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Bank Committee: June 15th 1936

 

On Minute 5624 (Progressive Mortgage - House at Fillongley) the Town Clerk submitted the following report on the matter:

 

8th June 1936

 

Progressive Mortgage.

House at Fillongley - Mr J Burgess.

 

I have to report that on investigating the title it was found that the land was held subject to certain exceptions and reservations as regards the mines and minerals, which your Committee's Valuer was not prepared to recommend your Committee to accept without a Mining Engineer's report. The Borrower is not willing to go to the expense of this, and his Solicitors inform me that their client does not intend to proceed with the matter if the Bank insist on a Mining Engineer's report being obtained.

 

5703   RESOLVED:- That, in view of the notification from the Solicitors to the Borrower that their Client does not intend to proceed with the matter if the Bank insist on a Mining Engineer's report on the question of subsistence being obtained, the offer to make  the advance be withdrawn and Minute No 5624 be discharged.

 

Bank Committee: October 19th 1936

 

5776   The following report of the House Purchase Sub-Committee was presented:

 

1. Revision of Policy for granting House Purchase Advances.

 

The question of revising the terms and conditions upon which house purchase advances should be granted has been under consideration for some time, but it was considered advisable to suspend the formulation of a scheme until the powers sought in the Birmingham Corporation Bill had been obtained. The Bank clauses contained in the Act necessitate amendments to the Regulations and these will come before the Committee in due course. It is, however, considered desirable, in view of the new powers and of the past experience of the existing house purchase procedure, to prepare a new scheme dealing with future advances to come into operation at once and the proposals recommended are contained in this report.

 

In considering the matter regard has been had to the "Code of Ethics and Procedure" recently adopted by the Building Societies Association, who appointed a deputation to confer with the Bank thereon.

 

While the Bank is not in the same position as Building Societies for granting advances, being limited in the scope of its operations and not having the same freedom in making rules and regulations, a certain measure of agreement can be reached on principles. Therefore, it is after a careful study of the Code and taking into account local circumstances, that the following scheme has been formulated for revising the Bank's terms and conditions:

 

(1) Amount of Advance.

 

Normal advances to approved applicants in respect of the purchase of dwellinghouses (ie without collateral security):

 

 

(2) Maximum Term of Years and Method of Repayment.

 

Applicable to freehold properties, or leasehold properties where the lease has 50 years unexpired:

 

(a) Where the advance does not exceed 80% of the valuation:

25 years;

Repayment by either method

 

(b) Where the advance exceeds 80% of the valuation, but does not exceed 85%:

25 years;

Repayments by equated method

 

(c) Where the advance exceeds 85% of the valuation:

20 years;

Repayment by reducing method

 

Where the valuer considers the leasehold property having less than 50 years to run constitutes a good security, an advance may be made for a period of 10 years or such longer period not exceeding 20 years as the Chairman of theHouse Purchase Sub-Committee (*) may sanction, but repayments in all such cases should be limited to the reducing method. In no case should an advance be made where the lease has less than 30 years unexpired.

          *inserted by amendment "(who may delegate this power to their Chairman)"

 

(3) Collateral Security.

 

Where collateral security is offered in order to obtain a larger advance, the following special conditions should govern any approved application:

(a) The minimum amount to be found by the applicant shall be:

10% of the purchase price where such price exceeds £750;

7½% where the purchase price is between £501 and £750; and

5% where the purchase price does not exceed £500.

 

(b) The extent of the collateral security required will be the difference between the normal advance and the actual advance, which latter must not exceed the full valuation of the property.

 

(c) Collateral security in such form as the House Purchase Sub-Committee may approve, should be retained by the Bank until the advance is reduced to a figure representing 75% of the valuation.

 

(d) Where collateral security is found by a builder or person developing a housing estate who agrees to take over the Bank's mortgage in case of default by the mortgagor (as provided for by No 4 of this scheme), repayments may be made by either reducing or equated method, spread over 20 or 25 years.

 

(e) Where collateral security is found otherwise than described in (d) above, repayments should be made in accordance with No 2 of this scheme.

 

(4) Taking back Properties.

 

Where advances are made and collateral security given by a builder or person developing a housing estate, it should be a condition that the builder or person takes over forthwith the Bank's mortgage upon default by the borrower within the following periods:

 

 

(5) Buildings used or to be used partly as a dwelling house and partly for some other purpose.

 

(a) Maximum normal advance not to exceed 75% of valuation

(b) Term of years and repayments same as in No 2 of this scheme

(c) Where collateral security is offered the conditions in No 3 of this scheme should apply.

 

Provided that in arriving at a valuation, the value of that part used or to be used otherwise than as a dwellinghouse shall not exceed one half of the value of the whole building or £500, whichever is the less.

 

(6) Property already owned by Applicant.

 

(a) Maximum advance not to exceed 75% of valuation

(b) Advance to be repaid within a maximum period of 20 years

(c) Repayment by reducing method

(d) No advance to be granted on leasehold properties having less than 50 years unexpired.

 

(7)  Combined House Purchase and Assurance.

 

An applicant may combine house purchase with life or endowment assurance upon the terms fixed with the Bank's approved Insurance Companies and subject to the conditions laid down in this scheme as to amount of advance and term of years.

 

(8) Married Women.

 

Where the applicant is a married woman the husband must be joined in the deed to secure repayments, unless there are reasons satisfactory to the House Purchase Sub-Committee for dispensing with such requirement.

