Mortgage Express Right to Consolidate

by Matthew Farrow

16:19 PM, 14th February 2013
About 6 years ago

Mortgage Express Right to Consolidate

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Mortgage Express Right to Consolidate

Mortgage Express give landlords good reason to worryI have been a buy to let mortgage broker for several years and recently heard the most alarming story in my career regarding the Mortgage Express Exit strategy and their “right to consolidate”.

I was contacted by a long-standing client recently as he had had a disturbing conversation with  Mortgage Express.  After calling them in relation to a Compulsory Purchase Order on one of his properties he had been told that redeeming one mortgage would mean Mortgage Express could exercise their “Right to Consolidate” – basically force him to redeem all of his mortgages with them.

When we discussed their revelation I found it highly unlikely that such a clause would exist, and even if it did no lender would enforce it, but even if they should try then our Ethical Guardian, the Financial Services Authority, who have placed Treating Customers Fairly at the heart of their regulations would never allow such a thing to happen.

It had to be a conspiracy theory.

I was wrong!

I called Mortgage Express and they confirmed what they had already told my client.

I then called the FSA, apparently this is a “business decision” and they don’t regulate buy-to-let mortgages.  “But what about the ethical implications” I naively questioned.  The FSA do not see this as an ethical issue.  They are quite happy for Mortgage Express to force a customer in to redeeming 20 mortgages despite the fact the accounts have never been in arrears.

With the help of some resourceful contacts I have been provided with Mortgage Express’s Right to Consolidate Definitions and Q&A Document.

It makes for some grim reading.

They hold all the cards.

If you hold any Mortgage Express mortgages then now would be a sensible time to investigate your position with them and put in place a contingency plan.

Looking to the future: spread your risk.  Ease of use, low rates, sensible fees are all attractive reasons to use a lender, but avoid complacency.  Use a number of lenders to provide your funding and insulate yourself as far as possible from being left in a similar situation, because sometimes, you are not being paranoid – they really are out to get you.

I’m obviously fighting this for my client so if you are in a similar position or would just like to discuss mortgages in general please complete the contact form below to get in touch. I have not disclosed my identity in this article for legal reasons, but my first name is Matthew.

PS – I’m also a member of The GOOD Landlords Campaign.



Comments

16:20 PM, 15th February 2013
About 6 years ago

good post and it exactly what I have been telling landlords for a couple of years but they are reluctant to believe it

Brian Fitzsimons

17:55 PM, 15th February 2013
About 6 years ago

This is indeed a concern for landlords. I have a number of BTL mortgages and I recently discovered that the mortgage provider had securitised the mortgages and sold them off to Auburn Securities 6 Plc ( a pool of mortgages to the tune of over £4 Billion, divided into shares for investment purposes....ie MBS mortgage backed securities).
My understanding of this is that the mortgage provider no longer owns the mortgages and at best acts contractually as a service provider for Auburn. The upshot of all this is that the mortgage provider is no longer the lawful holder of the debt and will have great difficulty proving any claim it may have as the debt has been sold into a pool and owned by the shareholders.

I suspect that the person dealing with Mortgage Express is in a similar predicament . He/she should check if the mortgages have been securitised, and if so, should offer to negotiate/settle only with the current holder (ie lawful holder) of the debt. This should throw the cat among the pigeons and slow things up for a few years at least.

Mark Alexander

19:54 PM, 15th February 2013
About 6 years ago

I've also heard that MX losses are subsidised to 75% of book value by the Tax payers bail out money. Therefore, if a property if sold for 50% of the mortgage value MX would show 100% profit on their books and somebody would probably get a nice bonus. Do you think this might be incentivising them to look for any old excuse to call in mortgages, e.g. letting to tenants on benefits and anything else they managed to squeeze into their mortgage conditions?

Mark Alexander

20:05 PM, 15th February 2013
About 6 years ago

Hi Brian, this is a very interesting point and something I'd not previously thought about. I've let Matthew know.

I spoke to Matthew earlier today and at that time he has received enquiries from 4 other landlords in pretty much the same predicament. Apparently he's been working with an Insolvency lawyer this week who believes very strongly that MX will not win a case whereby they can call in all loans under their Right to Consolidate and the landlord may well get away with MX taking 100% of the sale proceeds and having to pay any extra to clear the loan.

This begs a question though, if you were this landlord or another landlord in a similar position what would you do? I know what I would do, I'd be working with Matt to join forces with other landlords to fight MX as a group.

Nat Patel

16:16 PM, 16th February 2013
About 6 years ago

Hello,I have four BTL mortgages from Mortgage Express and two Bristol & west at present Bank of Ireland.They both writing me since last four years to Re Mortgage with another lender any pay back them
as all my mortgages are base +2.25%.Since Banks bailed out and in trouble they want their money back for quick recovery and less trouble.Even they have involved mortgage brokers for re mortgages too.But I have said NO all the time.I always have paid on time and started paying extra so my mortgage have been reduced too.But Tax bill have gone up as less interest and financial charges. we can't win That's HMRC system.Always pay on time so why we give-in. That's me!!!I I say NO ONE should give-in too !!!!

22:07 PM, 16th February 2013
About 6 years ago

Hi there, Mortgage Express have just enforced their right to consolidate on me. I took up thier offer of no penalty fees on redemption after they said they would not offer any new deals or change one of my mortgages from interest only to repayment. They took all the sale proceeds from the property that I sold to pay off the balance on another property that I own with three other people. No arrears at all, always paid on time.My Solicitor only showed me a letter from MX dated Sept 2012 saying they would enforce this two hours before sale completion three months later in Nov 2012. Obviously I would not have gone through with the sale had I known in time. They told me that I agreed to the terms and conditions of the mortgage which of course I did not as the property I sold had been with G-Mac who were then taken over by MX.

Tried fighting it but they have applied the money to the other mortgage. FSO is involved but I don't hold out much hope.

Can anyone help?
Mark

9:37 AM, 17th February 2013
About 6 years ago

Hi Mark,

I have been aware of this issue for a while, but it is helpful to hear actual cases of it happening.

I was wondering .... do you think there might be a link with your previous post about lenders distancing themselves from "BMV deals"?

Do you think they might be targetting landlords who talk about BMV and NMD deals in social media spaces?

As others have said ... any excuse ....

Mark Alexander

10:24 AM, 17th February 2013
About 6 years ago

It's no money down that got MX into a mess Vanessa but they loved it at the time. I discussed the risks of same day remortgages with their MD and senior management on many occasions but all they were interested in is how they could lend more. They only drew the line at providing their own bridging finance because they knew there credit team would not be able to deny knowledge of the risks they were taking.

I don't think they really care whether you did no money down deals, the people working there now are just civil servants and their job is to get money in.

11:06 AM, 17th February 2013
About 6 years ago

Thanks Mark.

I think it is important to make a distinction between legitimate NMD and illegitmate NMD in this context.

Prior to April 2008, there was a legitimate MX product.

However, many people continued to construct NMD after the demise of that product.

Those are the NMD deals I am referring to. They may be some kind of trigger for an investigation?

Mark Alexander

11:18 AM, 17th February 2013
About 6 years ago

Indeed, however, MX are trying to re-write history and say that they were never aware of doing no money down deals. Watch this space, I am acting as a professional witness to prove this. MX are trying to claim against a law firm, I am acting for the law firm representing the accused law firm! If that sounds complicated you ought to see the rest of it.

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