Monday, 22 January 2018

Handbook Changes - Top Lenders Start 2018 with Updates

It has been a busy start to 2018 when it comes to lenders changing their Handbook instructions.

Three weeks into to the new year eleven lenders have updated their instructions via Part 2 of the UK Finance Mortgage Lenders' Handbook for conveyancers. Twenty six sections have been changed.

Examples of top lenders who have made updated their Part 2’s in 2018 include:
  • Halifax 
  • Bank of Scotland 
  • Lloyds Bank 
  • Santander 
  • The Mortgage Business 
  • Atom Bank 
LENDERmonitor provides protection to conveyancers from the risk of missing updates to Part 2 of the UK Finance Mortgage Lenders' Handbook. With the LENDERmonitor alert service, solicitors and conveyancers receive an email notification any time lenders of interest make changes to their policies.

Staying abreast of policy changes is particularly important at a time when lenders are making a significant number of changes and solicitors and conveyancers are at greater risk of being sued for non-compliance with lender requirements.

Monday, 8 January 2018

Top Ten Important Changes to Reports on Title 2017

In the last twelve months the conveyancing fraternity witnessed significant changes to Part 2 of the UK Finance Mortgage Lenders' Handbook. This, combined with the press and government focusing a spotlight on leasehold, resulted in firms considering how they should upgraded their Report on Title .    

In response to lender changes and in anticipation of legislative action many new paragraphs were added as optional precedent text to the Lexsure’s Report on Title in 2017 by the  network of lawyers using the software.

Here is a list of what I consider to be the Top Ten areas where new paragraphs were indexed in 2017 for future use :

  1. Ground Rent Escalation 
  2. Remaining Lease Term Less than 90 Years 
  3. High Ground Rent 
  4. Original Lease Term Less than 125
  5. Source of Funds 
  6. Contributors Towards Purchase Price
  7. New Build - Long Term Completion Date
  8. Statutory Matters Concerning Leasehold 
  9. EPC Result - F/G Rating 
  10. Limitation of Enquiries based on Protocol 

Firms wishing to be alerted as to new suggested paragraphs should subscribe to the e-ROT Notification Service.

Tuesday, 2 January 2018

Land Registry Applications - Room for Improvement

I sometimes come across lawyers complaining about how long it takes the Land Registry to register title.

According to Andrew Robertson, Head of Customer Policy at the Land Registry responding to a comment on a blog entitled ‘Opening our conveyancer data’ commented  ‘... we aren't able to process in the region of 40% of the applications we have pending because we're waiting for something else to be provided or done before they can proceed’.

The top 5 reasons for requisition are as follows:

1. Restrictions (20%) - consents or certificates needed to satisfy the terms of restrictions on the register
2. Discharges (13%) - discharge of charge evidence needed
3. Variations and discrepancies in names (11%)
4. Signing and witnessing of deeds (6%)

5. Identity verification issues (3%)

Monday, 16 October 2017

'All Monies Charges': A Threat to Law Firms

Image result for grabbing all monies

The recent news that the majority of the top ten lenders have declared they will use ‘all monies charges’ to repossess homes if borrowers struggle with non-mortgage debts should be cause for concern to conveyancing practitioners.

File Reviews for Handbook Compliance

More repossessions equals increased file reviews and inevitably the spotlight being placed on the lender handbook compliance.

John Kunzler, senior vice president in the financial and professional practice at Marsh recently pointed out in an article entitled ‘Grasping the nettle of conveyancing claims’:

‘...when the property market falls solicitors are often held to account for negligently performing conveyancing and, more recently, in particular failing to follow the instructions set out in the Council of Mortgage Lenders’ (CML) Handbook. For those who have worked in professional indemnity for decades, it may feel like solicitors are perpetually doomed to repeat this cycle’

A review of Marsh statistics on lender claims in England and Wales from 2011 to 2014 showed that around 40 per cent of the cost of conveyancing claims arises from breaching various disclosure obligations set out in the CML Handbook requirements. And this was a period when repossessions were low. Undoubtedly lenders choose the breaches that are easiest to prove, and support the lenders’ position that they would not have proceeded with the loan had they known the information that was not provided by the law firm.

Reports on Title

A further consequence of a lender repossessing a home for a non-mortgage debt is the inevitable questioning as to  whether a firm's Report on Title adequately explained the implications of an all monies charge. Although we are approaching Halloween I do not wish to take on the role of the Profit of Doom. Yet it's foresee the potential nightmare of a client looking to blame a lawyer if they have nothing in writing adequately explaining the meaning of such a charge.

Lexsure are running a specific webinar next month on the the topic of what to include in your Report on Title with an emphasis on the mortgage section of the Report. Bookings can be made here.

Sunday, 1 October 2017

Lenders Who Made Changes to Their Handbook in September 2017

A number of lenders made changes to their Handbook last month. Perhaps not surprisingly some focused on changes to leasehold requirements.

Examples of lenders who made changes (England and Wales region) include:

Yorkshire Building Society (2 sections)

Scottish Widows Bank (5 sections)

Swansea Building Society (1 section)

Chelsea Building Society (2 sections)

Market Harborough Building made set an interesting new requirement relating to ground rents. Their new wording at 5.14.9 reads:

a. Any ground rent at the start of the mortgage term should not exceed annually £250 outside of London or a £1,000 inside London. If this is the case you must immediately contact the Society. We will advise you if our mortgage offer remains valid.
b. Ground rent and other event fees must be reasonable at all times during the lease term. For example, it is acceptable for ground rent escalation to be linked to RPI (Retail Price Index) or a similar index and where this is the case we do not need to be advised. However, unreasonable multipliers of ground rent will not be permitted, for example, doubling every 5, 10 or 15 years. These must be referred to the Society and we will advise you if our mortgage offer remains valid. If you are unsure as to whether the terms of a lease are unreasonable, please refer the details to the Society immediately.

Friday, 18 August 2017

Leasehold is Changing - Is this Reflected in your Report on Title?

Leasehold reform is on the way. Many lenders have already been proactive in making changes for some months now to their P2 Handbook requirements.

Is it now time to be making changes to your Report on Title in light of new lender instructions and in anticipation of legislative reform?

On the 25th and 26th September Lexsure will be running a number of free 30-minute webinars focused on what a firm's leasehold Report on Title might contain and how the latest e-ROT technologies can improve the process of generating a Report on Title.

The free webinar will pay particular attention on the following areas:

  • New considerations concerning the number of years of the lease
  • Fees changed for by a management company or landlord
  • Ground Rent provisions
  • Assignment provisions - what might affect marketability
Bookings can be made here

Sunday, 23 July 2017

No Smiles for Conveyancers if Cheshire is Right

Are we about to see a significant dip in house prices in London in the near future?

Bloomberg News recently asked seven market commentators to predict what they see happening next in London’s 1.6 trillion-pound housing market.

Paul Cheshire, professor of economic geography at The London School of Economics and Political Science:

“The turning point is just being reached. Housing prices have continued to rise relative to incomes and the affordability ratio is now at an all-time low. Real incomes are falling as the weakness in the pound feeds through to higher inflation. The ability to raise wages isn’t there and Brexit is making everything more uncertain and worse. London is the epicenter of the U.K. housing market and changes in prices there tend to ripple out. I’m expecting a sharp correction in housing, more on the level of the 1990 crash. I don’t expect negative equity to be as big of a problem as it was then, and interest rates may rise but will still remain low by the standards of the early 1990s.”

NOTE: House prices fell about 32% in London from 1989 through 1992, according to data compiled by Nationwide Building Society.