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

Craig Holmes

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12:00 PM, 29th January 2015, About 10 years ago

Reply to the comment left by "Rob " at "29/01/2015 - 11:58":

No - my mortgage was taken out in 2007..

Jamie Finch

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12:02 PM, 29th January 2015, About 10 years ago

Reply to the comment left by "Craig Holmes" at "29/01/2015 - 11:38":

We must fight on. I have ordered my copy or the judgement. If this is unchallenged and overturned there can be no certainty for any landlord over what the cost of their mortgage might be from one month to the next. Could create a massive problem in time in the housing market.

Alex Williams

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12:05 PM, 29th January 2015, About 10 years ago

Yup. Beggars belief. I am astounded.

JB

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12:07 PM, 29th January 2015, About 10 years ago

This ruling is OUTRAGEOUS!! It must be publicised and appealed.

I have a number of mortgages with ME and am now very worried.

Mark Alexander - Founder of Property118

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12:18 PM, 29th January 2015, About 10 years ago

Reply to the comment left by "Rob " at "29/01/2015 - 11:58":

No, that date is in relation to the BoI's justification
.

Jamie Finch

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12:19 PM, 29th January 2015, About 10 years ago

Reply to the comment left by "Mark Smith (Barrister-At-Law)" at "29/01/2015 - 11:44":

The speed of judgement maintains my feeling that the judgement was made well before the hearing in line with and for the same reasons the ombudsman came up with a similar conclusion!

The Man From Nowhere

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12:31 PM, 29th January 2015, About 10 years ago

I am shocked, saddened, appalled, disappointed, and deeply disturbed by today's judgment. However, as some may recall I have continually banged my drum from day one about making provision for an appeal, having 2 bites at the cherry, a contingency plan (Plan B). I hope everyone who has been involved in this case so far will dig deep for that extra courage (and those extra pennies) in order to take this injustice to the next level, the Court of Appeal.

Jeremy Smith

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12:35 PM, 29th January 2015, About 10 years ago

Reply to the comment left by "Jamie Finch" at "29/01/2015 - 12:19":

I quite agree with you Jamie.
"for the same reasons".....

I have now started to wonder who the shareholders of West Brom Mortgage Company are .....
If this gives the green light to other mortgage companies to up their rates, then this result would be good for their shareholders too !

Draw your own conclusions.

Martin S

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12:39 PM, 29th January 2015, About 10 years ago

Amazing isn't it, that the Judgement of one person, i.e. The Judge, be they right or wrong, is enough to over-ride everything else, including what appears to be common sense to everyone else. Who knows what interaction there is behind the scenes within 'Member's Clubs' etc where decisions are really made between people in positions of political, financial and legal power. Read any Basic Sociology book to find out more on the subject!

This is further proof as why we need to keep the Jury system in this country, which the Judiciary is looking to cut back on, in order to save costs.

Luckily we don't have a BTL mortgage with the two main culprits, but we do elsewhere, including MX, and like everybody else, we're concerned about the potential. We can't just accept this flawed ruling.

Dan Smith

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12:40 PM, 29th January 2015, About 10 years ago

Reply to the comment left by "Jamie Finch" at "29/01/2015 - 12:19":

Agreed Jamie - just time for a quick confirmation call to the Treasury.

The good news (for the government) is that a major financial institution will not require a bailout so close to the election. The financial crisis being over and all that.

IMHO this was always a targeted rate hike against those deemed to have no protection from any regulator. The arbitrary rule of "three or more" ensured that there was both no regulatory support or public sympathy - who likes BTL Landlords in the media?

Perhaps this ruling may have further implications for other types of mortgages - capped, fixed etc. Providing that three or more are held why should their contracts not be broken when the time is right also?

Finally I think tracker mortgages with other institutions will be safe, ie terms of contract maintained, unless the mortgage holder has three or more and the lender is in financial trouble and likely to go under/embarrass the government of the day.

Once again thank you to both Marks and all the team.

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