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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.
#WestBromTracker – please re-Tweet if you think we should appeal – http://t.co/UgNLSXvurt
— Mark Alexander (@iAmALandlord) January 30, 2015
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?
The 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.
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The Man From Nowhere
13:26 PM, 29th January 2015, About 9 years ago
Reply to the comment left by "Appalled Landlord" at "29/01/2015 - 13:21":
Except the Offer of Loan didn't use the word 'tracker' despite the CEO of West Brom, Jonathan Westhoff himself, referring to our mortgages as 'trackers' in his own witness statement and West Brom reporting our mortgages to the rating agencies as 'trackers'.
If it looks like a duck, waddles like a duck, and quacks like a duck, in the opinion of the learned judge, it's clearly a goat.
Mark Alexander - Founder of Property118
13:27 PM, 29th January 2015, About 9 years ago
I agree that we should appeal, and so do other the other action group members who met at Pret A Manger after the Judgement was delivered.
The other sides QC was in the same coffee shop so I took the opportunity to introduce myself. Clearly he was shocked. Don't worry, I didn't shake his hand to avoid having to count my fingers afterwards! (just kidding) However, I did ask him why his clients only applied the increase to mortgage accounts sold via brokers, despite having thousands of other mortgage accounts sold directly by the building society not being affected by the increase and despite the fact these mortgages are on identical terms and also with borrowers who owned three properties. He could not answer my question. This MUST be part of our appeal in my opinion.
I am now on the train home.
At the end of the hearing a full copy of the judgement was handed to me. I have now had the opportunity to digest it.
I share Mark smith's confidence in the Court of Appeal granting leave to appeal and I have instructed him to press on with this. If I am granted leave to appeal then at least we will know we are in with a reasonable chance.
In his judgement Mr Justice Teare has referred to a lot of case law regarding contractual interpretation. I don't have a problem with that but I do feel that he has applied the case against West Brom to those legal principles incorrectly and that the Court of Appeal may well concur with me.
The legal principles of Contra Proferentem appear not to have been considered at all by the Judge. There is also no mention of the case law to be found in ICS vs West Bromwich Building Society or the case of Rainy Sky SA vs Kookmin Bank.
.
David Vickers
13:40 PM, 29th January 2015, About 9 years ago
Mark, did the Judge discuss allocation of costs and how much ?
Andy Boothman
13:40 PM, 29th January 2015, About 9 years ago
Without doubt we need to appeal.
If this decision stands then it means that ANY mortgage agreement made by ANY lender can be changed at whim by the lender because they're bound to have some line buried in the T&C's somewhere that might introduce an element of confusion or doubt that can be exploited.. We've just seen how an apparent contradiction in two different sets of terms by the same lender have been resolved to the lender's advantage whereas contradictions would normally be resolved in the recipient's favour.
As distasteful as it is we need to put our hands in our pockets again if need be (and for those that can afford it) to fully fund an appeal.
You think they'll limit this to people with 3 properties?
No - they just changed their minds, now it's anybody with 2 properties
You know, actually, we've had a rethink, if you have a tracker mortgage on just your own residential property then we believe it demonstrates a certain level of financial acumen greater than the standard consumer (the FSA agree, we've already told them, I mean explained this to them)
We need to attrract basically anyone with a tracker mortgage and warn them 'you're next!'. We somehow need to come together collectively
These vultures at WB think they've been circling over a few hundred poorly funded infividuals but we need to spread the word through online networks and social media to as many other people as we can. Don't expect too much serious help from the mainstream media as they know where their advertising revenue comes from and 'it ain't from us'
So - we can all be despondent and meekly say 'ok, you've won, at the first hurdle' and look forward to them stealing our other properties or we can draw a line in the sand and say NO, you will not f*ck/ng get away with it, we will appeal and our numbers will swell due to your transparent dishonesty'.
WB think they've won, with a bit of persistence on our part they've just sowed the seeds of a much bigger win by us.
Time to WAKE others up to what's coming down the line to them if they don't take action NOW
Jamie Finch
13:47 PM, 29th January 2015, About 9 years ago
Reply to the comment left by "Mark Alexander" at "29/01/2015 - 13:12":
Exactly, it will be very tempting to any lender! What's the betting nothing will be done until after the election but after that it's hard to imagine other lenders won't give it a go.
Well done so far and thanks for keeping going!
Steve Masters
13:51 PM, 29th January 2015, About 9 years ago
As well as Martin Lewis of MoneySavingExpert how about Paul Lewis (no relation) of BBC Money Box.
This needs to go mainstream.
The Man From Nowhere
13:55 PM, 29th January 2015, About 9 years ago
I will be extremely angry if ICS v West Brom and Rainy Sky were not considered. If that is the case then this so called judgement is a whitewash.
Mark, if you can email me a copy of the judgement to digest that would be greatly appreciated. I've purchased a copy as well as it is so important that we right this wrong that we have suffered today. I know many of us have expended considerable sweat and treasure in reaching this point and today has been a punch in the guts for all of us but this battle is far from over. I want to call what happened today in court what it is (other than "crock of sh*te") and the words "a grave injustice" sum it up perfectly. What happened today in court was absolutely and unequivocally UNJUST and it must be challenged. .
Mary Latham
13:58 PM, 29th January 2015, About 9 years ago
Mark I am so sorry that you did not win but well done for putting up a fight on behalf of buy to let borrowers.
Good luck with the appeal
Richard Mann
14:04 PM, 29th January 2015, About 9 years ago
Hi I am disappointed and shocked at the Judges decision.
If the contract says "X" and you take on the responsibility of the loan / mortgage agreeing to the terms in the contract then surely any judge in the country would take this as the basis of your agreement.
You agree to the loan and accept responsibility based on the terms within the contract.
Should a contract or agreement be FAIR to both parties in order to be considered legitimate?
I am so shocked at this decision.
Well done Mark for seeing this through my complete and total respect goes to you and your team, I feel that an appeal would be justified on the basis of contract law alone.
I for one wish you the best of luck for a successful outcome.
14:04 PM, 29th January 2015, About 9 years ago
Shocked, dismayed and disgusted - should we not at least now be due a refund of the extortionately high arrangement fees we all paid for what was seemingly after all only a SVR mortgage by another name? Surely we must appeal?