HOUSE PURCHASE DEPARTMENT:
ADMINISTRATION & POLICY
(continued)
Bank Committee: July 28th 1930
3841 The following report of the House Purchase Sub-Committee was presented:
49 Redthorn Grove, Stechford.
Your Sub-Committee report that the Bank have obtained possession of the above named property in respect of which Mr A Ford is the second mortgagee, and in accordance with the arrangements entered into with Mr Ford in other cases, your Committee are recommended to instruct the Town Clerk to prepare and seal a deed of collateral security for the amount outstanding on the Bank's mortgage, so that Mr Ford will be responsible for the future payments to the Bank, such payments to be spread over a period of twenty years, it being understood that Mr Ford is to be put to no legal expense so far as the Bank is concerned.
With reference to the paragraph in the foregoing report relating to No 49, Redthorn Grove, Stechford, the General Manager reported that Mr Ford was similarly interested in property No 3 Bankdale Road, Alum Rock, which had been put up for sale by auction, when no bid was forthcoming, and Mr Frank Wilde was at present acting as Receiver on behalf of the Bank. It was understood that, the Mortgagor having agreed to give up possession, Mr Ford was agreeable to enter into a deed of collateral security as in other cases.
3847 RESOLVED:- That, in regard to properties Nos 49, Redthorn Grove, Stechford, and No 3 Bankdale Road, Alum Rock, the Town Clerk be instructed to prepare and affix the Corporate Seal to deeds of collateral security with Mr Ford, the second mortgagee, for the amounts outstanding on the Bank's mortgages, so that Mr Ford will be responsible for future payments to the Bank, such payments to be spread over a period of 20 years, it being understood that Mr Ford is to be put to no legal expenses in the matter so far as the Bank is concerned.
Report of the Town Clerk: October 17th 1930
Minute No 3847
49 Redthorn Grove, Stechford (C C DON)
3 Bankdale Road, Alum Rock (W SKIDMORE)
In accordance with the above Minute, the Deeds of Collateral Security in respect of the Mortgages on the above houses have now been executed by Mr Alfred Ford, who has also provided the necessary stamp duties.
I, accordingly, ask that the above Minute be discharged.
Bank Committee: December 15th 1930
3922 The Chairman called attention to the existing practice relating to loans by the Corporation by way of progressive mortgages and the subsequent transfer in certain cases to Municipal Bank mortgages. He stated that he had raised the question at a Sub-Committee of the Finance Committee as to the wisdom of considerable sums being outstanding in respect of large blocks of property, many of the houses in which were at the present time empty and could not be sold. The Chairman intimated that the City Treasurer was at present looking into the question and would report thereon to the Finance Committee in due course.
3936 RESOLVED:- That the Bank having obtained possession of the property No 2 Bankdale Road, Alum Rock, the Town Clerk be instructed to prepare and affix the Corporate Seal to a Deed of Collateral Security with Mr Ford, the Second Mortgagee, for the amount outstanding under the Bank's mortgage, so that Mr Ford will be responsible for future payments to the Bank, such payments to spread over a period of twenty years; it being understood that Mr Ford is put to no legal expenses in the matter so far as the Bank is concerned.
House Purchase Sub-Committee: October 19th 1931
Second Mortgages.
As a result of a question raised by Alderman James at a recent meeting of the Committee, the General Manager has conducted an exhaustive survey of the deeds of extant mortgages and furnished a report thereon to your Sub-Committee, which shows that there are 550 cases in which second mortgages are in operation.
Very little trouble has been experienced in arranging with the second mortgagees to discharge the Bank's mortgage, in cases where such course was suggested.
If the Bank altered its policy and declined to grant advances in any case which might become the subject of a second mortgage, it is felt that much business would be lost. It is not possible in every case, for the purchaser to acquire the house, even with assistance from the Bank, unless the purchaser realises some of his investments. In cases such as those, Solicitors in the town are frequently ready and willing to find additional money by way of second mortgage in order to complete the purchase.
Strict control has always been kept on the position in respect of Bank mortgages, and the practice of your Sub-Committee to have before them regularly cases where mortgagors are three months in arrear very largely safeguards the position, and it would not appear to be in the interests of the Bank to vary the present practice.
The Committee will realise that the Bank relies on mortgages for a portion of its income, and your Sub-Committee do not consider that any step should be taken which would have the effect of making the House Purchase facilities less attractive than at present.
Limitation of Amount of Advances.
Your Sub-Committee are of opinion that the time has arrived when the existing limitation of £1,000 fixed by the Bank Committee in 1921 for advances on House property should be no longer imposed, and they recommend that Minute No 992 containing this restriction, be rescinded.
