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.

Friday, 30 June 2017

CML Lenders’ Handbook to be Renamed on 1st July

From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance.

It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services.

The new organisation will take on activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.

The CML Lenders’ Handbook will continue, but it will be renamed the "UK Finance Mortgage Lenders’ Handbook" (‘the Handbook’). 

The CML will rename the Handbook from 1 July 2017.

Associated documents (for example, the Disclosure of Incentives Form) on the CML website in due course.

Website urls and bookmarked links relating to the Handbook will continue to work as normal.

From 1 July, all references to the CML Lenders’ Handbook shall be deemed to mean the UK Finance Mortgage Lenders’ Handbook.

Any associated documents which refer to the CML shall be deemed to mean UK Finance.

A set of FAQs and responses has been prepared by the CML to assist users of the Handbook during the transition from the Council of Mortgage Lenders to UK Finance.

Monday, 19 June 2017

Is Your Firm Updating Their Pre-Completion Checklist ?

Technology, lender compliance and fraud prevention within the context of a pre-competition checklist are some of the main focus points at the next Webinar by Lexsure on 24th and 25th July.  

Almost all firms have a pre-completion checklist that they use, either on the side of the file or a paper checklist. But how often does a firm update that checklist and how comprehensive? Lexusre’s webinar focuses on what a firm’s pre-completion checklist should look like and how the latest technologies can help reduce mistakes and insurance premiums.

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

  • What questions should your checklist have to highlight potential frauds (what can we learn from the Mishcon, Perunsing and P&P cases)
  • Help to Buy - Example Questions/Tasks/Workflows
  • The European Union’s Fourth Anti-Money Laundering Directive
  • Lender Compliance - How can a checklist ensure that you are up to date with the latest requirements
  • How a pre-completion checklist  can build your post completion workflow.

The webinar will demonstrate example checklists within the COMPLELTIONmonitor system

Bookings to the webinar are available here but please as will previous webinars only 800 spaces are available.

Monday, 29 May 2017

Amendments To CML Lenders’ Handbook - 19 June 2017

The following amendments will be made to the Lenders Handbook for England and Wales, Scotland and Northern Ireland on 19 June 2017:

England and Wales

  • A minor amendment to reflect that the FASI and MASI professional qualifications are no longer offered.


  • Updating the Handbook to reflect the closure of the Register of Sasines to new standard securities
  • Removing reference to obsolete Law Society guidance in relation to coal mining
  • Aligning the Handbook instruction with England and Wales in respect of warranties for new build properties
  • Updating the handbook to reflect the use of digital discharges
  • A minor amendment to reflect that the FASI and MASI professional qualifications are no longer offered.

Northern Ireland

  • A minor amendment to reflect that the FASI and MASI professional qualifications are no longer offered.
  • Aligning the Handbook instruction with England and Wales in respect of warranties for new build properties

The CML will for an updated summary of amendments will be published alongside the changes, as usual.