When we received a letter in May 2010, advising us that our eight buy-to-let properties had been put into LPA receivership, we really hadn't a clue what this meant and we have since found out, that most of the thousands of others this has happened to had also never heard of LPA receivership, let alone being aware that this was an option for their bank to resort to under the terms of their mortgage agreement.
At the time this happened, we were in dispute with our bank, the Kent Reliance Building Society, over alleged arrears, we had time and again asked the bank for a detailed breakdown of our accounts as we knew there were discrepancies and the only paperwork we received from them were annual statements which were very basic and lacking in any detail. For instance, we had a payment holiday and this was not detailed on our statements and we were simply requesting clarification of our position. All our mortgages were interest only and yet our outstanding balance was less than the amount we had borrowed and we wanted, we thought quite reasonably, to find out how we had reached this situation.
The bank made no attempt to help us and would not or could not provide the account details we requested and, stupidly as we now know, we stopped our monthly mortgage payments which resulted in the bank making a formal demand for the alleged arrears. Still, the bank could not or would not provide the information we had requested and before long there followed a demand for payment of all of the mortgages in full with a threat of court action if we did not comply.
The threat of court proceedings didn't seem a bad option as at least the bank would need to provide the information we had repeatedly requested but without any notice of it's change of tack, two weeks later, we received the letter to inform us that the LPA receivers had been appointed.
The following days and weeks were spent frantically attempting to ascertain what had happened and what this all meant. We contacted numerous lawyers and organisations and got nowhere. It seemed that the part of this antiquated law which the bank had used, was an area which few seemed to be familiar with. We felt isolated and totally bewildered. Eventually, we began to fit the pieces together after spending hours searching on the internet, we even managed to make contact with others in a similar situation and it gradually became obvious that our predicament was not unique - in actual fact, thousand of other people were victims. These people mostly seemed to have had mortgages with Mortgage Express but there were other banks and building societies using the same loophole in the law, such as Yorkshire Building Society, Chelsea etc. It became apparent that the banks were all jumping on the same bandwagon and using their power to appoint LPA receivers,some in a way which seemed questionable. For instance, I heard of receivers being appointed because of historic arrears eg mortgage payments missed maybe two years earlier. It became apparent that LPA receivership is a way for banks to rid themselves of unwanted mortgages whilst remaining at arms length. Once appointed the LPA receiver becomes the agent of the borrower and the bank should not interfere and therefore is able to have it's 'dirty work' done whilst remaining at arms length.
Our alleged arrears when the receivers were appointed was £18,500 (still disputed) and our properties were all tenanted and in excellent condition and in positive equity. Four and a half years later, all the properties have been sold and we have been left with a debt of £328,000 brought about by the receivers carrying out expensive and mostly, unnecessary work on the properties and then the properties being sold below value. When the rents didn't cover the work they did, the receivers simply sent the invoice to the bank who would cover the cost of the work and add it to our mortgage accounts.
The receivers 'sold' five of the properties over a period of two and a half years but then we were able to prove in court that the receivers did not have the Power of Sale a point the Land Registry later acknowledged but by that time the transfers on two of three of the properties had been processed and the bank stepped in and submitted new transfers as mortgagee in possession. The receivers had fraudulently signed official documents but no matter who I contacted, we could do nothing about it. Following this, the bank quickly sold the remaining three properties as mortgagees in possession.
This is a very brief overview of our situation which has resulted in us losing our business and home. I now live in rented accommodation and on benefits with no prospect of ever improving my situation unless by some miracle I am able to obtain compensation for the many wrongdoings of the bank and the receivers.
I feel very strongly, as I know many others do, that there needs to be an urgent change in the law to prevent banks using LPA receivers as they are presently doing. LPA receivers are TOTALLY unregulated and therefore operate under the radar of all authority while they spend our money to line their pockets and those of the contractors and lawyers they instruct.
Thank you for reading this.
SME Alliance Member