Report of the Town Clerk: January 15th 1932
Minute No 4222
28 Anderton Road, Sparkbrook (R S Stockman)
In accordance with the above Minute, the above property in its existing condition was put up for auction on the 15th December last and disposed of for £280, a sum which is more than sufficient to cover the total amount due under the Mortgage, the accruing outgoings and the costs.
It will be recollected that this house was sub-let by the tenant of the borrower to five separate families and, accordingly, it got into a very bad state of repair. Mr Frank Wilde, who had been appointed Receiver, collected the rents and, when vacant possession of the whole had been obtained, there were no arrears.
Having ascertained that neither the second Mortgagee, the third Mortgagee nor the Official Receiver of the bankrupt borrower's estate would attempt to realise the property, I took Counsel's opinion on the authority of your recent Chairman.
Mr J Bradley Dyne advised that the Corporation were in a position to exercise the statutory power of sale, he being of the opinion that there had been breeches of covenants in the mortgage deed; namely to repair and not to underlet. The fact that the Corporation had knowledge of these breeches did not waive or affect their power.
The completion of the sale has been arranged for the 26th instant, and I am, accordingly, affixing the Corporate Seal to the Assignment, the title having apparently been passed by the Purchaser's Solicitors.
Bank Committee: December 19th 1932
4595 The following report of the House Purchase Sub-Committee was presented:
House Purchase Mortgages - Rate of Interest on Advances.
Your Committee will remember that this question was raised at the Council Meeting in July, when the Chairman promised that the matter should receive consideration.
Your Sub-Committee, after hearing the views of the City Treasurer and General Manager, are of opinion that no alteration should be made at the present time in the existing rate of interest, for the following reasons:
(1) That, although certain Building Societies have reduced their rate of interest on new mortgage loans, the terms of repayment offered by the Municipal Bank and the incidental charges are still much more advantageous to the mortgagor. It should also be borne in mind that with the exception of one Society operating in the district, building societies only apply the reduction to new mortgages, whereas, when the Bank interest was reduced from 6¼% to 5% in 1922, all mortgagors paying the higher rate benefited by this reduction.
(2) That, in view of the uncertainty of the yield from investments in the near future, it is undesirable at present to vary the existing rate.
Your Sub-Committee therefore recommend that no change be made for the time being.
4601 RESOLVED:- That no action be taken at the present time to reduce the rate of interest on advances for house purchase.
House Purchase Sub-Committee: February 20th 1933
Arrear Cases - Charges for recovery Procedure.
Your Sub-Committee consider that in arrear cases in which the Town Clerk is instructed to take proceedings, it is desirable that the mortgagor should bear appropriate charges in respect of the extra work and time involved, particularly as in many instances certain borrowers are frequently in default. The Town Clerk has advised that it is within the discretion of your Committee to ask him to prepare a bill of his charges in connection with any particular matter and to add the amount of those charges to the sum recoverable from the mortgagor.
The General Manager has been instructed, in notifying defaulting mortgagors of the intention of the Bank Committee to take proceedings unless the arrears are paid, to intimate to them that charges will be imposed in respect of any proceedings which may be commenced in cases of default.
Your Sub-Committee recommend that, unless good reason can be shown by the mortgagor for failure to pay arrears, the General Manager be authorised to charge the mortgagor such sum or sums as may be considered appropriate, after consultation with the Town Clerk.
Bank Committee: March 20th 1933
The following communication was submitted from the Tenants Sub-Committee of the Estates Committee passed at a meeting held on the 8th March 1933:
2417. RESOLVED:- That the attention of the Municipal Bank Committee be drawn to cases of defaulting mortgagors who have paid off a substantial part of the loan and who are in financial difficulties which may eventually prove to be temporary, it being the opinion of this Sub-Committee that if some arrangement could be made which would enable the borrower to pay interest only on the outstanding loan until such time as it could be judged whether or not he was likely to be in a position to continue with his obligations in such cases might be substantially reduced.
4683 RESOLVED:- That the foregoing Minute be received and entered on the Minutes; and that the Estates Committee be informed that it is already the practice of this Committee to allow the payment of interest only on the suspension of repayments in appropriate cases where the Borrower is in temporary financial difficulties.
House Purchase Sub-Committee: March 20th 1933
Advances for Improvement to Properties.
Your Sub-Committee have had under consideration a letter from the Lord Mayor to the Chairman of your Committee, suggesting that a scheme should be arranged through the Municipal Bank whereby owners of property could be financially assisted to enable them to carry out improvements to property, with a view to giving material aid to his campaign for encouraging spending to alleviate unemployment.
Representations have also been made by the Birmingham and District Master Painters Association on the matter, and the General Manager has received two direct applications for assistance as a result of the Lord Mayor's circular letter to householders in connection with the "Spend Now" Campaign.
