However it now seems as if his worst opponents may not be the thug landlord with the lead piping, but organisations which we all use every day and which have (in the past anyway) generally been considered the acme of responsibility. I am talking of course, about our banks.

Our helpful banks

Banks have taken a bit of a dip in popularity recently. They are generally considered to have been the cause of the dire financial situation we all find ourselves in today. And yet despite having been bailed out by governments at huge expense (meaning that practically all public services are now being cut to the bone) they are still paying themselves enormous bonuses and carrying on much as normal.

And despite having been the recipient of financial aid themselves, they show little sympathy to ordinary citizens who fall into arrears with their mortgages. As described very clearly in Ben’s most recent TRO Confidential post on his mortgage repossession work.

“I’m not anti-banks, or anti-mortgage”  I just think that when it comes to customers in mortgage arrears, service is poor, and the FSA agrees with me”.

The Homesavingexpert web site – helping with mortgage repossession

Having spent some time helping people and saving their homes from bank mortgage repossession, Ban has decided to share what he has learned, So he has written a report and set up a web-site, homesavingexpert.co.uk.

“Lenders will often tell people ‘If you cant pay we will repossess your home’, but there are many ways of avoiding repossession, they just never tell you what they are, that’s what my website and reports are about”

So if you are having problems with YOUR mortgage and are being threatened by your bank, it is a good place to go.

Whats on the site?

There are a number of free letters you can download to help you on your way, but the best thing is Bens report, priced at a very modest £6.

Being written by Ben it is, as you would expect, clear, and very readable. And he is on your side. It is a very helpful report. It will tell you exactly what you need to do. Almost as good as having Ben in the room with you.

The report will also be extremely helpful to advisors helping people threatened by mortgage repossession, and should be on the desk (or rather the computer screen) of every financial and CAB advisor. Solicitors doing this sort of work would also benefit from a copy as well.

But if you are having problems with your bank about your home and are threatened with repossession, do at least visit the web site.

“If I have one message for people in mortgage arrears it is this. Dont give up just because you are getting letters you dont understand from large companies – you probably have a lot more going for you than you realise’ “.

The case of the Emperors New Clothes

Explanation: Tenancy Relations Officers (TRO) work for local council’s providing advice on landlord tenant law and investigating allegations of harassment and Illegal Eviction and prosecuting landlords. All names are false but the stories are true.

This week I am going into the side of my TRO work where I have to deal with mortgage companies rather than rogue landlords.

I don’t know if other TROs do mortgage work. In their enthusiasm for the Government’s Mortgage Rescue Scheme my bosses decided I would be the best person to do it, on top of my landlord/tenant stuff, and true to local authority form, I got no training. A photocopied file was simply thrust into my hands and the words “There you go mate”, graced my ears.

Ben takes on the banks

What I have discovered as I fought my way through the last couple of years shocked and appalled me. Remember I am not easily shocked, having investigated a range of stabbings and gun pullings over the years, and (just yesterday) a landlord assaulting a 3 year old girl during a lock change – and all this with a casual and foppish yawn – but I was genuinely amazed as I got to know how the banks operate in repossession cases.

I think what shocked me is that I foolishly expected large financial institutions to behave appropriately and legally. I can hear the guffaws at the back there……maybe, despite all the criticism of banks lately I am still basically naïve and believe that people try to do the right thing.

What the banks are really like

In the first few months I was myself taken in by the letters. I presumed that as the case was being handled by very large law firms and respectable high street names, that if there was a problem it was I who was misunderstanding things, rather than any wrong doings on their behalf…….time, experience and countless court appearances where the judges lost their temper with the mortgage lenders solicitors wised me up!

Almost every day I pick up new clients who are depressed, in tears, on medication, even suicidal sometimes. Its not so much the fact that they are creaking under the weight of the debts they have, but the methods that the lenders use to recover their money.

There are a range of tricks that they pull, and I do mean tricks. They all use them so consistently that you know there is method in the madness.

The correspondence scam

Take the correspondence scam. Mortgage lenders would say, not unreasonably, that it is good practice and ethical to keep borrowers up to date and informed of developments. I wouldn’t disagree with that but at the same time the weight and tenor of the correspondence completely wears people down.

The usual scene greeting me at the beginning a mortgage repo interview, is a person, hunched shouldered and baggy eyed, tipping a carrier bag full of letters onto the table, some opened, but usually the most recent crop unopened.

As I wade through them I cant keep up with the different individuals and teams that the letters come from. I am exhausted within 30 minutes so God knows what is like for the borrower. People have simply given up and are ready to throw in the towel. I firmly believe that this is the unofficial intention behind it.

This is not just me being picky.  In July 2010 the Financial Services Authority fined Redstone Mortgages for a range of breaches, including sending excessive and confusing correspondence.

The missing authorisation letter scam

A seemingly small but very damaging thing my colleagues and I encounter, in almost every case, is the missing authorisation letter scam. A lender, understandably, can’t negotiate with me without the borrowers written permission. I get the client to sign an authorisation letter which I staple to my introduction letter and fire it off to the mortgage company.

Weeks go by and you hear nothing, so you phone up. The very polite person on the other end of the phone tells you that they have your introduction letter on file but no copy of the authorisation letter so they cant talk to you. When you point out that the letter had 3 or 4 staples on it (my particular tactic) they just profess to be mystified as to the reason for it’s loss and ask you to send a copy in.

Result? More delays….more delays means, more charges and fees getting added on.

If this happened once or twice I could understand it but nearly every time???? And often more than once????, with every single lender????? Its hard to believe that there isn’t an unwritten rule in there somewhere.

What Mortgage Pre-Action Protocol?

The other, most pernicious thing that they do, and I mean in 90% of cases, is simply going for repossession without looking into ways to help their borrower.

The Mortgage Pre-Action Protocol and the Mortgage Conduct of Business Rules governs how lenders should behave in repossession matters, and both state quite clearly that repossession should only be used as a last resort AFTER they have looked into other ways of saving the home.

There are a range of tools that a lender can use for a borrower, known as ‘Forbearance’ but the borrower usually doesn’t know what they are and the lender won’t tell them. I think what irks me the most, is that the depressed people I deal with don’t have to be in that situation, they have more going for them than they realise.

Feliticy’s story

A typical tale from last year.  Felicity co-owns a house with her retired, elderly Father. She gets made redundant and runs into mortgage difficulties. The lender issues proceedings for possession. In the meantime Felicity gets 2 jobs, working both nights and days, part time.

Her Dad is in despair and is terrified of the court so on the date of the hearing Felicity goes along on her own, totally unrepresented. The lender’s solicitor sits down to talk to her and go over her finances. She explains about the new jobs, that she has to work a month in hand for. He looks over her income and tells her that she can’t afford to pay the monthly amount, let alone a sum off of the arrears.

A possession order is made

They go in front of the judge, the solicitor explains the situation. What neither the judge nor the solicitor took into account was Felicity’s Dad’s income, which was with the court in the form of his written defence which would have proved the monthly amounts could have been covered. Judge grants outright possession.

Ben takes a hand

A day later Felicity comes in to see me, she still doesn’t even understand the possession system. She isn’t unintelligent, she is a graduate, but the legal system is so arcane and intimidating that she can’t keep up. I explain how possession works and she is horrified and tearful, suddenly realising what has just happened.

I take on the case and write to the lender…..they lose the authorisation letter. I write again…….. 6 weeks (and more fees and charges) later they start talking. I point out the numerous breaches to the procedures for possession that there are on the case, including going for possession without looking into other ways of helping their customer. I threaten a complaint to the FSA but I get nowhere.

Seven months later …

Wind forward 7 months….and that’s 7 months of interminable letters and phone calls (like banging your head against a smiling, polite wall where the computer always says “No”) Felicity has been making regular payments and I ask them to capitalise the arrears (that means swallow them up into the mortgage) they refuse, so I apply to court to have the possession order set aside on the basis that they have breached the required protocols. They send a solicitor to defend the action.

The Judge gets angry

The solicitor begins her defence and the judge cuts across her, clearly angry and asked her why the hell she was there. She was thrown for a bit and tried to mount her defence again but the judge wouldn’t hear it. He ordered her to leave the court and call the lender to find out why the banks had not been properly negotiating despite seven months of my attempts to get them to do it.

She did. The judge wasn’t satisfied and made her call again. She did. The judge again he still wasn’t satisfied and told her to make a third call. Three hours later the lender backed down, withdrew the defence and agreed to capitalise the arrears……they could have done that months before without driving Felicity and her Dad to the point of despair.

Success!  But why didn’t they do this before?

The above tale is typical. You have to fight to the very end for each, tiny concession. I have learned so much in the past couple of years and I want to share that knowledge with every single person in mortgage difficulties. to let them know that they aren’t dead in the water, even if the locks are about to be changed.

Ben starts a campaign

To that end I have started a website to help share what I have picked up www.homesavingexpert.co.uk and a campaign to get mortgage lenders to treat their customers fairly. Please lend your support.

Ben Reeve-Lewis

About Ben Reeve-Lewis: Ben has worked in housing in one form or another since 1987. He has variously been a Homelessness caseworker, Head of Homelessness for a local authority, a TRO and Housing law trainer. He now divides his time between doing contract Tenancy Relations work and as a Freelance housing law training consultant for the CIH, Shelter, Sitra and many more. Read more about Ben here.

Photo by Blatantnews,com

We have discussed a number of these cases on this blog, perhaps the worst example being this case here.  However hopefully this sort of thing won’t happen again (or if so, it won’t be as bad), as the private members bill introduced in the last parliament, has now been made law, the Mortgage Repossessions (Protection of Tenants etc) Act 2010.

This gives tenants the right to apply to the court for an order that the date for possession be delayed for two months, to allow them time to find somewhere else to live.  It also requires mortgage companies to serve a notice on tenants before the apply for a bailiffs appointment, so that they will know to do this.

The act has now come into force and there are new regulations, The Dwelling Houses (Execution of Possession Orders by Mortgagees) Regulations 2010, setting out exactly what needs to be done by the mortgage company and the tenant:

• if the mortgage company wants to enforce an order for possession it must first serve a notice at the property
• this notice must be in a prescribed form, which you can see at the end of the regulations
• if you receive a notice like this and you are a tenant, you should immediately contact the mortgage company
• the mortgage company should give you at least two months to find somewhere else to live
• they may also consider allowing you to stay on in the property, for example if you pay your rent to them rather than to the landlord, but this is not something they have to do if they do not want to
• if you have difficulties contating the mortgage company, you should make an application to the court asking for the two months
• the form also suggests you take legal advice on your situation

This new act is a step forward for tenants rights, as at least it means that never again (hopefully) will tenants suddenly find the bailiffs at the door and be expected to move out within a couple of hours, as happened here.

Note that if the mortgage company is not prepared to give you any more than the two months, you will may be justified in withholding rent, particularly if you are being evicted during the fixed term of your tenancy.  This will be a major breach by your landlord of the terms of your tenancy agreement, for which you will be entitled to claim compensation and the re-reimbursement of any expenses you incur as a result, for example removal costs.

However it may advisable to take legal advice on this, and as always any rent withheld should be kept in a separate, interest bearing bank account (ie don’t have a party and spend it all) until matters have been resolved.

Has anyone had any experience of these regulations in action yet?  Do you think they will, in reality, make much difference?

This Saturday Slot post is the fourth part of my weekly series of posts on Court Hearings (in the UK). You can see the others >> here.

Not all court hearings are trials

There are two main types of court hearing. The first is the main hearing or trial which decides the case. I will be looking at those next week.

However today I am going to be looking at all the other, smaller, hearings that happen at court. These are generally to do with preparing for the trial, or are dealing with how the decision should be implemented.

Hearings leading up to the trial are often known (to lawyers) as interlocutory hearings. In large complex cases, these can be long and complex, and the decisions made can be very significant (for example see this report of a hearing in the Foxtons litigation).

Types of hearing

However in the type of case we are looking at, they will generally be fairly simple. Sometimes they will be as a result of an application by one of the parties. For example :

• if one of the parties wants to amend their claim, or
• add another defendant, or
• apply for more time to comply with a court order, or
• seek an adjournment of a hearing.

Other hearings may come about because they are ordered by the Judge. For example if he considers it necessary to have a directions hearing, rather than just making an order for the directions he thinks necessary.

Then after judgement has been given, it may be necessary to have further hearings – for example

• if a tenant who is being evicted applies to the court for more time in the property before the bailiffs can evict (known as an application for a stay of execution), or
• a hearing connected to enforcement proceedings such as an attachment of earnings order or third party debt order, or
• if the defendant applies to have judgement set aside, perhaps because he never received the paperwork

Where solicitors are acting, these sorts of hearings are often agreed in advance, and the parties will write to the court asking for the agreed order to be made in their absence. This saves everyone’s time.

However if you do not have an agreed order, and assuming you have views as to the sort of decision you want the Judge to make, it is important to attend these hearings.

In the Judge’s room

Hearings will generally take place in the Judge’s room (known as hearings ‘in chambers’) and are not open to the public. The room will generally have a table where the parties sit facing each other, and the Judge sits at a table going across the top like a T.

The Judges who take these hearings are usually District Judges, which is the lowest rung of the judiciary. If the Judge is a man you call him ‘Sir’ (not Your Honour) and if it is a woman, you call her ‘Ma’am’ (see here for further guidance on addressing Judges).

If it is your application, the Judge will normally ask you to speak first, and explain the application. Sometimes though, if the reason for the application is very clear from the paperwork, and everyone knows what it is all about, he may just ask you questions about it.

However the Judges runs the hearing though, make sure you explain everything carefully and say everything necessary in support of your application. Don’t expect the Judge to be all knowing or a mind reader – if he has not had time to read the papers he will need you to explain things to him.

Once you have finished, if the application is defended (although sometimes you may find that you are the only person at the hearing, which should make things easier for you), your opponent (or this might be you if you are the one opposing) will explain why he thinks the application should not succeed.

If, while the other party is speaking, you want to object to anything, or think of something you want to add, don’t interrupt. You will only annoy the Judge. Write down the point so you don’t forget it, and wait for him to finish.

Generally the Judge will want everyone to have an opportunity to say their piece. However, sometimes you may find that the Judge cuts you off, and allows your opponent to speak at length. If this happens, don’t get annoyed, it generally means that you have won, and the Judge is allowing the other side to say what they want so they cannot complain later that the Judge didn’t listen to them!

Mind you, I have heard clients say otherwise and complain that the Judge would not let them speak and found against them, so best to make sure you say all that you think is necessary in support of your case.

Possession hearings

Possession hearings are a special sort of hearing. You will generally (if you are the landlord) expect to get a possession order at the initial hearing, and in most cases this is what will happen. However your hearing will be in a long list with a lot of others and generally allotted about 5-10 minutes.

So if there is any dispute which is going to take some time to resolve, the Judge will adjourn the hearing to another day, and make directions. This should be avoided if at all possible, as generally the court will not be able to list the case for hearing for several months (whatever the Judge tells you in the hearing), and the case will probably become a lot more complex and time consuming (and expensive to run).

This is why you should only issue proceedings (again if you are a landlord) in circumstances where the order is virtually certain to be made at the initial hearing (using my do it yourself kits will help here).

What has been your experience of the types of hearing discussed here? Have you found Judges helpful or otherwise? Note – please do not post comments here about final hearings or trials as I will be looking at those next week.

Mortgage advice for Buy to Let Landlords

The recession has not appeared to have greatly dented the buy to let market but where does the novice landlord stand if the tenant doesn’t pay their rent and as a consequence, they can’t pay their mortgage?

The so called ‘Sub Prime’ lenders can be very quick off the mark to recover their money when there are mortgage arrears and have been widely criticised and in some cases penalised for being too keen to use possession instead of working with their borrowers to find a solution.

Back in October 2009 the Financial Services Authority imposed a penalty of £2.8 million on major mortgage lenders G Mac and ordered them to pay a sum of £7.7 million in redress to complainant borrowers in relation to their conduct with their customers. The decision has heavily influenced proposed changes being brought in by the FSA to protect borrowers from unreasonable practices of mortgage lenders. (you can see the final G Mac notice at www.fsa.gov.uk/pubs/final/gmac_rfc.pdf).

In the Financial Services Authority’s ‘Mortgage Market Review, published in January 2010 it states

“The findings from our thematic reviews demonstrated that firms were often too quick to take repossession action, focussing too strongly on recovering arrears without reference to the borrower’s individual circumstances. In addition, some firms explored very few forbearance options before taking legal action against borrowers. We observed these poor practices across the mortgage market, though it was more prevalent among the specialist lenders and third party administrators”. (4.6)

What should they be doing?

The Mortgage conduct of Business rules / Mortgage Pre Action Protocol

The 2 main tools that should help a borrower in mortgage arrears are the Mortgage Conduct Of Business rules (MCOBs) and the Mortgage Pre Action Protocol (MPAP).

The over arching aim of both instruments is that possession should only be used as a last resort, after all other avenues have failed. There are a range of what are known as Lender Hardship Tools, that should be explored before a lender applies for a possession order.

The MPAP was brought in back in November 2008 but by October 2009 it was evident that adherence to the protocol was patchy and inconsistent so for all mortgage possession claims initiated after 1st October 2009 lenders must produce for the court a new form called an N123, which details their actions before possession.

Lender’s behaviour

It has to be said that some lenders are very good at negotiating and exercising sensitivity and a generally helpful attitude to borrowers in difficulties but in my experience the majority fall well short of that standard, sometimes behaving in an obstructive and evasive manner.

This behaviour has not escaped the attention of the FSA and their Mortgage Market Review proposes changes to the MCOBs to tighten up things like excess and unfair charges being levied on borrowers in arrears.

Lender hardship tools amount to what is termed ‘Forbearance’ on the behalf of the lender. At present the MCOBs relating to forbearance are guidelines only, which means that even if a borrower in trouble offers a certain deal or arrangement to the lender, they are not obliged to accept it, however the Mortgage Market Review recommends changing these guidelines into rules.

Protecting yourself from possession

In response to the recession the government has introduced high profile measures such as the over hyped but in reality, under effective Mortgage Rescue Scheme and the Home-owners Mortgage Support package but these are not available for buy to let mortgagors.

As we saw above, at the moment negotiating forbearance is a bit of a lottery. The worst lenders don’t give anything away and will ask you to make an offer without hinting at what they will accept.

Making an offer to your lender

Remember you have to offer something that amounts to a reasonable plan of action, you will be wasting your time if you just ask them to allow you time in the hope that your situation might improve. Similarly asking them to allow you not to pay while you chase your tenant for their arrears is not a strong argument.

• They can extend the life of the mortgage, which will reduce the monthly payments you make.

• They can grant you a payment break of a short period and tack the missing payments onto the end of the mortgage.

• They can reduce monthly payments for a short time

• They have the power to freeze charges and fees while you get yourself back on your feet.

• Where there are arrears but you have made regular monthly payments of say 3 or 6 months you can ask them to Capitalise the Arrears, which means to swallow them up into the mortgage as a whole.

Some lenders have strict lending covenants which may prohibit them from capitalising the arrears but if so you can ask them to exercise their discretion in accordance with a case law of Cheltenham and Gloucester Building Society v. Norgan 1995 which is a case where the judge allowed a borrower’s appeal against possession on the basis that if the arrears could be paid off during the life of the mortgage then that measure of forbearance should be allowed.

Always bear in mind that your contract with your lender is a 2 way street, you are their customer and it is strictly business. They can modify their deal with you in pretty much any way they choose as long as you have a sensible financial arrangement to propose.

If your lender takes you to court for possession it is wise to check both MCOBs, particularly rule 13, and the MPAP to see if they have covered all recommended pre actions before applying for possession.

If you try to negotiate with your lender but hit a brick wall each time or if they keep rejecting reasonable proposals and keep pushing for outright possession then you could file a complaint to the FSA itself for unfair treatment – remember the FSA ordered G Mac to pay some £7.7 million in redress to disgruntled borrowers and the FSA’s enforcement division are currently investigating 6 other firms on similar grounds and while you are lodging your complaint with the FSA let your lender know what you are doing, it might just be the leverage you need.

Ben Reeve-Lewis

About Ben Reeve-Lewis: Ben was the Tenancy Relations Officer for Lewisham Council for 11 years, prosecuting landlords for harassment and illegal eviction. Now he is a freelance housing law training consultant with a more balanced approach, delivering housing law courses for the Chartered Institute Of Housing, Shelter etc. His aim now is to help the housing world work as a interdependent system that benefits all