West Bromwich Building Society Tracker Margins Legal Action

Hi Ed

Apart from regular readers of Property118 most of the people who call and email me have found us via a Google search. They tend not to be forum users and I have to encourage them to interact in order to encourage others. What we don't know is what inspired them to search Google so I agree that a survey is a good idea.

Regards

Mark
.

We (both of us are named and the Dear... and sign off sections are even handwritten!) have just received a very supportive reply from our MP , Hugh Robertson, who has actually grasped the issue and addressed it (could he possibly be a fellow victim???) He suggests that we seek legal advice about the legal agreement we have with West Brom, as well as asking the FCO to investigate what he believes may be 'sharp' practise - and offering further assistance (he would 'be delighted to help!) if we let him know if there is anything more he can do to help.
Would it be useful to send Justin a copy of his letter?
Denise

I've received a written response from the WestBrom in respect of my written complaints to them.

The first substantive sentence reads:

"Thank you for contacting the Company regarding our BUSINESS DECISION [my caps] to change the interest rate currently charged on [your] buy to let tracker mortgage accounts."

Oh, so that's alright then, it's a **BUSINESS DECISION**! [Grr...]

It goes on:

"My understanding of your complaint is that you do not feel the terms and conditions of your mortgages allow us to do this and are unhappy that the rate of interest will increase by 2% with effect from 1st December 2013. In light of this I would like to explain the reasons for this change.

Market conditions have clearly changed since you took out your buy to let mortgages. Our funding costs have increased significantly over the last four years..."

Oh do come on puh-leeze! Are they seriously suggesting that the cost of servicing historical loans is dictated by today's interest rate environment?

Surely not, because that is just not the way these things are done.

What really happens is that, in contemplation of offering a tranche of loan finance to the retail market (landlords like us lot), they, the "lenders" (WestBrom et al), first approach the wholesale money markets and secure a block** of money (£50M, £100M, £ whatever) on terms which mirror those that they intend to re-offer that money back out to the retail market on. In doing so they carefully arrange that the cost of servicing their debt to the money markets is always constrained to be in lockstep with the terms offered to the retail market minus their own profit margin.

Ergo - they cannot lose!

[** This is also, of course, why, back in the day one would often hear of talk from the brokers of the need to move quickly to secure one's loan application before the tranche was exhausted - the clear implication being nobody could be sure if the terms for the next tranche (if indeed there would be one at all) would be as favourable...]

There is one fly in this ointment I suppose, and that is if the money markets have demanded repayment of the outstanding loan early. It's quite possible that such a term would be a part of any agreement that they had with the money markets (although unusual in my judgement as to agree to such a clause when the amounts involved are so large would surely be commercial suicide). If this has happened, then they would be left with a very serious hole in their own finances hence the necessity for them to call in loans from the retail customers in turn.

The WestBrom letter goes on:

"...whilst we have done all we can to avoid passing on this increase to date, regrettably, this is now unavoidable. I can assure you this decision was only made after all considerations had been taken into account and we believe it is a fair reflection of the increased cost to us."

A **fair** reflection? Really? Do they?

"The terms and conditions of your mortgages (specifically Section 5 - The rate of interest) make it clear that unless the rate of interest we charge is a fixed rate then it can be varied at any time for a number of reasons, including:

• To reflect market conditions generally, and
• To make sure our business is carried out prudently, efficiently, and competitively."

Oh, so that's alright then - because you they screwed up we have to pay.

(Hmmm... seems to be about par for the course these days - if you have the power make some other poor sod pay for the consequences of your mistakes. Grrr...)

And so, finally, the killer blow:

"Also under the terms and conditions, demand for full repayment of the loans can be made by giving one month's notice (Section 14 - 'When the loan has to be paid back to us'). "

A sentence just dripping with threat.

"We felt this was more disruptive to the customers affected and therefore felt that an increased rate would be preferable."

Translation: we knew it would cause a most almighty stink if we get this heavy straight out of the gate so we are trying a more low-key approach to see if we can win that way first.

"We appreciate that you may wish to consider looking for an alternative mortgage provider..."

(Blah, blah, blah, etc., etc.)

Reply to the comment left by "Badger " at "26/10/2013 - 11:55":

Precisely what you would expect the WBBS to say. As that's the way banks operate. Wholesale money market lending rates aren't 0.5%. Far from it.

Reply to the comment left by "Seething Landlord" at "26/10/2013 - 01:58":

No conflict if interest from my viewpoint Seething Landlord. Absolutely first and foremost I wish to save myself £290 odd per month extra I shall be paying if WBBS get away with it. Secondly only I would love to see other lenders deterred from doing likewise.
BUT if other borrowers won't/can't/don't come on board so that the outcome is that only we who have put our hands in our pockets benefit from an out of court (or in court win)settlement then so be it.
I salute those landlords who despite not having WBBS mortgages have come on board. God bless them. Equally i deplore those WBBS borrowers who despite knowing about our action continue to sit on the sidelines. They will end up as losers on all fronts.
I continue in my efforts notwithastanding these comments to bring more folk into the fold..
Can someone please answer my previous question. Does the 6700 figure constantly quoted represent the number of BTL mortgages WBBS have on their books, or the number of actual people who have BTL mortgages with them?

Reply to the comment left by "Richard Adams" at "26/10/2013 - 14:14":

It seems to me the more specific our objective the more achievable it becomes.

My motivation is to reverse the £600 per month(2 mortgages)increase shortly to become effective for the next 15 years = £108,000 total. Plus of course any further increases West Brom impose so I'll conservatively estimate £200K.
As I mentioned earlier, if our legal victories can be kept confidential then we have a very valuable asset - an asset that all contributors will have paid for. If others wish to use our successful judgement then they can pay as we all have done
- just a lot more.
Subject to Counsels opinion perhaps we should "cap" numbers involved? I would gladly bet £5K per mortgage if I knew any potential judgement would be ours to benefit from both directly (reversal of rise) and indirectly as sold onto those who choose to stand and watch (parasites) thinking they are so very clever.

Reply to the comment left by "Dan Smith" at "26/10/2013 - 14:56":

If things pan out as you suggest Dan then I for one would be delighted.

Reply to the comment left by "Dan Smith" at "26/10/2013 - 14:56":

BOE base rate isn't going to remain static for another 15 years. So no point in getting carried away. Better to base decisions on more realistic assumptions.

Reply to the comment left by "Richard Adams" at "26/10/2013 - 15:11":

The more I discover the more I think why wouldn't they pan out as I imagine?

If Justin could walk into a meeting with West Brom holding a Client A/C bank statement with £500K in it I am sure that they would take us a little more seriously.

It would seem that so many class actions fail because people will not pay even 1% of projected losses to fight it. Of course large defendants - such as West Brom- know and rely on this fact of human nature.

If we're "investing" our time and money in the knowledge that only we will benefit then it makes our participation all the more worthwhile on so many levels.

Reply to the comment left by "Colin Childs" at "26/10/2013 - 15:25":

Hi Colin. I agree BoE base rates can only go up and most certainly will. My speculation of my future costs are based on the West Brom increasing my tracker rates as much as they like. Why wouldn't they? They are a business that is purely for profit (and Director's bonuses). They've already done the unthinkable once and got away with it so far. Why not do it again and again?