 

(9)  Valuation Fee.

 

(a) £1 where the property is situate within 10 miles of the Town Hall.

(b) £2 where the property is beyond 10 miles from the Town Hall.

(c) Special valuations obtained by the applicant direct from the Bank's Valuer to be accepted in lieu of the requirements of (a) and (b) above.

(d) The fee for valuations upon plans and specifications for houses to be erected to be determined between the Bank's Valuer and the applicant.

 

(10)Roadmaking Charges.

 

Borrowers should be indemnified against road-making charges, or where such indemnity is not forthcoming the Valuer should take such costs into account in arriving at his figure.

 

(11)Tenancies.

 

Where an advance is required on property subject to a tenancy, or where it is intended to place a tenant in such property, the advance should be limited to 80% of the valuation, and the Bank should be satisfied that the rent receivable is sufficient to meet all liabilities under a mortgage and that the tenant is in a position to pay such rent.

 

(12) Progressive Mortgages.

 

Advances on progressive mortgage may be made under the following conditions, viz:

 

(a) Maximum advance - 75% of valuation; the advance to be made by five instalments on the certificates of the Valuer.

(b) Interest to be paid monthly on the amount outstanding.

(c) Town Clerk's charges of £1 per cent to be paid by borrower.

(d) Valuer's charges of £1 per certificate of payment to be paid by borrower.

(e) Loan to be repaid, with interest and any other charges, within six months from issue of final certificate, but the borrower may convert the progressive mortgage into an ordinary Bank mortgage on the terms and conditions herein laid down.

 

(13) Power to vary Terms and Conditions.

 

Power should be reserved to the House Purchase Sub-Committee to vary the terms and conditions laid down in this scheme in any particular case where they consider a variation to be desirable, and in order to avoid delay in dealing with applications the Sub-Committee may delegate this power to their Chairman. Any variation should be reported to the Bank Committee.

 

(14) Rescission of Existing Instructions.

 

These new terms and conditions should take the place of existing instructions contained in Minutes of the House Purchase Sub-Committee or Bank Committee, which should be rescinded.

 

With reference to paragraph 4 of the scheme as to builders or persons taking over the properties in the event of default, the Town Clerk has been requested to consider the best method of giving effect to the proposal embodied in the scheme, and to report to your Committee thereon at the meeting on Monday next.

 

Your Sub-Committee recommend that the foregoing proposals which, in addition to governing future policy, are designed to consolidate to a large extent the existing procedure, be approved and adopted and the officers concerned instructed accordingly; also that the instructions from time to time given by your Committee and the House Purchase Sub-Committee be amended or rescinded in conformity with the Scheme.

 

2.Proposed transfer of Mortgages from the Solihull Urban District Council.

 

Representations have been made on behalf of the above Council with a view to the Bank taking over a number of mortgages effected with the Council, where the rate of interest is in excess of 4½%, and by such transfer enabling the borrowers to obtain the advantage of the Bank's rate of interest, namely 4½%. The proposed transfer concerns 504 mortgages effected during the period 1924-32,  representing advances amounting to £234,100, with outstanding balances amounting to £191,518.

 

Negotiations were conducted on behalf of the Bank by the Chairman of your Committee, and the Chairman of this Sub-Committee, together with the General Manager and, having regard to the substantial nature of the proposed transfer and the apparently satisfactory position of the accounts, it was considered appropriate for the Bank to make certain concessions with a view to securing the business, as efforts were being made in the same direction by a Building Society prepared to relieve the Council from any costs in the matter. The Town Clerk having been consulted on the subject, it was agreed to adopt the following arrangements:

 

1. Title as  examined and passed by the Solicitors acting for the Council to be accepted.

2. Search fees in Local Land Registry to be paid by the Bank.

3. Stamp Duty on transfer of mortgage to be paid by borrowers.

4. Printing, etc expenses in connection with notifying borrowers to be shared between the Council and the Bank.

5. Stamp Duty on Vacating Receipts to be borne by the Bank.

6. Second Mortgages to be discharged before a transfer takes place.

7. Existing Fire Insurance arrangements to remain in force.

 

The necessary sanction of the Public Works Loan Commissioners to the transfer has already been obtained.

 

Your Sub-Committee recommend that, subject to the consent of the Solihull Urban District Council, approval be given to the proposed transfer of the 504 mortgages referred to in the foregoing report, in accordance with the procedure, terms and conditions therein mentioned, and that the Town Clerk and General Manager be instructed to take any necessary steps for giving effect to such transfer; the Town Clerk being authorised to enter into any necessary agreements, affixing the Corporate Seal thereto when required.

 

Sale of Property No 27, Oxford Road, Moseley.

 

Your Sub-Committee report that exhaustive enquiries have been made for several months by Mr Frank Wilde with a view to the sale of this property at a reasonable figure, but the best offer he has been able to secure is one of £500 from Mr S I King. The amount outstanding under the mortgage is £647. 4. 7. and, in addition to this, certain expenses will have to be met in connection with the abortive sale by auction. Having regard, however, to the difficulty of disposing of this property owing to the very high ground rent, and for other reasons, your Sub-Committee have directed that the offer of Mr King be accepted, and that the loss on the sale, including costs and outstanding charges, be written off, unless any part of such loss can be recovered from the Mortgagor.