Mark Robert Alexander vs West Bromwich Mortgage Company High Court Judgement

Mark Robert Alexander vs West Bromwich Mortgage Company High Court Judgement

10:59 AM, 29th January 2015, About 10 years ago 390

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Today was Judgement Day in the case of Mark Robert Alexander (me) vs the West Bromwich Mortgage Company. I was representing a group of 360 affected borrowers, who between them contributed nearly £500,000 to fund the legal action. I am extremely disappointed to report that we didn’t get the News we were so desperately hoping to receive. West Brom Tracker Judgement

 

Could this be the end of tracker mortgages as we know them for up to 1 million people in the UK?

The Judge, Mr Justice Teare ruled that the mortgage company were within their rights to increase the premium (margin) on the rate they charge above the Bank of England base rate. He also ruled that West Bromwich Mortgage Company had the right to call in mortgages with 30 days notice. Clearly we are shocked at his decision and we anticipate outrage from the general public too.

The special conditions in my OFFER OF LOAN state (I’ve added bold capitalisation for emphasis) ….

“After 30th June 2010 your loan reverts to a variable rate which is the same as the Bank of England Base Rate with a premium of 1.99% UNTIL THE TERM END.”

NOTE the words “until the term end”, which I have always understood to mean that the premium of 1.99% over the Bank of England Base Rate would apply to the remainder of my 25 year mortgage after the initial 4 year fixed rate period was completed. The Bank of England Base rate today is 0.5% so you would be forgiven for thinking that I should be paying a rate of 2.49%. However, the West Bromwich Mortgage Company have added another 1.5%, meaning that I’m now paying them 3.99%. When they first increased the rate, the margin they added on was 1.99%. Should I be thankful they reduced it? What’s to stop them putting it up to 10% tomorrow? Well according to the Judge, Mr Justice Teare, apparently very little!

The Special Conditions, which the mortgage company are relying upon to vary the premium (margin), are generic to all of their mortgage products and come in the form of a booklet. It is very obvious that the Special Conditions booklet is generic to their entire mortgage range because in one section it says the property cannot be let, which is clearly inconsistent with a Buy To Let Mortgage.

To deal with issues of inconsistency between the OFFER OF LOAN and the Special Conditions booklet the mortgage company also has the following condition in the very same Standard Conditions booklet it has been allowed to justify the increase in the premium charged ….

“These Mortgage Conditions incorporate any terms contained in the OFFER OF LOAN. If there are any INCONSISTENCIES between the terms in the Mortgage Conditions and those contained in the OFFER OF LOAN then THE TERMS CONTAINED IN THE OFFER OF LOAN WILL PREVAIL.”

I accept that the mortgage company needs the contractual ability to vary their Standard Variable Mortgage rates in their generic Special Conditions booklet and I had every reason to believe that the clause they are now relying upon to increase my interest rate only exists because Standard Variable Rate mortgages are not pegged to another rate in the same way as a tracker. I had no reason to assume that the clause allowing them to make variations to interest rates would affect me, after all I had a Tracker Rate Mortgage with a premium over the Bank of England base rate UNTIL THE TERM END, which in my case is in the year 2031.

Would you have come to the same conclusions I did?

#WestBromTrackerThe reason I took the lead and encouraged other affected borrowers to fund this expensive legal battle was that the industry regulators have a proven track record of allowing banks and building societies to get away with this particular form of “daylight robbery”. In 2013 the Bank of Ireland hiked its rates for over 14,000 customers with Tracker Mortgages, many of them were home-owners, NOT Landlords. The regulators proved ineffective for affected complainants. Prior to that, in 2009, the Skipton Building Society CEO publicly confirmed  that their Standard Variable Rate mortgages were capped at 3% over the Bank of England base rate and that pledge would be honoured despite market conditions. A year later that promise was broken and the regulators did nothing about that either!

The problem that all borrowers have faced when complaining to regulators has been that all mortgage lenders who have been a party to these rate hikes to date have very sneakily targeted borrowers who ‘fall between the cracks’ in terms of consumer protection regulation. WBMC targeted borrowers who own three or more properties whereas the Bank of Ireland relied on a date when mortgage selling regulations changed. The the Bank of Ireland case this provided them with an opportunity to mercilessly target homeowner mortgages too. Anybody who took out a Tracker Mortgage before the MCOB (Mortgage Conduct of Business) rules were introduced on 31st October 2004, AND anybody who owns three or more properties has good cause to be VERY worried following the judgement passed today.

There are an estimated 1 million Tracker Rate mortgages in the UK, they were very popular in the decade prior to the Credit Crunch. I have other tracker mortgages with other Buy to Let lenders and I am fearful that if they follow suit all my hard work to generate money to invest for my retirement will be undone. Many homeowners with tracker rate mortgages could also lose their homes.

I simply couldn’t allow this to continue unchallenged. Somebody had to stand up to the financial bullies and I am proud to have been one of them, despite this awful news.

The question now is; “Should we appeal?”

We already have £68,912.39 lodged with Barco (The Bar Council Escrow Account Service) and we have paid £350,000 into the Court on account of the other sides claimed legal expenses. The Judge is yet to rule on costs to date so we may get some of the money paid into Court back too. We don’t yet know how much an appeal will cost in terms of paying the others sides legal fees if we lose, however, our barrister is so dissapointed by the verdict that he has already offered to represent us in the Court of Appeal on a no-win-no-fee basis, despite this not being covered in his original terms of engagement.

