West Bromwich Building Society Tracker Margins Legal Action

Reply to the comment left by "Nicola Everden" at "07/10/2013 - 19:51":

Hi Nicola

I would remove the part about the credit check if I were you. We don't know that they have actually done one.

Experian are a data re-seller and also offer services to clean and match lists.

West Brom could have sent them a list of all BTL borrowers and asked them to de-duplicate against a list of anybody in the UK with 3 or more mortgages. That would not have required any credit checks.

I am working on whether I can reverse engineer this and obtain a list of everybody in the UK with three or more mortgages, one or more of which is with West Brom. If this is possible I will be running another call for funds to write to all these people.
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Reply to the comment left by "Nicola Everden" at "07/10/2013 - 19:51":

Thanks nicola. I think the template letter is great. I just hope many people use it and get onto their mp. I think the pm and chancellor should be included too. The more letters emails they get hopefully it could put some pressure on west brom

Dean

Reply to the comment left by "Mark Alexander" at "07/10/2013 - 20:08":

Thanks Mark, not sure if you can edit that part out of my draft e-mail so others don't follow it, as I can't do that now. It appears to me that West Brom have given conflicting information as to how they gained the knowledge about how many mortgages I hold. On one call I was told that a credit check was carried out on me but then on the second occasion they said that they were relying on the credit checks carried out at the time of the mortgage was taken out some 5 years ago. If I felt that the information they held regarding my buy to let mortgages was incorrect they said they would send me out a form to complete.

Here is the text of my letter to my MP, Matthew Offord in Hendon North. I have also sent a variation to Alex Brummer at the Daily Mail and to John Hetherington, also at the Daily Mail. If you have any connection with your MP, however slight mention it in your letter and ask for a response.

Mark did the synopsis and can provide this if anyone wants to send it along with their letter.

Good luck everyone

Dear Matthew Offord

I am writing to you on a matter which I think will interest and concern you. You may not be aware but, completely arbitrarily, West Bromwich Building Society have decided to raise their tracker rates by 2% from December 1. None of the more than 6,000 buy to let landlords has this in their mortgage offer which is the contract document although some have a reference to a subsidiary booklet of Terms and Conditions. I understood that any Terms and Conditions relevant at the time a contract was entered into or which may become relevant at a later date were to be disclosed clearly, intelligible and in the main contract document not hidden away.

These mortgages were offered by mortgage brokers and in none of the cases raised was the possibility of the percentage being raised away from the initial offer and since most of the work appears to have been done by solicitors linked to the mortgagors who were offering “free” fees; a number of questions need to be asked

I am a member of Property 118 which is an information exchange on the internet where hundreds of thousands of landlords and property experts exchange information, seek assistance and, where necessary, lobby for change in legislation. The questions raised by what West Bromwich have done are numerous but many of them seem to fly in the face of the law. These include:

• The fact that the rate rise has been applied in a discriminatory fashion; only buy to let landlords with three or more mortgages (with any lender) are affected. This was not in the terms and condition and is described by West Bromwich as a “business” decision. They do not comment on whether some with two mortgages today will move on to their revised rate if they buy another property or someone will move off the new rate if they sell a property. Taking this to its extreme if they are allowed to get away with this then they could, at some stage, discriminate against borrowers who total income exceeds a certain figure or they could decide to discriminate in some other, far more sinister way.
• A tracker is a fixed rate. When you take the mortgage the rate is fixed at a certain percentage above base rate. That is a fix. Irrespective of changes in the financial situation a fix is a contract that cannot be broken
• It is clear from their filed accounts that West Bromwich are in financial difficulty. They have made loss for the past four years and as their mortgage book is 60% buy to let they have clearly made some unsound decisions.
It is not the responsibility of their borrowers to pay for this. Those days are over and I understood that the Government was taking a very firm hand with financial institutions who allow themselves to get into this position.
Perhaps the answer is that West Bromwich have to close their mortgage book until they have weathered the storm their offer has created.

