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 9 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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Steve Masters

12:46 PM, 29th January 2015, About 9 years ago

WBMC and WBMC tracker customers took a commercial gamble on the base rate NOT on the margin above base rate, that was supposed to be fixed for term.

WBMC tracker customers made their decisions to take out the mortgage and their financial arrangements on that basis as did WBMC, both parties should be bound by their contract. If that contract does not subsequently satisfy either party and if the contract can't be mutually re-negotiated then the only other option is to terminate the contract under the conditions of that contract. Period.

What WMBC have done is take advantage of ambiguity within that contract to re-write it to their advantage.

Most business partnerships rely on trust, with the contract between them to avoid ambiguity.

WBMC have been proven untrustworthy and consequently should never be trusted again. The same applies to any other lender who follows suit.

Shame on WBMC. They need to be outed. Shout it from the roof tops "WEST BROMWICH BUILDING SOCIETY CAN NOT BE TRUSTED".

Freda Blogs

13:05 PM, 29th January 2015, About 9 years ago

This is a very disappointing decision.

Clearly I don't know all the facts, but it does seem astonishing that the judge can see fit to allow West Brom to avoid the terms of its own contract. The ramifications from this decision could be so far reaching...

Mark Alexander - Founder of Property118

13:12 PM, 29th January 2015, About 9 years ago

I will now explain why I think this judgement could affect hundreds of thousands more Tracker Rate customers.

What is to stop every mortgage lender writing something along the following lines to every account holder who's tracker rate mortgage is not profitable to the lender

Dear Borrower

In the case of Mark Alexander vs West Bromwich Building Society Mr Justice Teare ruled that mortgages could be called in with 30 days notice regardless of whether or not they are in arrears and especially if those mortgages are not profitable.

A review of your mortgage account has revealed that it is not profitable.

We prefer not to have to call in your loan with 30 days notice so we propose the attached terms which switch your account to our standard variable rate. Alternatively you are free to pay off the mortgage by refinancing or selling the property or by other means. Please select one option on the enclosed form and return it to us within 30 days, failing which this letter is to serve as 30 days notice for you to repay your mortgage in full.

Jeremy Smith

13:13 PM, 29th January 2015, About 9 years ago

Perhaps there's a case for some other mortgage company to take ALL of West Broms customers, take the whole lot from them, surely they will lose alot of income if that happened.

Keep up the fantastic work Mark, and YES, Def. an appeal !!

The Man From Nowhere

13:13 PM, 29th January 2015, About 9 years ago

I hope anyone with a tracker mortgage no matter which lender it is with realises how crucial it is that all who are affected by this judgement (and that includes those who will be similarly affected when other lenders pull the same dirty trick) contribute to make up any shortfall for an appeal. Appeals are typically cheaper due to the appeal being only on points of law rather than facts (although this judgement also appears prima facie Wednesbury unreasonable). I have yet to read the full text of the judgement but it appears so at odds with common sense and caselaw so as to be almost grotesque. I am incredulous that the judge could have reached this decision although in hindsight it hardly seems surprising given how he struggled to grasp what a tracker was (I use the past tense because following this judgement tracker mortgages no longer exist).

Mark Lynham

13:16 PM, 29th January 2015, About 9 years ago

Reply to the comment left by "Mark Alexander" at "29/01/2015 - 13:12":

not sure we need scaring any further Mark, i think we know what might be around the cornet given this 'judges' decision today...
what's the point of a contract as clearly it means diddly squat nowadays

Richard Adams

13:16 PM, 29th January 2015, About 9 years ago

Bombshell massive disappointment ruling. Distraught yet proud to have been part of the fight as should all who stood up to the WB. I eagerly await Mark S's opinion re an appeal.

I don't suppose WB will now call in loans despite being permitted by the ruling to do so as they don't need to presumably?

I just wonder whether the ruling would have been different, although facts the same, had we all been owner occupiers? Also had there been say 3000 of us who joined the action instead of the relatively small number who actually did might the outcome have differed? We'll never know.

Appalled Landlord

13:21 PM, 29th January 2015, About 9 years ago

I couldn't be in court, but the judge can't really have struggled to grasp what a tracker was, can he? The Offer of Loan described the tracker perfectly.

Graham Durkin

13:23 PM, 29th January 2015, About 9 years ago

Where does one start to try and understand this judgement,I really cannot see how the JUDGE can come to this conclusion when so many PROFESSIONAL People and Institutions have commented on their understanding of what a TRACKER MORTGAGE stands for,and in turn all the paperwork that should have gone in our favour has clearly no weight as far as the law is concerned,Whats so galling about all this is that if the financial crash didn,t happen ,the WEST BROM and other LENDERS would still be making shed loads of money and everyone would still think they knew what a TRACKER MORTGAGE was.

Steve Masters

13:24 PM, 29th January 2015, About 9 years ago

Martin Lewis of Money Saving Expert fame runs a cheap energy club which invite suppliers to offer bespoke rates to club member undercutting public rate by a long way.

It would be great if someone copied the idea and invite lenders to bid to take over WBMC business on mass. Just a thought.

Mark A, how about contacting Martin L!

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