The Mortgage Works (TMW) Redemption figure – Help!

Exactly the same happened to me when selling off our investments in the UK before escaping back to Australia. I found that the problem was incredible incompetence within the Nationwide office. The clerks working there have no ability. The only option I found to work was to spend a whole day on the phone, insisting on getting service. In the end I threatened to visit their office in person with a TV crew. Finally they relented and I got the deal done but it raised my blood pressure. The nub of the story is that at no time did TMW inform me that my multiple loans would be viewed as a whole at discharge. If it had gone to court I would have won, but I would have lost my sale and it would have cost me big time.
Let this be a salutary lesson to anyone considering a TMW loan.

I sold one of my properties which was the subject of a TMW portfolio loan a few years ago. When the redemption figure came through they wanted 50% more than the price I was selling the property for, even though the value of the property had gone up!

I had to pull a few strings with Directors I'd met there during my days as a broker before I got anybody to see sense. The final outcome was that they retained 100% of sale proceeds to reduce the loan. This suited my circumstances so I didn't need to continue to fight but I fully accept that it could be a massive problem for other landlords, not least because they may need some of the sale proceeds to cover CGT liabilities.

The problem seems to be that they run indexed valuations across the portfolio to assess overall gearing. These valuations are rarely accurate but what makes it worse is that there seems to be no upper limit to the redemption figure. In my mind it should be X% of the original purchase price of the property. X% could be the max LTV they offered at the time the advance was initially made. Their argument, however, is that they lend based on the LTV and rental cover on the whole portfolio and their criteria is designed to stop a landlord selling off assets which have performed well leaving them with the less attractive properties and possible future problems.

In time, when property values recover to 2007 levels across the whole of the UK this is less likely to be a problem but for the last few years it has caused major headaches for people who built and remortgaged their portfolio's to high level LTV's during the first decade of this millennium.

I can't see a logical solution and that has dampened my former enthusiasm for portfolio lending which, when it works well, is fantastic for balancing a portfolio of both low and high yielding properties. It's only a problem when indexed valuations go south.

Thankfully I have no intention of selling any more properties which are mortgage to TMW in the foreseeable future.
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In case any readers are not aware of it, the reason portfolio lenders can do this is because of the long-established doctrine of consolidation of mortgages: see e.g. http://heinonline.org/HOL/LandingPage?handle=hein.journals/lwcoarch4&div=58&id=&page=

s93 of the Law of Property Act 1925 attempted to modify the doctrine. It says "A mortgagor seeking to redeem any one mortgage is entitled to do so without paying any money due under any separate mortgage made by him, or by any person through whom he claims, solely on property other than that comprised in the mortgage which he seeks to redeem."

However, it went on to say:

"This subsection applies only if and as far as a contrary intention is not expressed in the mortgage deeds or one of them."

Mortgage deeds routinely express the contrary intention.

When lenders want to recover cash quickly (e.g. Mortgage Express - see earlier posts on Property 118) they use this doctrine to compel landlords to re-finance their whole portfolio.

Motto of the story: don't borrow from just one lender, however good their terms or however good the relationship you think you have with them.

Ah, TMW - not my favourite company. I was lucky. I only had two properties but soon learnt the hard way on how the system works. It is all in the small print but made worse because the clerks do not understand it nor do they fully explain the system . I don't know whether you have yet discovered the time limit either? My understanding is:
For example - You have 4 properties all bought for 100k with each having 85K loans at purchase. The two in the south some ten years later have doubled in value to 200. The one in the midlands has just stayed the same at 100k but the one in the north has fallen to 50k. You now want to sell one of the two in the south. Oh dear. Well TMW now values the whole portfolio - with me it was ' drive by valuations' and the valuer was incompetent. Lets say the valuer actually values them properly at 200k, 200k and 100k and 50k. Well TMW (small print) takes the lower of current and original (at purchase) valuations. So they take 100k, 100k, 100k and 50k. You are selling on in the south so TMW new security is (to them) 100k, 100k and 50k, on which you have loans of 85k, 85k and 85k. - after you pay off the 85k on the one you are selling in the south. But TMW also wants some more money off you because the one in the north has dropped in value. They want back 50K*.85 in addition to the redemption of the 85K on the one you are selling. This is because they want to retain the original LTV on 'their valuation figures'. Hope you are following this. Next they write to you to tell you how much you have to pay them to allow them to release the security on the one you are selling. AND they tell you the figure is only valid for 30 days - from when they issued the letter (not when you receive it). So if you don't sell in that time the figure is no longer valid and you have to do the revaluation all over again!! They tell you that they will provide you the redemption figure in 15-20 days. Forget it. It can be within 10 to 45 days and it is impossible to get the figure to match an agreed sale date. You have to work around their incompetence.

I took them to the financial ombudsman and won a small compensation despite the fact I proved it was impossible to get a redemption figure from them to meet a fixed sale date and that they did not comply with their stated time scales.

Oh and despite the fact they record all calls I did not get a transcript from them of calls which were detrimental to their position. I now record all calls to banks etc. - even for trivial matters.

Good luck - you will need it.

Going through the same process. TMW's website claims they will value the remaining portfolio by way of external valuations and provide a release figure within 15 working days. They wanted to use 10 year old values unless I paid for internal valuations. Now they have agreed to carry out all internal valuations free of charge> However, due to the quantity and location (approx 25 valuations) they say they will not be able to meet the 15 days. A week has gone by and after chasing every day have not heard from the valuers. They advise that the website is wrong and has been for some months. Yet they have not withdrawn the page!!