Campaigns
UK Mortgage Prisoners have been campaigning tirelessly to highlight the unjust and unfair treatment of 250,000 mortgage prisoners. We have and will continue to lobby government and apply pressure on the regulatory bodies to put right the wrongs of over a decade.
TIME FOR MORTGAGE REFORM
UK Mortgage Prisoner Action Group are calling for legislative change to mortgage regulations to protect the homeowner.
1. Prevent borrowers from being trapped on reversionary standard variable rates
We all know that there are very limited circumstances where anyone would willingly remain on an SVR when there are cheaper fixed rate options.
FCA should require an amendment to residential mortgage terms and conditions so that at the end of a fixed rate term, a Lender or the transferee of a mortgage/mortgage book should be required to offer a Borrower a new fixed rate IF the Borrower requests one (on similar criteria to current product switches in mainstream Lenders). The fixed rates offered and likewise any default reversionary rate where a fixed rate is not requested by a customer, should be in line with fixed rates and reversionary rates available to borrowers in similar circumstances in the wider financial group of which the mortgage owner is a part, subsidiary or has financial connections to OR in line with the top 6 Lenders or a bucket group.
This would mean that Borrowers- who entered into a mortgage contract with the same expectations as every Borrower i.e. with no intention to sit on an SVR but rather to switch repeatedly which is common practice in the UK mortgage market - can exercise that well held expectation.
This prevents further mortgage prisoners being created in future.
In relation to current Mortgage Prisoners, the right to access fixed rates now should be introduced as a means of attempting to rectify some of the wrongs of the past and as a much-needed relief to the current situation to place these borrowers on the same footing as other residential customers.
If Mortgage Prisoners have fallen into arrears since the consecutive rate rises starting in December 2021, those arrears should not automatically prevent access to fixed rates for those customers, but individual circumstances should be considered.
Most, if not all these customers are in entities allied to or part of a wider active lending financial group.
This type of protection was wholly absent in the sale of NRAM etc and in current sales.
The majority of borrowers in the current market are unaware that terms and conditions permit their mortgages to be sold without their patent consent but by latent consent via power of attorney clauses and WITHOUT the protection that such sales/transfers should be to entities that continue to provide access to market comparable fixed rates as per common practice and expectations.
Even the Financial Ombudsman Service (FOS) has openly accepted the point of a reversion rate is to attract new customers with a preferential rate and has stated that the reversion point is treated by customers as the point to get a new rate with a new Lender (affordability assessment required) or with their existing Lender (no affordability assessment required in the active market). It is entirely unfair that this is not available to Mortgage Prisoners.
2. No Sales of residential mortgages to non-lenders
A. Subsidiaries set up to hold residential mortgages out of active lending in SPVs and non-lending books should NOT be permitted with regard to borrowers' homes.
Government and Regulator should require that residential mortgages should only be held by firms who not only HAVE a lending licence but lend in practice.
The practice of allowing the rights over mortgages on homes to be purchased by acquisition companies without fresh lending capability and/or intentions and focused on the profit of investors thus abusing the mortgagees and exploiting their position should be ended.
Mortgages originated with active market Lenders should never be sold to non-Lenders who do not offer new products. There is simply no way this can or should be deemed as fair treatment of customers or in line with consumer duty requirements.
This is a massive failing and huge injustice has occurred as a consequence.
B. The term "the same financial group" should be better defined in MCOB regulations so that it applies to being a separate legal entity within a wider group so that
E.g. SPML, managed by Acenden, owned by Kensington, owned by Barclays is treated as Barclays
MAS5-Co Op
Engage-Pepper
Heliodor-Topaz etc
These entities/administrators are instead set up specifically to evade the obligations of the "parent" thus profiteering from homeowners without the obligations of an active lender/parent and preventing access to their products.
There should be no requirement for a "new customer" application for a switch to the wider group product, but this should be treated as a product switch by an existing customer.
Wording in MCOB regulations should be mandatory around this.
It is a cloak and dagger exercise to hold these customers trapped effectively in a locked room in the same house as Borrowers within a wider group who have access to expected rights these prisoners cannot access. The corporate veil of separate legal entity should be lifted in these circumstances.
It is entirely unfair to deny access to preferential rates by permitting sales to books/SPVs/entities that close the door to this and trap homeowners on SVRs, particularly those with historic mortgages who cannot switch Lender e.g. pre GFC interest only borrowers who will not meet post-crash affordability criteria for LTV on their interest only borrowing etc
3. Grandfather Policy / Changed affordability criteria
Post 2008 Global Financial Crash (GFC) affordability criteria are not appropriate for many pre-crash mortgages as many borrowers, particularly those sold interest only products, will, more likely than not, fail the current affordability assessment for the mortgage they are currently paying.
While product switch in active Lenders and modified affordability for those deemed Mortgage Prisoners (under limited and strict definition) go some way, neither are sufficient solutions particularly for interest only customers where there was no regulatory requirement at time of offer to check any or adequate repayment vehicle and where the sale of the mortgaged property was often accepted as a suitable vehicle and which is no longer acceptable by underwriters for those e.g. seeking term extension.
An extended Modified Affordability needs to be introduced to enable Mortgage Prisoners or trapped customers to be assessed on evidence of payment made over a defined period/months/years at the same or a higher rate than the product on offer.
Further, if these payments can be evidenced as having been made by one party in the case of a relationship breakdown, and the other party consents to transfer of title to that paying party, then the mortgage owner should be required to permit a change in the mortgage to the sole name of the paying party without affordability assessment other than evidenced payments.
Grandfather Policy, where there are exemptions to new rules and regulatory changes, should be applied to affordability assessment for pre GFC mortgages.
Policy should urgently be developed to secure the primary residences of those who have been trapped on interest only mortgages post GFC and unable to switch to repayment due to the introduction of new affordability criteria post-crash. For example, policy around conversion of these mortgages to lifetime mortgages for those Borrowers so that there is not a generation of Borrowers coming towards term end currently and in increasing numbers over the next 10-15 years, particularly those heading towards retirement, facing homelessness.
This is also good social policy in the context of lack of housing.
Instead, these Borrowers with historic interest only mortgages should be 'grandfathered' and enabled to remain in their homes on average market fixed rates (not higher lifetime rates) continuing to pay interest only and with option to overpay towards capital if there is inadequate income to switch to repayment either due to age or changes in circumstances post affordability changes. These borrowers should also be permitted to downsize on their existing terms under grandfather policy without affordability assessment.
Lenders will have their security on these homes and capital can be repaid when mortgagees are deceased. Any surplus can, and should, be paid to the next of kin.
4. Mortgage Prisoner Compensation Scheme
Government /Financial Conduct Authority /banking industry should participate in a Mortgage Prisoner Compensation Scheme to compensate those held in closed books between 2008 to date at the difference between the rate they paid and base rate plus 2%.
Enormous profits have been generated on the back of trapping customers on high SVRs at the expense of massive detriment to those Borrowers.
Government was aware of potential detriment and yet proceeded with sales.
Week of Change
After the debate on Mortgage Prisoners in parliament on 6th June, 2019, of which many members traveled from across the UK to attend. UK Mortgage Prisoners kicked off their Week of Change campaign.
One Year On
October 22nd, 2019 marks the one-year anniversary since the airing of Panorama’s ‘Trapped by mortgage’. This was the point that many ex-Northern Rock customers realised that they were, in fact, mortgage prisoners. Until this point, most had been ashamed of their situation, even though Northern Rock was a reputable high street lender. When it collapsed, the Government bailed it out whilst hanging mortgage holders out to dry. The margins on the standard variable rates were inflated and, with the addition of post-hoc legislation, the now widely known ‘Mortgage Prisoners’ were created.
Fair Mortgages For All
It has been sixteen months since the Panorama programme ‘Trapped by my Mortgage’ aired in October 2018. Since this time, UK Mortgage Prisoners has organised into a well-established action group for change. We have brought to life the people behind the numbers, the lived experience of a mortgage prisoner, and the devastating impact this has had on many of our lives. We have gained the sympathetic ear of the press, financial institutions and unsung heroes who have worked behind the scenes, providing invaluable support to free all mortgage prisoners. The FCA has gone to great lengths to develop a framework to ensure mortgage prisoners are treated fairly by banks and ‘lenders’, while simultaneously acknowledging that these efforts will not go far enough and leaves too many vulnerable borrowers behind. The FCA has called on the Government to extend the regulatory perimeter so that those trapped on the books of inactive and/or unregulated lenders can be helped. John Glen, the Economic Secretary to the Treasury, has publicly stated that he is open to this idea. UK Mortgage Prisoners is now calling on the Government to follow through on this statement so that all borrowers in the UK are subject to, and protected by, the same mortgage regulations and not left to the whim of unregulated entities. Additionally, as part of our campaign, we will be requesting that the Government adopt the ‘Fair Mortgage Bill’ which will legislate for fair rates, fair treatment and an end to the culture of selling British mortgages to vulture funds.
Action 4 Solutions
During the banking crisis of 2008, many (but not all) of our mortgages were with high street lender, Northern Rock. This was subsequently nationalised and further lending was suspended which put stop to internal product transfers. This meant that our mortgages reverted to the more expensive standard variable rate (SVR). Pre-crash, the SVR was set at 1.5% above the Bank of England base rate. However, UKAR, acting for the Government, increased this margin to 4.5%. Given the difficult economic conditions – housing market, job losses and business closures – many borrowers could not switch to a better deal elsewhere. This was then exacerbated by the Mortgage Market Review (MMR) which introduced a retrospective stress test for new borrowing. This meant that new mortgage applicants would have to prove their income could withstand rates if they increased by 2 -3 %. So, whilst many of our members have been paying between 5- 7% SVRs, we are consistently told that we cannot afford to pay interests which are set at significantly less.
2 Years On
22nd October, 2020 saw the anniversary of the BBC Panorama airing ‘Trapped by my mortgage’. When we covered the 1 year anniversary none of us thought we’d still be here campaigning for another 12 months with member numbers now reaching nearly 4000.
In the run up to the anniversary we asked the Facebook members what is had caused to them ‘Being a mortgage prisoner…’ Over the week member’s experiences were presented across social media platforms through images.
2 Year On video produced to mark the second year of the Facebook group uniting.
UKMP Action Group look back at where it all began. Listen again to the messages sold to us to 'take control'. The crash of the high street bank, Northern Rock and the successive government's handling of the sale of mortgages. A chance to remember the truths, 100s of 1000s were good borrowers, they were not toxic, irresponsible lenders that the government led the public to believe. The Conservative did and continue to profit over people, treating family homes as assets to make a profit on. After 13 years of financial hardship causing huge detriment #ukmortgageprisoners must be allowed to 'take control' of their mortgage again.
Protests.
After a year of writing to MP’s asking them to support the mortgage prisoner campaign and asking the Treasury to put right the years of financial misery 250,000 homeowners have been through. UK Mortgage Prisoner members began getting tired of the same copy and paste replies from Government ministers and so peaceful protests were arranged in the constituencies of John Glen MP, Economic Secretary to the Treasury and the then Chancellor, Sajid Javid MP.
The protest outside John Glen MP’s constituency office caught the attention of the local press. One of their journalist’s and photographer came out to meet the protesters and were happy to do an interview and photograph the protest. The article featured shortly afterwards with a photograph of the protest appearing on the front page.
Chance meeting with Sajid Javid MP
Our lead campaigner Rachel Neale on arriving in Bromsgrove for the mortgage prisoners protest was able to speak with Sajid Javid as he was out in the town talking to his constituents. Rachel was able to quiz Javid on why he had refused to help mortgage prisoners back in 2013 & what he & his party plan to do for the 250k #ukmortgageprisoners. Javid was unable to answer but promised to meet with Rachel after the December election.
Sajid Javid MP’s constituency, Bromsgrove.
UK Mortgage Prisoners took their protest to the streets of Bromsgrove and visited the constituency office of Sajid Javid who was currently the MP for Bromsgrove & also The Chancellor of the Exchequer. In 2013 Sajid Javid was the Economic Secretary and rejected the almost finalised regulations that would have saved mortgage prisoners and saved them thousands of pounds each month. https://www.thisismoney.co.uk/money/m...
10 Downing St & The Treasury, London.
UK Mortgage Prisoners took their next protest to London. Members travelled from across the UK to protest and deliver letters to 10 Downing Street and The Treasury asking for urgent action to free 250,000 #ukmortgageprisoners who had their mortgages sold on by the Government to vulture funds who for 12 years have charged extortionate interest rates. ITV News covered the protest which was featured in their regional news programmes.