Mortgage Express Right to Consolidate

by Matthew Farrow

16:19 PM, 14th February 2013
About 7 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

Mark Alexander

11:38 AM, 17th February 2013
About 7 years ago

Possibly, have you made contact with Matthew? The angle here may be that they have used your money from this sale to repay debts of a separate business partnership. There may be other angles to fight too which I'm not aware of yet.

16:08 PM, 17th February 2013
About 7 years ago

I will have a similar situation as you.

I will be contacting the FOS as it cannot be correct that a former GMAC mortgage is lumped in with previous Kensington mortgages as a portfolio and that any sale proceeds of the GMAC property for which the mortgage must be redeemed in 5 years time in my case can be used to pay down any other mortgages which are now owned by MX.

Remortgaging is NOT an option for me as my credit rating is shot!!

I will therefore be selling to an associate at the mortgage redemption price and no more.

My associate will be getting a good deal but then he does have a 2nd charge on the property already, so an agreed value between ourselves will repay in equity some of what I owe.

I will once he has been repaid have a 2nd charge applied in my name on the property and there will be nothing MX can do as 2nd charges don't appear on credit files.

I just hope that my associate can raise the finance to buy; if not the property will be sold at a loss.

That will cost MX but not me.

Of course what they could do is carry on receiving the monthly payments; but they won't and there will be nothing they can do to me.

I'm a pensioner and they can't touch my pension.

They could bankrupt me and make even more losses.
I wonder if common sense will prevail.
By the sounds of it no!
We really need to stop MX's appalling behaviour in putting perfectly viable businesses out of business.
To use clever accounting to justify premature crystalisation of debts for substantially less than an asset is worth is scandalous.
MX need to be stopped from being allowed to downsize their loan book by creative accounting measures.
How I have no idea.

12:22 PM, 18th February 2013
About 7 years ago

Law of Property (Miscellaneous Provisions) Act 1989

2 Contracts for sale etc. of land to be made by signed writing.

(1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.

(2)The terms may be incorporated in a document either by being set out in it or by reference to some other document.

(3)The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract.

If the mortgage deed is not signed by both the mortgagee and mortgagor then the contract is null and void, so how do Mortgage Express expect to obtain twenty properties, without evidence of this document, unless it has been sold for profit. I would request the original mortgage deed from Mortgage Express. Been trying to get a copy of the "original" of my mortgage, which Halifax state that they do not have. Even the Financial Ombudsman are a waste of space in this matter. What am I meant to think when the bloody original document has gone AWOL? Good luck. Beat the bankers.

Brian Fitzsimons

17:09 PM, 18th February 2013
About 7 years ago

Hi Mark, I would first find out if the loan(s) were securitised. If so, acquire shares in the securitised company/trust etc, ie you now own a share of your own debt. This should give you the same standing in court as whoever is trying to foreclose on you.....stalemate! ( Don't know the cost of this, but joining forces with other landlords as you mention would help).

If not securitised, Helen's idea (see below post by Helen) is a good one. I would conditionally accept their offer to consolidate ( thereby removing controversy). In the conditions of acceptance, I would look for the signed agreements/contracts (with signatures of both parties) and an assurance of adequate performance on their behalf in that they actually lent you their money and did not just monitize your promissary note. Apparently financial institutions have a great difficulty complying with these conditions so prepare for a very long wait.

20:11 PM, 24th February 2013
About 7 years ago

Hi

I've always read the posts with interest and found them really helpful but this is the first time I feel compelled to write.

We discovered about MX's "Right to consolidate" at close of business the day before the completion of the sale of one of our B2L houses when we were told they wouldn't let us redeem the morgage without paying off some of another loan we have with them. After a very sleepless night, we were unable to speak to anyone until 10.00 am (with completion only hours away) but even then they wouldn't tell me what figure they would accept to allow things to proceed. I was made to suggest what extra we would be prepared to pay! In desperation I named a figure and then had to wait to hear from our solicitor whether things could now go ahead.

It was a truly stressful experience and we were extremely fortunate that the proceeds of the sale weren't required for a related purchase or earmarked in some other way. I still feel extremely angry at the way we were treated and have as yet received no response to my request sent 12/12/12 for a redund of the money charged on the full amount of the loan the following month.

I'd be very pleased to join any group opposing their action.

Kind regards
Hilary

10:28 AM, 25th February 2013
About 7 years ago

I was informed about the right to consoldate clause by my MX Account Manager during amy annual review. I am due another annual review next week, which should be interesting. I have been told that in ALL cases they will enforce this right to consolidate condition & the only way you will be able to gain access to any of the captial equity is if it's for professional fees and for a CGT bill should the property disposal mean you being liable for a CGT bill..

neils26

16:03 PM, 1st March 2013
About 7 years ago

I understand this to mean that they will keep any surplus you may be lucky enough to achieve if you sell any properties. i.e. they will offset the surplus against other mortgages with them.

You are not forced to redeem all your other mortgages just becuase you sell one house. Sorry if I misunderstood this thread, but that's what article and early comments appeared to indicate...

6:09 AM, 3rd March 2013
About 7 years ago

Are you certain about this!!?
I thought if you had to redeem one mortgage with them; they would force redemption of any others whether that was at a loss or not!!
I will have to sell a property in 5 years time and i was concerned that all my MX properties would have to be sold even though their terms have 18 years to go!!
All I have to do is now sell the 5 year property for exactly the mortgage amount to the person who has a legal charge in their name on the legal title.
I reckon I might just manage that and MX will get nothing!
Of course what happens then is my purchaser will put a voluntary 2nd interest in my favour for an amount we agree on!!
What a very nice purchaser I will have!!?
Of course this may NOT be so easy; what if my preferred purchaser cannot obtain a BTl mortgage!!!
We shall see; however we are planning for the possibilty of carrying out this strategy now; to work in 5 years time.
No way is MX taking any of my equity; though of course some will go in SDLT, etc.................boo hoo!

neils26

10:51 AM, 4th March 2013
About 7 years ago

Paul, you are so lucky to be worrying about something that might happen in 5 Years time... !

Most of us are happy to get through a week, trapped in this awful business. I'd be rid of all my props tomorrow if I could even cover the mortgages.

Right now, yes I'm sure they can't make you redeem all your mortgages just because you sell one house. Next week, next month, 5 years... who knows ? But I can't see how that principle will change.

Richard Peeters

21:11 PM, 5th March 2013
About 7 years ago

At the end of 2012 I wrote to MX about what would happen if I sold one of my properties held in our MX portfolio. They wrote back saying that they retained the right to insist on retaining any surplus I made from the sale to top-up the equity across the rest of the MX portfolio i.e. they would not release the charge on the sold property unless I agreed to that upfront. If the sprung this on someone just before completion, the seller might find him/herself unable to complete the sale!

I am partly in this position because at the end of 2007/early 2008, I had accepted their kind offer of additional finance across the portfolio (drawing down on those with equity even if others had none left). Could this be a new case of Misselling?

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