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B&B looks to recoup same-day remortgage losses from solicitors

Bradford & Bingley is looking at taking legal action against solicitors who advised borrowers to take out same-day remortgages through its specialist lending arm, Mortgage Express, during the property boom.

Same-day remortgaging involves buying a property from a distressed seller at below market rate using a one-day bridging loan and then remortgaging the same day at its market value, creating a profit.

According to the FT, the bank says some solicitors ignored fraud guidelines and failed to disclose vital information when carrying out the transactions.

In a letter to solicitors, B&B says it will look to regain any losses it made on the deals from the solicitors involved.

It says: “The full extent of Mortgage Express’ losses in these transactions will be quantified once its interest in the property has been realised. Mortgage Express will seek its full losses from you, including the costs of repossession/sale, its cost of funding and the shortfall on its mortgage advance.”

The FT report states B&B believes, in some cases, there has been an “actionable breach” of the Council of Mortgage Lenders handbook, which says: “solicitors have a professional duty… to provide specific information when lodging mortgage applications”. The lender says the solicitors failed to say borrowers had bought the property less than six months before remortgaging.

B&B says it will only take action on any same-day remortgages where there has been an actionable breach of the CML handbook.

While Bradford & Bingley has not disclosed the exact number of solicitors involved, it says only a small proportion of the buy-to-let mortgage book is affected.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Its always the same. The lenders knew what was going on, but were only interested in the market share. Fortunately I did not get involved,. Now its all gone pearshaped they are looking for someone to take the blame and cough up. During the heyday, lenders sent their BDM,s out to get the business no matter what the cost.

  2. I distinctly recall the BDMs maketing the virtues of same day remortgaging. It was great for those who flipped properties overnight and walked off with a legitimate profit. Can someone please explain what losses the B&B are referring to. They advanced money and charged interest. Don’t bother it only seems to refer to parasites/solicitors.

  3. I seem to remember a certain Scottish bank funding sale and rent back deals without even bothering with the bridge. 85% discounted purchase price, 100% borrowing covered. You cannot get more complicity than that.

    We taxpayers now own the lender of course.

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