Property 118, led by Mark Alexander, a property expert and founded of several extremely successful property businesses, has now launched a fighting fund so that this decision by West Bromwich can be fought, if necessary, all the way to the Supreme Court. To date thousands of people directly caught up in this matter and who will be parties to any Class Action which is necessary have contributed as have many other property owners who do not have mortgages with West Bromwich but who could face similar random demands for increases if this is not challenged.

As a local MP with a constituent with many homes available to rent through the PRS (Private Rental Sector) the implications of what this mortgagor has done are enormous and I would be grateful to learn that you were interested in this matter and were prepared to raise it with the appropriate Minister. This Government insists it has control of the banks and building societies and if that is true that they must be aware that if this arbitrary increase is allowed to pass then landlords may be forced to sell up causing a shortage of property to rent; rents may rise to cover the additional costs of borrowing and landlords will be wary of increasing their portfolios if they do not have some security in the knowledge that a mortgage contract will be honoured. This cannot be good for the country or for the Government’s aim of providing good quality housing at reasonable prices for our citizens and I would appreciate hearing from you on this matter in the very near future.

Finally, I enclose a synopsis of the entire matter written by Mark Alexander and if you did want to be in direct contact with him his e mail is mark@property118.com

This is what I sent to my local MP, please don't treat it as a template but "just for ideas" , I sent this last week and would +/- some bits now.
You might guess it's to a labour MP. And there's a lot in there about my particular situation and how I go about things.

Note: You have to give your address so they can act.

"I'm also a residential Landlord with 5 properties in the village. I know Landlords often get a bad press but many of us are socially conscious, provide good quality housing and make an effort to support our tenants whenever possible. So I hope you will feel able to support this.

The problem is another of those "nasty banker" stories. The results will be that Landlords such as myself will no longer be able to fund support for tenants through difficult times and we will be pressured into raising rents. During the last year I've been able to fund shortfalls and rent arrears, occurring due to redundancies (co-op), sickness, housing allowance mix ups and delays. I have not increased rents for over six years. I know this has helped my tenants keep their heads above water. This has been my way of passing on some benefits of the low interest rates I thought I had on my tracker mortgages.

(On the less altruistic side, I'll see a drop in profits but that will mean reduced revenue for the treasury)

The Detail:

I've just received notification (along with 6700 other Landlords) from the West Bromwich Mortgage Company that they will be adding 2% on to their BOE tracker rate mortgages, the original rate was sold to me as being fixed. They say they can do this due to their lawyers interpretation of a clause in some small print. At best this is a very dubious and un-ethical especially as the Company is owned by the West Bromwich Building Society.

I have joined a group of similar, outraged Landlords who fear that other lenders may follow suit (The Bank of Ireland have already done something similar). If Natwest did the same I would have to consider selling two properties causing two settled families to move out of their long term homes. This is just me, the same may be repeated, multiple times in every village, town and city in the country.

There is also the chance that similar tacticts could be tried with residential mortgages.

We will do what we can to fight this, moves are being made to start a class action. However it is thought the result may be politically biased so an idea is to gain some cross party support.

It might be difficult to get public support, I get the feeling the public regard for landlords is only one step above bankers, and on a par with big business, journalists and certain politicians. As such the lenders are thinking Landlords are an easy target to rip off first. The vast majority of us are small Landlords trying to provide good housing to good tenants.

Below is the copy of news release that is being circulated. Some of the story has already been reported on the BBC and Telegraph web sites and Twittering is beginning.

I'm sure you would need to research this in more detail. Please contact me if I can help.

I hope you will be able to find some ways of supporting our collective effort."

This is the letter I will be sending to my MP ...

Dear Sir

I suspect that I am but one of millions of mortgage borrowers who took a tracker rate mortgage on the understanding that I would pay a fixed margin over the Bank of England base rate for the life of my mortgage contract. Indeed, that is what all of the lenders promotional material, the advice from my broker and my mortgage offer eluded to.

However, in February this year I heard that Bank of Ireland "BoI" intended to increase the margin on 13,500 tracker rate mortgages during June on the grounds of some small print hidden away in a Mortgage Conditions booklet. I thought at the time that this had to be wrong and I joined a Class Action campaign via the Property118 internet forum. I was not affected at the time but my concern was that other lenders might follow suit.