I also worry about the potential impact on tenants. The ramifications of lenders being able to hike up Tracker Mortgage interest rates or call in unprofitable loans on a whim (even if they are not in default) could no doubt result in mass defaults of repayments and inevitable repossessions of the quality rental property which has been funded by Buy To Let mortgage lenders. The knock on effects to tenants in terms of security of tenure and the availability of quality accommodation, afforded by the very existence of Tracker Rate buy to let mortgages, could be devastating!

Please share your thoughts in the comments section towards the bottom of this page.

Mr Justice Teare’s 20 page reasoning for his ruling is available free of charge via the Courts. However, I am asking everybody reading this article to donate £50 by completing the form below and in return we will immediately redirect you to a full copy of the Judges ruling. All money received will be used in a marketing campaign to raise awareness of the potential consequences of this dreadful decision. If you want to donate more than £50, simply order two copies for £100 or three for £150 etc. We believe we have already raised enough money to fight an appeal. However, we must not dip into these funds to promote the importance of the case, hence the need for an additional fundraising campaign.

Download the full judgement

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Comments

Richard Mann

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14:40 PM, 30th January 2015, About 10 years ago

Mark Carney
Surely the Bank of England should be aware that bona fide lenders approved by CML are riding roughshod over written contracts of agreement and flagrantly disregarding their own terms.
It is unbelievable that a judgement has not been ruled in your favour. This is not the Wild West. Agreements and conditions have been broken quite clearly why is this not being taken into account.

HOWARD MANSELL

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15:03 PM, 30th January 2015, About 10 years ago

Reply to the comment left by "HOWARD MANSELL" at "30/01/2015 - 13:56":

Sorry, correction after reading your reply - if Court of Appeal rejects the appeal and at that point refuses permission to appeal to Supreme Court, then only Supreme Court can give permission. I intended to convey that there is no automatic right to go to "the highest court in the land" as some may think.

John Cornford

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15:18 PM, 30th January 2015, About 10 years ago

Reply to the comment left by "Andy Bell" at "29/01/2015 - 11:37":

I find from what i have read that it is incredible that some makes this decision as a reasonable unbiased person. There must be something within this that the judge has pointed out or focused on which has lead to the decision. Is anyone able to shed light on this? - even if you don't actually agree with what he has deduced.

Richard Mann

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15:43 PM, 30th January 2015, About 10 years ago

Please look at the Bank of England Website where you will find opportunities to lodge complaints against regulated members and while host of other options to raise the profile and get some attention on the judgement.

Tony Rockn'Roll

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16:11 PM, 30th January 2015, About 10 years ago

My impression (from one with no legal background) having attended the court case but not the hearing was that the judge was focussed on applying the law around whether or not the note in section 5 of the general terms and conditions booklet (which gave West Brom the clause to apply other rates) could be read along with the those contained in the mortgage offer which we all signed. The judge could not be persuaded otherwise and decided that they could be read together.

Any appeal would need to provide compelling evidence that one contradicts the other.

The Judge also ruled that the screenshot from a West Brom website quoting along the lines that this was a tracker mortgage giving you the certainty of knowing that rates are linked to BOE rates was inadmissible evidence as it did not relate to specifically to Mark Alexander's mortgage.

The angle of misrepresentation was not specifically discussed as it kept coming back to the question of can the offer letter and the terms and conditions be read together.

Yes, we can huff and puff and take a man in the street view but when it comes right down to it, whether we like it or not, it is about a judgement on how a law should be applied.

I would agree that, funds permitting, we have nothing to lose by consulting other legal experts.

And, of course, add my thanks for the tremendous efforts of all involved especially the two Marks to have got us this far.

Richard Mann

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16:29 PM, 30th January 2015, About 10 years ago

Surely the terms set out on the signed contract are what forms the agreement?
Anything else i.e. Supporting material would be deemed irrelevant.
Pamphlets brochures even the key facts paperwork usually clearly says this does not form the basis of an offer!
Marks contract and his responsibility to pay back the agreed amount stated that the percentage above the BOE rate was for the term of the loan.
If the content of the contract can be manipulated at will by only one party then it is not a contract it something else.
Will someone please see the madness that is this decision

Mark Alexander - Founder of Property118

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16:55 PM, 30th January 2015, About 10 years ago

Reply to the comment left by "Richard Mann" at "30/01/2015 - 14:40":

Hi Richard

West Bromwich Building Society are NOT members of the CML. They are one of just a few who are not.

I agree this should be brought to the attention of Mark Carney thgough, may I leave that with you please?
.

Richard Mann

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17:04 PM, 30th January 2015, About 10 years ago

Hey more than happy to let Mr. Carney know what's happening on his watch.
It may be that in the not too distant future about 1 million other folks will need his contact details too.
It's not so much the CML it's who or what is either handing out the licenses to operate such a business or the relevant bodies that oversee the actions of such organisations.
I do not know who this is.
Who polices these companies. Are they trading and meeting the criteria , reserves I'm thinking of lending ratios. What is deemed to be safe or legitimate ratios to be working within. How is monitored?

Mark Alexander - Founder of Property118

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17:11 PM, 30th January 2015, About 10 years ago

Reply to the comment left by "Richard Mann" at "30/01/2015 - 17:04":

The regulator keeping watch of liquidity ratios etc. is the PRA which is housed in the Bank of England.
.

Mark Alexander - Founder of Property118

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17:36 PM, 30th January 2015, About 10 years ago

OMG - wow!

Nicole Blackmore from The Telegraph has managed to embed our Twitter Campaign into her online article 😀

See >>> http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11377821/Landlords-lose-West-Brom-court-battle.html

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