Receivers appointed to manage BTL flat

Brennus

My tenant did a runner owing £2k, 2 mortgage payments were missed and Rooftop have appointed receivers to manage the flat. They appear to have no sympathy to someone in a tight corner. Despite offering to pay arrears using a family loan, this was refused. I have now lost control of my BTL property. Would the FSA be interested in my plight?

holly_hobby

They have refused the arrears as you have no tenants to maintain the mge, so the arrears situation will continue to manifest itself.

Unfortunately BTL lending is unregulated (as it is commercial lending) so FOS would not be interested in any complaint re arrears management.

H

Jimbo1976

Well whilst Buy to Let mortgages aren't regulated themselves. Rooftop Mortgages is still regulated by the FSA so it would be expected to act in accordance with the FSA principles. Principle 5 leaps to mind

A firm must pay due regard to the interests of its customer and treat them fairly.

I'm not totally sure of the process to appoint a receiver but I'm surprised they did this after 2 months especially if you offered to repay the arrears.

holly_hobby

No you don't understand ... its the arrangement, not the provider that denotes whether its regulated, and BTL mortgages are not regulated by the FSA.

They have probably refused the arrears payment, as you are getting further into debt to pay it via a personal loan, and its not your primary residence which P5 would be appropraite, but a semi commercial venture.

If you also have no tentants, and as I previously stated, the arrears situ will just continue to manifest itself ...i.e. what happens when you can't get any more personal loans to keep repaying the accruing debt ?

Regulated borrowings is typically 3 mths arrears before it goes to court for a possession hearing, with positive account management due to the loan being related to primary regulated lending. Whilst BTL lenders must treat farily there is not set arrears management matrix, the best you can do is argue to the court why he possession order should not be granted, but from what I've read you're balancing on sinking sands, so postpostment is doubtful (unless of course the property was re-tenanted at that point and self sufficient with a plan to clear the arrears).

Have you actually tried to mediate with the firm ?

Holly

Jimbo1976

HH I am not sure why you are telling me I don't understand, are you trying to be patronising?

I know buy to let mortgages are not regulated, I put that in my post. However Rooftop Mortgages is a regulated company so it needs to treat its customer fairly and to act in accordance with the FSA's principles.

If you are saying that P5 doesn't apply then why if LIBOR setting isn't regulated the FSA fined Barclays for violating Principle 5. http://www.fsa.gov.uk/static/pubs/final/barclays-jun12.pdf

holly_hobby

The OP has semi commerical finance

BTL morgages are not regulated by the FSA

However most lenders will use the format for dealing with regulated arrears management in respect of BTL arrears situations.

CML guidance states that lenders re BTL finance should look to act fairly towards their borrower, and to take individual circs into account - whilst EVERY case is an individual and one format must not be applied carte blanche.

Facts are -

OP is arrears on a semi commercial mge

Rooftop Mortgages has closed to new business - so may be looking to dispose of highrisk exposure (within industry guidelines of course).

OP needs to look at the T&Cs for the mge re details on how BTL arrears are managed by Rooftop, which he would have accepted in signing the application and drawdown of funds.

OP can not satisfy arrears from own capital, but needs to borrow via a personal loan to repay the 2 mths (and counting) accrued arrears

OP apparently has no tenants or income being drived from the property (so it is clearly not self sufficient)

Additionally it seems OPs earned income isnt sufficient to service the mge whilst it is unoccupied - hence the arrears and requirement of a loan. Therefore the arrears situation will just continue to re-emerge with at some point OP wearing out all access to additional loan finance to pay it off - then what happens ?

OP has to ask from a business perspective and based on the above, the benefit to the lender of retaining the liability ?

The OP could look to remortgage and repay the arrears as part of the final redemption (if he can find a taker) - however with no assumed rental income we're back to how the mge will continue to be serviced.

Of course legal advice would be also be beneficial in an attempt to suspend the action.

Jimbo by the way, I wasn't been patraonizing, just stating facts re regulation that you state you already know.


H

Wh05apk

Sorry Holly, I don't think you understood the thread, Jimbo was not the OP! :rotfl:

holly_hobby

Wh05apk wrote: »

Sorry Holly, I don't think you understood the thread, Jimbo was not the OP! :rotfl:

Have duly amended the post to reflect advice relevant to the OP.

:rotfl::rotfl::rotfl:

Jimbo1976

For a start I am not the OP, so I don't know why you are referring to me as such. It should be easy to spot as we have different names.

For the record I agree with your points about the OP's situation not looking good and there not being many options.

However my point was not about the viability (or not) of the OP's buy to let loan, it was about TCF. I see from your profile that you are working in financial services. Why don't you ring up your FSA Supervisor or the FSA's Firm Contact Centre and ask as if you have to adhere to FSA Principles in all your dealings with clients or just the regulated ones. I think if you asked if you could treat your buy to let clients unfairly and just treat the regulated ones fairly, their answer would surprise you.

holly_hobby

Oh get off your soap box and go an read my post again Jimbo.

BTL is commercial finance not residential - so arrears management is on an individual basis and not carte balance of 3 mths as we see with resi borrowing.

If he has 2 mths arrears (now in his 3rd) , no capital to pay it other than secure a personal loan, no tenant and no supporting income to svc the mge whilst out of tenant - how is the lender treating him unfarily by refusing the repayment of current arrears from a personal loan and instead seeking a possession order. I take that as a responsbile not irresponsible approach. to the situation.

Would a court accept unfair treatment based on the above, in respect of rejecting or postponing the possession order ?

Doubt it.

If however the OP hasn't revealled the arrears monies are being sourced from a personal loan, then yes, there is absolutely no reason for them to reject the payment. (however much a shortterm solution it may be)

H

vectistim

Presumably then LPA receivers have been appointed are their instructions to sell the property or to re-let?

If you can get family to gift you the money and can find tenants (may be awkward as I believe you're not meant to have any dealing with the propery whilst under receivership) - or if the receivers get some tenants in and you clear the arrears I believe there is some legal mechanism to try and claim the property back again.

Make sure you keep on top of all costs the receivers are charging for and be prepared to challenge them.

But as below, I am not a lawyer etc, but it may be worth seeing one to see what the options are.