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View Full Version : Robbed by Birmingham Midshires moving BTL



Poj McDodge
18-05-2007, 22:02 PM
I have a major issue with Birmingham Midshires robbing me of £5k please take the time to read this and help me if possible or stop your self getting in the same situation.

My wife had a property (A) that was owned outright, in September last year we remortgaged it with a BTL product to by property (B) at auction as a cash purchase, this product had a 2 year tie in. The set up costs of this product was nearly £1000. The tenant in property A gave us notice early in December and we decided to sell this property.

We knew there would be early repayment charges so we checked our mortgage offer which had a section about moving the mortgage stating.

'What happens when you move house?

You can keep this product if you move to a new property and take out a new mortgage with Birmingham Midshires, provided that the new mortgage is for the same amount or more and is taken out within 6 months of repayment of this loan. If this occurs, any early repayment charges, with not be payable. However, if the new mortgage is taken out in different names we will not waive or refund these early repayment charges without the written consent of all original borrowers.

What we wanted to do was transfer the mortgage to another property (C) which has a mortgage with different company which was coming to an end of a tie in period. We telephoned the company to ask if this was possible and we were told yes, from this information we put the property A on the market. The mortgaged properties (A & C) are only in my wife's name.

We completed the sale on property A in March and paid off the mortgage plus ERC charges of £3997.

We are now ready to transfer the mortgage to property C and phoned the mortgage company to get the wheels in motion. To our disbelief we were told we can't do this because they have changed their criteria on BTL's. It is a requirement now that the person taking out the mortgage has to earn £25k per annum. We have had no information regarding this and have been on the phone to several people who are giving different times when this change took place.

It seems they have got us by the short and curlies because the following sentence was under the paragraph above
''If either the scheme or your circumstances change, you may not be able to keep this product, and any early repayment charges will be payable.''

We intend to take this to the FSA but first we have to follow the companies complaints procedure.

Does anyone have similar experiences?

Can anyone give me some advice ?

Do I have any chance of not losing out?

I would appreciate any information.

Thanks

Dean

GuitarMan
18-05-2007, 22:14 PM
Certain types of clauses in contracts can be classed as unfair terms for many reasons. The clause about the scheme changing looks like an unfair clause to me, as it basically means that they can end the contract at any time by changing the scheme, and charge an early redemption penalty. And the circumstances where they may change the scheme are not clear, given what you've posted.

Some of these characteristics are similar to descriptions I've seen of typical unfair clauses.

I am not a lawyer, and this is not legal advice, but to me it looks like it might be worth your while studying guidelines about unfair clauses in contracts, to see whether this clause might be such a clause.

http://www.fsa.gov.uk/Pages/Doing/Regulated/consumer/fair/index.shtml



Here are some generic examples of terms that may be unfair. However, just because a term looks like one of these examples does not necessarily mean that it is in fact unfair – that will depend on the precise details of the contract as a whole.

If you are a firm, these could be terms that:

* tie your customers into the contract but let you decide whether to provide the service;

* allow you to change important parts of the service you have agreed to provide to your customers without their agreement, unless this is for a valid reason specified in the contract– e.g. premium review clauses, variable charges or variable interest rates, for more see our Fairness in Consumer Contracts: Statement of Good Practice;

attilathelandlord
19-05-2007, 11:54 AM
Correct me if I'm wrong but BTL mortgages are not monitored by FSA, only residential ones.

Yes the critieria can change, you have to make sure you fulfill the scheme's requirements BEFORE you take any action.

I did a couple of early redemptions/porting products over to new properties earlier this year with BM and was refunded ok.

Don't make any applications to mortgage companies before you read the lending criteria.

I found that out the hard way when BM changed its lending criteria to disallow HMOs and I didn't realise.

justaboutsane
19-05-2007, 15:02 PM
Arila... The poster DID check the details! ... Havinga clause that says.. we will offer you XYand Z put if we feel like it we will stop.. thats unfair in my eyes! ... I also think you will find that the FSA is involved in some way shape or form!

Colin Mustard
19-05-2007, 15:13 PM
Correct me if I'm wrong but BTL mortgages are not monitored by FSA, only residential ones.

Monitored? In what way? :confused:

attilathelandlord
19-05-2007, 17:14 PM
Meant to say regulated ie for mis-selling.

Criteria can and do change unfortunately. You will also find that BM will have stated that the applicant must comply with their current BTL criteria when porting the mortgage. If the criteria have changed then I'm afraid that's life.

The latest BM BTL criteria is dated Feb 2007 if you google on that you will find them and they do state that minimum earnings must be £25k per applicant.

peterdo
20-05-2007, 18:46 PM
I had a similar situation with Northern Rock. Their minimum rent requirement is based on BofE interest rates and in the space of a week I had been pushed out of the criteria, losing the £500 non-refundable application fee!

Wasnt impressed.

Pete

GuitarMan
21-05-2007, 07:40 AM
This document suggests that buy to let mortgages are covered by the unfair terms in consumer credit etc. etc. etc.

http://www.fsa.gov.uk/pubs/other/concordat_fsa_oft.pdf

Poj McDodge
21-05-2007, 11:10 AM
Thanks for the replies including the bad news, I need all the info I can get and keep with the reality I may not get this back.

