no equity in your home they would be far less likely to go for the asset.

I strongly recommend that you somehow manage to find the money to take professional independent advice, even if that means you doing a deal with a lawyer whereby his fees are secured by a second charge over equity in your other assets.

Just as a matter of interest, how many months were you in arrears for when MX appointed the LPA receiver?

The really awful thing here is that the LPA receiver actually did a decent job for you in the beginning and managed to clear the arrears and no doubt their fees too. Therefore, I can't understand how MX managed to get an order to allow them to sell your properties.

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