Last month I received a letter from my mortgage lender (West Bromwich Mortgage Company) advising me that they would be increasing the tracker margin on my mortgage by 2%. Their excuse was difficult trading conditions but frankly, that's not my problem, I too have suffered difficult trading conditions over the the last few years like many others but I have honoured the contracts I entered into. My concern is that West Brom's marketing information and their offer letter did not meet the FCA and ASA principles of being "clear, fair and not misleading". It is my understanding that clauses in contracts which are so vitally important should not be buried in small print in an accompanying brochure but should be clearly stated on the primary documentation, contracts and marketing materials. I have researched this subject and the wikipedia legal definition supporting my understanding of this is "contra proferentem".

Further, West Bromwich have confirmed that they are only increasing their tracker margins for people with three or more properties.  The BoI decision affected both landlords and home-owners regardless of the number of properties but only targeted borrowers with mortgages taken prior to the Oct 2004 mortgage regulations date. Surely this is discrimination? It is clear to see that these lenders are using grey areas in the law to profiteer and exploit their customers because they think they can get away with it.

If these lenders get away with this, what's to stop them, and other lenders, doing the same to all borrowers with tracker rate mortgages? Just because I have more than three mortgages doesn't necessarily mean that I am in a better position to pay more than a person with just one mortgage does it? Friends of mine, also in your constituency, have only one mortgage with the BoI and some of them are unaffected because they took their mortgage in after October 2004 but others are affected due to taking their mortgages with identical terms prior to the Oct 2004 date. Is this fair?

An action group was formed when the Bank of Ireland increased their tracker mortgage rates as many people were outraged, not just those directly affected either but also people who could see the writing on the wall for their tracker rate margins if the BoI got away with their actions. Funds were raised by the group and Counsels opinion of some 32 pages was obtained and submitted to the Financial Conduct Authority "FCA". We believe the FCA’s response has been a whitewash despite pressure having been put on them by Andrew Tyrie MP.  The FCA have simply used the BoI response to the case as a reason not to pursue it.  The FCA did not obtain their own independent advice so the FCA has not acted as an independent arbitrator.  The BoI response was a note from their barrister who they asked to find ways round the legal arguments presented by the group.  It was not an independent review of the actions of BoI but despite this the FCA used it as a reason not to progress the matter.

There are now two mortgage lenders who are not treating customers fairly and doubtless many others watching to see what will happen as a result of this. I have been making preparations for a rise in the Bank of England base rate as I know it will happen at some point. What I've never prepared for or expected is for the terms of my mortgage contract to be changed arbitrarily and for such changes to be applied in such a grossly unfair manner and without the FCA taking what I consider to be proper action in relation to complaints concerning this.

I am not a lawyer so I have obviously only touched on a few of the legal arguments submitted to the FCA by the group affected by the BoI scandal. The group affected by the actions by West Bromwich Building Society will also be seeking Counsels opinion and submitting this to the FCA.

My request to you is that you raise my concerns about the actions of these mortgage lenders with the appropriate Ministers in the Houses of Parliament. I would also like you to raise the point to the House about how the FCA have acted in response to the financial scandal which has been reported to them.

Yours faithfully

Does anyone know how long west brom's website has said "we no longer provide mortgages in the following circumstances - buy to let and shared ownership properties". All sounds very healthy!!!

10 Downing st is on Facebook or Twitter

Interesting - I've found the letter from december 2008 when the BoE rate went down to 3%
They tried to convince me to change deals. I thought at the time - Nar, I'll take my chances even though they made the claim " Reduce your mortgage payments now and stay in control" "Lower mortgage repayments can make a big difference"

1.99% 1yr fixed with 1%fee
2.99% 1yr fixed with no fee
2.99% 2yr fixed with 1.5%

All three reverting to tracking base at 0.99% "(subject to a floor on Bank Base Rate of 2.75%)

I'm sure if they knew they could force to pay more, they would have done it back then.

£480 and docs first class tomorrow + new ink for my poor printer.

Anyone else?