Special thanks to GuitarMan with that last link, does anyone think I should forward this information to BM to try and get this resolved sooner or wait until I have to take it to some regulator.

Is it reasonable to expect me to keep checking their criteria through the chain of events?


If the regulators can't / won't help is it worth taking this to court? If so does anyone know of any solicitors in this field?

Dean

GuitarMan
21-05-2007, 14:24 PM
The link I gave basically suggested that there was some regulation or at least that the act applied. I don't wish to sound unhelpful, but I think you need to research things much further before deciding what can or can't be done. There must have been cases of people who have had legal trouble with their banks, though of course that's what you would have been looking for when you came here.

attilathelandlord
21-05-2007, 19:23 PM
I don't wish to be unhelpful but the scenario is this:

1) you took out a mortgage with BM (fixed, discounted?) knowing there was an early redemption fee.

2) BM then had to borrow these funds to lend to you, tying them into a certain rate for a period of time.

3) BM state that if you redeem the mortgage early yes there would be a redemption fee, however, there would be a possibility, not a guarantee, that these fees would be refunded if you ported the mortgage to another property and still met their criteria.

4) They didn't have to allow you to do this and sure as hell didn't go and change their criteria just to annoy you.

5) You go ahead without checking if you still met the criteria (selling in March, the criteria changed Feb).

I'd say that was a lack of due diligence on your part. Where did it state that you would be guaranteed the new mortgage without penalty?

Put it down to experience, the fee is tax deductible in any case.

GuitarMan
21-05-2007, 22:35 PM
I don't wish to be unhelpful but the scenario is this:

1) you took out a mortgage with BM (fixed, discounted?) knowing there was an early redemption fee.

2) BM then had to borrow these funds to lend to you, tying them into a certain rate for a period of time.

3) BM state that if you redeem the mortgage early yes there would be a redemption fee, however, there would be a possibility, not a guarantee, that these fees would be refunded if you ported the mortgage to another property and still met their criteria.

4) They didn't have to allow you to do this and sure as hell didn't go and change their criteria just to annoy you.

5) You go ahead without checking if you still met the criteria (selling in March, the criteria changed Feb).

I'd say that was a lack of due diligence on your part. Where did it state that you would be guaranteed the new mortgage without penalty?

Put it down to experience, the fee is tax deductible in any case.

Is the clause allowing the lender to change their scheme and withdraw the mortgage an unfair clause? If it is, then it's not just the borrower who has failed to exercise due diligence.

attilathelandlord
22-05-2007, 10:26 AM
Only a judge can decide if its unfair. Had the person checked when they sold they would have seen they were no longer eligible for the scheme.

Where did it state that BM would not change its criteria, having done this with them, I know it states that criteria can change.

paul_c
22-05-2007, 12:19 PM
Personally, I'd change the title of the thread too....

Wiggle
22-05-2007, 12:42 PM
Call BM and request transcripts of the conversation you had with them. You will need the date and time of the call and the telephone number you called from. BM do record all conversations. BM have changed all their lending criteria recently and it does seem that their surveyors also like to down value the property or the rental income. They will then offer you a product with a higher rate which you either have to take or you loose your valuation fee.
PS The FSA do not regulate BTL's.

Poj McDodge
23-05-2007, 06:19 AM
Thanks again for the replies.

Attila, I know there is a strong possibility I may not get anywhere I stated that in my last post but I am not going to let £4k go just by having two phone calls with BM, this started last Friday its not as if I have been bleating on for months.
You were obviously caught out before, how much effort did you put in to try and sort it? I appreciate your information and I do know that BM made this decision to change their criteria without thinking of me but making around £4.5k for 6 months of lending is good business for them.
It is also worth discussing what has happened on this forum, there could be a member about to do the same thing and as a result save a few grand.

They acknowledged that a call was made on the 27th December discussing porting, they did not mention about the possibility of transcripts. If we can get this could it be classed as a verbal contract, as this conversation started the chain of events. If at the time we were told that we couldn't transfer the product we would not have sold the house. How often should they have been contacted to see if we could go ahead?

attilathelandlord
23-05-2007, 19:44 PM
It's called an early redemption fee because not only you have to pay a fee.

BM have effectively lost 21/22 years interest from you because you have redeemed the mortgage.

You have to pay if you redeem early, effectively it's like a landlord allowing a tenant to leave early, but they have to pay a penalty.


BM like a lot of lenders have changed their lending criteria because of the new HMO laws. I didn't bother to check their lending criteria because I didn't realise at the time the effect the new legislation was concerned.

The banks change their lending criteria all the time. Now, as far as mortgages are concerned, I don't fart without checking with the lender.

By all means give it a punt, but read your original mortgage offer carefully, it will say that MAYBE you will qualify to have the redemption fee refunded IF you fit their criteria still.

It's up to you to check their criteria. If you spoke to them in Dec 2006 you were probably ok at that time, but their new criteria came out in Feb 2007.

Don't mean to be harsh but we operate in a business environment and there's no room for amateurs. I learned an expensive lesson as I had to remortgage to a different lender to comply with their criteria. You're learning also.

The lesson to everyone is check, check, check again and don't assume anything.