While the Bank, of course, has no power to make advances in respect of houses to persons other than depositors in the Bank, nor in respect of properties already subject to a prior mortgage (unless the mortgage is in favour of the Corporation) your Sub-Committee have given careful consideration to the possibility of granting additional advances to owner-occupiers of property already in mortgage to Bank.
The Town Clerk advises that, although, generally speaking, it is not in his opinion competent for the Municipal Bank to afford facilities similar to those which building societies are prepared to give in connection with house repairs, it may be possible, taking each case on its merits, for the Bank to afford assistance under certain circumstances. He expresses the view that the question rests as to whether or not the Bank's Valuer considers that the repairs are desirable to preserve the property in such a state that it will adequately safeguard the Bank against loss in the event of default by the mortgagor.
Bank Committee: May 15th 1933
On Minute No 4730, the General Manager explained that rates of interest charged by building societies was exactly the same as the Treasurer and himself had previously reported upon, and despite the reductions made were not as favourable as those allowed by the Municipal Bank.
House Purchase Sub-Committee: November 13th 1933
48 Beauchamp Road, Billesley - Grantham
|
Advance |
£340 |
|
Outstanding |
£228. 1. 8. |
|
Arrears |
£21. 14. 5. |
|
Last payment 30th Sept. |
£1. 6. 6. |
This mortgage account has been in arrear for some months, the mortgagor being in financial difficulties owing to shortness of work.
The case has been repeatedly before the House Purchase Sub-Committee who have given the mortgagor sympathetic consideration and allowed him to pay interest only and Ground Rent for some time.
In February last the mortgagor stated that he had suffered a material reduction in his wages some months previously; that he was still employed with the same firm, namely, the Crown Bedding Company of Macdonald Street, and that his wages then averaged £2 per week, out of which he had to support a wife and three children, and also maintain himself and carry on with the purchase of the property, which was quite impossible.
The mortgagor then notified that his financial position was an impossible one to cope with, and in fact his wife was ill in bed with Influenza and he was not in a position to afford to call in a Doctor to attend her. The mortgagor stated that he had been with the same firm for 13 years and was then paying his poor rates by instalments. He said that he was quite willing to dispose of the house provided the Estates Department would grant him a non-parlour type house to rent.
The full facts were accordingly reported to the General Manager of the Estates Department in a letter dated the 8th February 1933, and the decision of the Estates Committee was ultimately notified in a letter to the General Manager of the Bank, dated the 15th March 1933, stating that the Estates Committee could not see their way clear to allocate this mortgagor a house on a tenancy basis. As a result thereof the House Purchase Sub-Committee have allowed this mortgagor to pay interest only together with Ground Rent.
A further letter has been received from the mortgagor dated the 30th October, regretting that his position has not changed, and asking the Bank to give him further consideration.
Bank Committee: February 19th 1934
5054 The following Special Report of the House Purchase Sub-Committee as to proposed extension of house purchase facilities was presented:
House Purchase Facilities.
Your Sub-Committee have given careful consideration to proposals to extend the existing facilities for house purchase and have had before them a comprehensive report of the General Manager on the subject, together with a report containing the views of the Town Clerk as to the suggestions therein contained and also the observations thereon of the City Treasurer and Mr Frank Wilde (the Valuer to the Bank).
The Committee will be aware that during the last two years there has been a marked reduction in the number of mortgages arranged through the Bank on Non-Corporation houses. This reduction is attributable very largely to the development of estates by builders and others in conjunction with various Building Societies on terms to House Purchasers which preclude the Bank being considered for mortgage purposes. These terms, which have proved attractive, provide for the payment of a small deposit by the purchaser representing 10% of the purchase price (including all charges, ie valuation, stamp duties and legal costs), the balance being found by the builder and Building Society combined. The margin between 80% of the valuation and the amount of the advance is provided or secured by the builder, either by the deposit of money to be placed into a pool, the taking out of an insurance policy, or the deposit of other suitable collateral securities. Your Sub-Committee are informed that those responsible for the development of certain housing estates are in a position immediately to inform intending purchasers of the precise amount required by way of deposit and the exact amount which will be advanced on mortgage with the terms of such mortgage.
Your Sub-Committee feel very strongly that to enable the Bank to secure a reasonable share of this class of business it is essential that more attractive terms should be offered than the present system provides. They are given to understand that a similar scheme to the facilities offered by building societies would be welcomed by many builders and solicitors in the city. It would, however, be necessary to base the advance on the purchase price and not upon the valuation of the property (unless the two figures agree), and the operation of any such scheme would mean that purchasers would not be approved by the Bank but would negotiate with the builders concerned or their solicitors or agents.
Your Sub-Committee
are of opinion that, providing the scheme is entered into with reliable persons or firms and that proper security is given for the
difference between the amount advanced and 80% of the valuation of the property, any small risk involved would be offset by the increase
in the business of the Bank. They accordingly recommend as follows: