Rule 64 (Valuation of Property) surprisingly gave the Committee discretion as to whether a property to be mortgaged should be valued. However, this discretion never seems to have been applied and a valuer was paid (initially at the Bank's expense) to make a formal valuation. At the Bank's commencement, the Birmingham Overseers (who valued property as part of their duties of setting a rate so as to raise income for the relief of the poor, etc) were requested to provide valuations.
By March 1920, the number of applications for mortgages had increased considerably. At the same time a communication was received from the Birmingham Overseers that as a revaluation of the city was to be conducted, the existing arrangement for valuations to be conducted by the Overseers was to terminate on April 16th. It was therefore decided to appoint a valuer for a period of twelve months with a remuneration of £150 for the valuation of up to 300 houses, any valuation in excess of 300 to be paid for at the rate of 10/6d per valuation.
In due course, two candidates (Messrs Wilde and Foskett) were interviewed for the appointment of valuer. Frank Wilde was appointed with effect from May 17th 1920. His appointment was confirmed in December 1921 at the same rate for the first 300 valuations, but at only 10/- for valuations over 300. Mr Wilde (a professionally qualified valuer in private practice) was to continue as the Bank's valuer for some 25 years, during which time he also acted for the Bank in procuring premises for branches, and other tasks.
The valuation charge of 10/- continued for several years, but in May 1920 it was decided that the mortgagor or loan applicant should bear the cost. The valuations were done once or twice a week, depending on the number of applications, and would involve a visit to the property. A different situation arose with the anticipated rise in the building of new houses in the city, particularly the introduction of a joint scheme between the Bank and Estates Committees to finance a scheme that would give support to a decision of the City Council for the erection and sale of houses. The scheme called for the Bank to indicate from an examination of complete plans, specifications etc, as to the amount it would be prepared to advance upon the completion of such houses.
The House Purchase (HP) Sub-Committee produced a report dated June 18th 1923 under the heading 'Valuation of Houses to be erected under Joint Scheme':
The Committee will recollect that under the Scheme for the erection and sale of houses approved by the City Council on the 9th January last, provision was made for the Bank to indicate from an examination of complete plans, specifications etc, what advances they would be prepared to advance on completion of houses.
Consideration has been given in this connection to the question of what payment should be made to the Bank's Valuer in respect of the examination of such plans, specifications and contracts for house to be built. It is obvious that the work involved by such examination could not be regarded as forming part of the present arrangement with the Valuer, nor could payment at the rate paid for ordinary house purchase valuations, namely 10/- in each case, be considered reasonable.
It will be appreciated that plans may be submitted for a valuation figure or a loan figure based on valuation, and the actual borrowing may not be through the Bank, and it is therefore necessary to guard against persons obtaining a valuation through the Bank at a preferential rate, and using it in other directions.
Your Sub-Committee accordingly consider that the case would be suitably met by the fixing of a graduated scale of fees for the examination of plans etc. on the following lines, such fees to be paid irrespective of whether a loan is subsequently granted through the Bank or otherwise:-
Valuation not exceeding £500 £2. 2. 0d
Valuation over £500 but not exceeding £700 £4. 4. 0d
Valuation over £700 but not exceeding £750 £5. 5. 0d
also that the following additional arrangements to be made with the Valuer:-
1 Where the plans are submitted in respect of a single house, either by the builder or his client for own occupation, and the loan is subsequently arranged through the Bank, no charge is to be made by the Valuer for the usual valuation prior to granting the mortgage.
2 Where the plans etc, are submitted in respect of more than one house of a repetition character, either by the builder or his client, and loans are subsequently arranged through the Bank, the valuation fee payable on each of the additional houses prior to the granting of the Mortgage shall be 10/-, such fee being transmitted to the Valuer as in ordinary cases.
The General Committee discussed the amounts of the valuation fees referred to in the report, and other aspects of the report, then referred it back to the HP Sub-Committee for further consideration. The Sub-Committee responded on July 23rd:
.... this question has again been carefully considered. Your Sub-Committee have conferred with Mr Frank Wilde as to the nature of the work involved in order to arrive at the valuations of prospective houses so that the Bank might indicate what amount they would be prepared to advance on such houses when completed. Your Sub-Committee are satisfied that a considerable amount of detailed work is necessary, including examination of plans, specifications and contracts, in order to arrive at such valuations, and they adhere to the opinion that the fees recommended in their former report are, in view of all the circumstances, reasonable. It should be pointed out that it is probable that the majority of these valuations will not exceed £500, and that Mr Wilde has taken this into consideration in suggesting a low fee of £2. 2. 0d. for valuations up to this figure.
Frank Wilde's appointments as Receiver followed on from the Bank's Rule 76 that "in the case of any depositor being three months in arrear with his repayments, the Bank shall have power to take possession of the property." Before taking the drastic step of appointing a Receiver, the Bank contacted the mortgagor in order to seek an alternative answer. Often, the mortgagor paid the arrears; arrangements were agreed to pay regular instalments; or occasionally the period of the advance was extended.
In some cases the mortgagor used a variety of tactics to postpone being ejected from the mortgaged property. An early case of arrears that proved educational from the Bank's perspective was a loan made to a Mr J T Rea in August 1920 for a combined shop and two houses at 185 to 189 Stoney Lane, Sparkbrook. Mr Rea subsequently made no repayments and appears to have obtained a second mortgage on the property. On January 17th 1921, the HP 'B' Sub-Committee reported that:
an advance was granted in August last to Mr J T Rea on property Nos 185-7-9 Stoney Lane. No repayments of principal, interest or insurance have been made by the Mortgagor, and your Sub-Committee being of opinion that the Bank Committee should exercise their powers for taking possession of the property, have instructed the Town Clerk to take action in the matter and he will present a report on the matter at today's meeting of your Committee.
The Town Clerk wrote:
I have carefully considered the position with reference to this Mortgage, and am of the opinion that it would not be advisable to take possession of the property without an application to the Court. It is open to your Committee, however, to appoint a Receiver under the power contained in the Mortgage Deed, without the necessity of any public proceedings. The effect of such an appointment would be to enable the Receiver to collect the rents of two houses comprised in the Mortgage Deed, but he would have no legal power to compel payment of rent in respect of the house occupied by the Borrower personally.
Should your Committee think fit to adopt the latter course, I shall be glad to receive instructions to prepare and affix the Corporate Seal to the necessary Appointment. I may add that such course, if adopted, would not prejudice the rights of the Committee to exercise their powers of sale at a convenient opportunity.
The Committee resolved that the Town Clerk be instructed to prepare a Deed of Appointment of Frank Wilde as Receiver, and to take such steps as may be necessary for enforcing the security of the property. The Town Clerk confirmed on January 25th that Frank Wilde had been appointed as Receiver, and that he had paid the 15/- Stamp Duty.
Following Frank Wilde's appointment, an arrangement was arrived at with Mr Rea to pay a rent of 13/7d per week plus any future increase in rates. By March 21st no payments had been received. The Town Clerk stated that as far as he was aware:
no case has been decided on the question of enforcing a post-war mortgage against a mortgagor in occupation.
The Town Clerk understood that Mr Rea was living free of rent and was not paying any mortgage interest, and that in these circumstances it was improbable that the Court would give him any assistance, and that it might be well to ascertain whether the second mortgagees would be willing to take over the Bank's mortgage in order to secure the conduct of the sale. Subject to that, the Town Clerk recommended that he be given instructions to take proceedings to recover possession of the premises.
Negotiations were subsequently held with the second mortgagees but no satisfactory result was achieved. Accordingly, the Manager was instructed to make the necessary arrangements to sell the properties, the amount of reserve to be fixed after consultation with the Chairman (Councillor Appleby). It may have been as a result of this case that the Committee decided (May 23rd 1921) that a provision be incorporated into the Mortgage Deed that a second mortgage shall not be entered into without the consent of the Bank (see below).
However, on June 10th 1921, the Town Clerk wrote:
Further to my report of March 12th last, I understand that the Borrower is now paying a proper rent for the house and shop occupied, and that it is proposed to offer the property for sale without possession.
Under these circumstances there is no necessity to obtain the leave of the Court and your Committee may desire the sale to be carried through without the Corporation or the Bank appearing publicly as parties to the transaction.
If this course is agreed to, it would be necessary for me to engage a solicitor outside my own Department, and I shall be glad to receive instructions as to handing to him the deeds when required for production.
The Committee agreed with the Town Clerk's proposed course of action, but no action seems to have been taken as the Town Clerk wrote as follows on October 14th:
It will be recollected that the .... property was recently put up for sale by auction, but no sale was effected. Mr Wilde is in receipt of the rents, and it does not appear necessary to take any further action at present.
I recommend, therefore, that this Minute be discharged.
The Committee, however, resolved that the matter be deferred pending a favourable opportunity occurring for the disposal of the property. The matter then did not come before the Committee until February 20th 1922, when it was resolved:
That the Town Clerk be authorised to take the necessary steps to obtain possession of the premises occupied by Mr J T Rea and to take such other proceedings for enforcing payment of the arrears owing to the Bank as he may deem advisable.
This resolution was subsequent to a report by the HP Sub-Committee that Mr Rea had fallen into arrear with his payment of rent.
The Town Clerk next reported on June 19th 1922:
I beg to report that .... a Writ of Summons was issued in the District Registry of the King's Bench Division for possession of the dwellinghouse No 189 Stoney Lane, which is occupied by Mr Rea and which is included in the Mortgage to the Corporation.
The Defendant filed an affidavit in defence, setting up a statutory tenancy, and claiming the protection of the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920.
Mr Registrar Lowe, acting as Master in Chambers, dismissed the summons, and remitted the action to the County Court.
Failing to arrive at a useful settlement with Mr Rea's Solicitor, I decided to appeal to the Judge in Chambers, acting upon the instructions of your Committee's Chairman.
The Appeal came before Mr Justice Acton, sitting in Chambers, on the 16th instant, when the learned Judge dismissed the appeal, deciding that the Defendant had shown a prima facie case to be tried on the merits.
I am informed that the Mortgagor is now paying his rent regularly, and that he is only slightly in arrear. Owing to the operation of the Rent Act, it is doubtful whether the Corporation could obtain possession of the above mentioned dwelling house in a County Court action.
Although the standard rent has been increased by the additions authorised by the Rent Act, yet the notices requisite to make such rent legal have not yet been served, and it would now appear that the best course to pursue would be to serve such notices on the Mortgagor, and then, in the event of his falling in arrear with his rent, an action for possession could be successfully sustained.
I ask for your Committee's instructions.
On June 19th 1922, the Committee Resolved (No 1155):
That the foregoing report be approved; and that the Town Clerk be authorised to serve on the mortgagor the requisite notices referred to in his report as to the increase in the standard rent by the additions authorised by the Rent Act.
With the decision of Mr Justice Acton implying that Mr Rea was a tenant under the protection of the Rent Act, and that this argument should be properly determined by the County Court, the Town Clerk thought that, with the provisions of the Rent Act being so complicated in relation to matters of this kind, and involving questions so important to the operation of the Bank, it was desirable to seek the opinion of Counsel. The Town Clerk reported on July 10th 1922 that Counsel (Mr William Allen) had advised that:
the form of Mortgage employed is in order, and that the Corporation should succeed in obtaining the ejectment of any borrower who has merely become a tenant at will at a nominal rent under the term of the mortgage deed. In the case of Rea, however, there is a probability that the collection of money by your Receiver, Mr Wilde, in the form of rent has created a new tenancy which is within the protection of the Act. Counsel accordingly thinks that this case is not a satisfactory one to contest, although there may well be a small prospect of success.
To avoid the creation of a new tenancy in future cases, Counsel advises that money collected from the borrower by the receiver should be by way only of principal and interest. This should be made clear in the form of receipt given. The Committee should then have no difficulty in obtaining vacant possession for the better realisation of your security whenever you think proper.
Mr Rea's case did not come before the Committee again until January 15th 1923, when the members were informed that the borrower's payments were in arrear and that it would accordingly be possible to instruct a Bailiff to act in the matter, and the Town Clerk was therefore directed to instruct Frank Wilde to take steps accordingly.
The Town Clerk then reported (February 16th 1923) that:
I have instructed Messrs Frank Wilde and Glover to place this matter in the hands of a Bailiff.
I am now informed that Rea has been summoned for arrears and an Order has been made for the payment of weekly instalments of 2/4d per week in reduction of his debt, and I am further informed that Rea is now paying his weekly instalments regularly.
As the Bank had no power to make advances in respect of shops (Rule 62), Mr Rea's property comprising two houses and a shop would have been valued at the time of his loan application as a house only. His problematic mortgage came to a conclusion in March 1925.
This type of case, where mortgagors who were in arrear with their repayments and persistently evaded action by making partial payments to bring the arrears just below the equivalent of three monthly instalments, resulted in a change in the Bank's Regulations in 1929. That placed the Bank in a position to take action against defaulting mortgagors more promptly by providing the power to suspend or modify the repayments.
Rule 71 required that all property mortgaged to the Bank be insured against fire. Initially, it was the practice of the Bank to insure mortgaged premises on the basis of the valuation, and in the name of the Bank. However, several house purchase applicants expressed the wish that the policy be taken out in the joint names of the Bank and themselves. Consequently, the City Treasurer arranged that his Insurance Officer would give instructions regarding the preparation of policies, obtain cover notes, record the details in an Insurance Register, and forward individual policies to the Bank for depositing in the sealed packets used to store the Deeds. It was also agreed that, as far as possible, the mortgagor's wishes be complied with as to what extent the Insurance be effected.
This complicated system, basically using the process set up for the insurance of the Corporation's own assets, was soon replaced by the Bank paying the premiums initially and debiting the amount to the mortgagor's account. In due course, a large number of policies were placed with the Royal Insurance Company, the commissions received by the Bank providing a lucrative income for many years.
Insurance claims were dealt with by the Bank and recorded in the minutes: