Mortgage Express and Buy to Let Nightmares

Reading about the experiences of other landlords with Mortgage Express on Property118 has been very disturbing and familiar.

I hope that sharing my brothers story will result in the National media and housing charities picking up on what is really going on in the PRS. I am happy to be contacted by the press and the housing charities via mark@property118.com – tenants affected by my brothers story are happy to share their stories too.

My brother has a portfolio of 25 properties, all of which were acquired from 2005 to 2007. His financial advisor and mortgage advisor were the reason he was able to obtain a portfolio of this size, they organised the mortgages and then re-mortgages to release more funds for the next purchase. Unfortunately my brother was young and trusting. When his financial advisor said that they had created a Letting Agency and could manage his portfolio completely he agreed as he worked full time and was quite overwhelmed by the situation he found himself in. All of the mortgage statements were sent to the offices of the financial advisor who told him that due to the increasing LIBOR rates and tenants not paying that there was no profit from his portfolio. 

In 2009 my brother took the decision to sell his family home and move to one of his rental properties in order to release some of the financial strain. He moved into a flat which had been rented through his financial advisers Letting Agency where he subsequently discovered over £4,000 mortgage arrears and a similar amount of un-paid service charges owing. The sickening realisation of what state the other mortgage accounts might be in was unbearable. My brother asked for me to help him manage his portfolio as I was a property administrator. He wrote to all of his mortgage companies explaining the situation. He requested mortgage statements and a change in correspondence address to his own instead of the financial advisers office.

In March 2010 the mortgage statements started to arrive, imagine opening each one and finding arrears on all but one of the 25 mortgage accounts! He knew all of the properties had been let and income producing yet the statement showed random payments causing extra fees.

His financial advisor refused to pass on the tenants details so in many cases my brother had to knock on the doors of his own properties to find out who lived there. We did not know what type of reception we would get approaching the tenants as obviously it was a really odd situation and you would not blame the tenants for being suspicious. All but two tenants were just so relieved to finally meet the landlord as most of them had been told by the Letting Agent that the landlord lived abroad. When they had complained about repairs nothing had been fixed. In one flat there was water coming through the roof and down the ceiling light. Apparently, when the tenant complained to the Letting Agent they were told to move the bed! It was extremely upsetting hearing all of the tenants experiences. We set about prioritising the most dangerous repairs required as well as the gas safety inspections as there were none completed for the properties with gas.

Ten of the properties in the portfolio had such high arrears it was too late to save them going to the LPA receivers. Over the last three years my brother set about clearing the arrears and all but two of the properties (those with Mortgage Express) have been returned to him with the receivers disinstructed.

In total seven properties within the portfolio are with Mortgage Express, two of which were passed to Walker Singleton LPA receivers. We found that the financial advisor had made an insurance claim on one of the properties which had been passed to Walker Singleton. The insurance claim had been protracted over a couple of years so the arrears on the still empty property were over £20k. Walker Singleton and Mortgage Express had been liaising with the financial advisor even though he was not an authorised third party contact. In 2010 when we wrote to the insurance company they apologised and explained that they had issued in good faith a cheque for £18,500 to the financial advisor so although they said they would black list the financial advisor they could not assist further. When this information was passed to Walker Singleton they sent a couple of emails to the financial advisor asking him what he had done with the money and why the property was still in a state of total disrepair. There was no response so my brother had to use his own money to repair the house and I then found a tenant, all with the consent of Walker Singleton. Since 2010 the arrears have dropped to £5k but the tenant vacated in November 2013. MEX will not give a decision on whether they will sell the property or allow it to be re-let it so the arrears are accruing again and now landlords have to pay Council Tax on empty properties so there are even more costs.

The other property with Walker Singleton was a one bedroom flat which they badly managed and failed to inform MEX or us that the tenant had vacated. When we found out we were allowed to repair and clean the property before finding a new tenant. The arrears on this property were cleared in December 2012. With both of the properties Walker Singleton allowed us to complete the repairs and manage them to keep the costs down. As the arrears were cleared my brother was paying the service charge and mortgage for the flat but in April 2013 MEX decided to sell the flat. They instructed Walker Singleton to get the tenants to pay the rent directly to my brother and started proceedings to evict the tenants.

The tenants were a young couple with a new born baby, they were good tenants who paid the rent in full every month. They also looked after the flat so were ideal. As the mother was suffering from post natal depression, instead of seeking help when they received eviction papers, they put their heads in the sand and it was not until it was too late when they eventually approached Shelter for help. They went to court to delay the eviction but it was turned down by the Judge. They were devastated and the following Monday after the court appearance bailiffs were knocking on the door. We do not know what went wrong but it appears Walker Singleton failed to inform the bailiffs they could get a copy of the communal door key from the local managing agent. I was alerted by an elderly neighbour at the block of flats that someone was drilling the locks, she was very frightened. When the bailiffs entered, the neighbour asked what they were doing. It was then the bailiffs realised they were not entering the flat but just the communal hall. They then started to drill the lock to the flat without even establishing if anyone was home. The tenants were terrified and told to leave without collecting their possessions. They were told they could arrange access through Walker Singleton to remove their furniture and the council placed them in B&B emergency accommodation.

When the tenants contacted Walker Singleton they were told they would be charged £70 by New Trade to arrange access to collect their belongings. I emailed Walker Singleton to clarify who they should pay the money to and they said they could make a card payment to them.

When they met with New Trade, the company which evicted them, they were told that it was Walker Singleton that requested the £70 fee and they knew nothing about this charge. The couple and baby have been in temporary accommodation ever since the eviction in October 2013 and the flat has remained empty. Looking at market comparable evidence, if it is sold there would be an approximate short fall of £30k to clear the mortgage.

Reading other landlords experiences of MEX it is clear to me they intend to sell the property and then apply their right to consolidate my brothers other MEX mortgages, this would bankrupt him. He has now instructed a solicitor to proceed with an injunction so the flat cannot be sold as there are no mortgage arrears. His solicitor is confident this can be achieved. Like others who hear that a mortgage company has foreclosed on a mortgage that is no longer in arrears, the solicitor is perplexed by the whole situation.

What can be done to stop mortgage companies deciding they do not want to continue with the agreements even though there are no arrears and evicting paying tenants?

My family are all clubbing together to fund the necessary legal fees to fight the injustice of the above, however, we don’t know how long we can keep doing this for as it is so expensive. Could it be that’s what lenders are reliant upon? My brother made some bad judgements and is paying dearly for those. Clearly some of the mortgage lenders also made bad judgement calls which is why they are now owned by the tax payer. The inefficiency and the unfairness of the system though needs to be addressed. We understand that the administrators need to recover the tax payers bail out money but at what human cost?

I have worked out that if my brother is made bankrupt by MEX a total of 34 adults and 18 children will be made homeless from his rental portfolio alone. I know MEX are doing this to other borrowers so this will add to the desperate homeless situation across the UK. Local councils are at breaking point as they do not have the housing stock and with more landlords choosing not accept Housing Benefit tenants this is a crises already happening now.

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