House Purchase-1-Minutes-7

HOUSE PURCHASE DEPARTMENT:

ADMINISTRATION & POLICY

(continued)

Continued ....

Finance & House Purchase Sub-Committee: April 19th 1926

Loan on No 3 Bankdale Road. Death of Borrower.

Your Sub-Committee are informed that the borrower in this case (W Young) died on the 1st June 1925, and that an application was submitted through the solicitors (Messrs Bailey Cox & Co) from Mr W Skidmore, who proposed to take over the mortgage. The loan to Young was for £440, being 80% of the valuation, but only one repayment was made, and the account fell into arrears. The General Manager offered Mr Skidmore on the 13th October 1925 a loan of £440 subject to the existing mortgage being discharged, and this was accepted. Continual delays have been experienced, and at the 31st March as completion had not been effected, the General Manager withdrew the offer and cancelled the cheque which had been drawn, informing the solicitors that the Bank would exercise its powers and dispose of the property. Mr Ford, who has a second mortgage on the property, was informed that if he desired to discharge the mortgage to the Bank he could do so, and the deed would be passed over to him. Mr Ford expressed his willingness to take over the mortgage, pay up the arrears and continue the monthly repayments. This course, however, the General Manager would not agree to, as it is against the policy laid down by the Committee, and insisted that the mortgage must be discharged in its entirety, but that if Mr Skidmore (who is residing in the house) was prepared to take up a mortgage of £440, the offer previously made could be renewed.

Your Sub-Committee have confirmed the General Manager's action, and recommend that in the event of Mr Ford and Mr Skidmore failing to adopt the suggestion of the General Manager, Mr Frank Wilde be appointed Receiver, and the Town Clerk instructed to take steps accordingly.

Advances on Houses where possession cannot be obtained.

Your Sub-Committee report that in certain cases where borrowers have purchased the property with the help of a second mortgage from Messrs Philip Baker & Co, it is found that possession of the property cannot be obtained. The borrowers assert that they were under the impression at the time of purchase that they could enter into occupation of the property.

Your Sub-Committee consider that it is desirable in these cases to give notice to the borrowers (who are in arrear to the extent of three months' payment of principal and interest) that the Bank will exercise their powers and appoint a Receiver, and they recommend that the General Manager be authorised accordingly.

Scheme for Life Assurance of Mortgagors.

Your Sub-Committee have considered a scheme submitted by the General Manager whereby mortgagors may take out life assurance policies with the object of securing that the property passes (in the event of death of the mortgagor) to the legal representatives free from any incumbrance. The scheme, which would be entirely voluntary, provided for a total assurance equal to the amount of the loan by the Bank, divided into four policies, one of which would be surrendered at the end of the 5th year of the loan; another at the end of the 10th year; another at the end of the 15th year, and the last at the end of the 20th year. The surrender values would be paid to the mortgagor who could in turn place them to the reduction of his loan or otherwise use the money. An example of the effect of the scheme on a loan of £400 obtained by a man aged 35 years next birthday, is given with this report. Arrangements would be made for the annual premium to be received at Bank counters in quarterly instalments, without affecting the rate of premium. The money received would be transmitted to the Royal Insurance Company (who have agreed to work the scheme) through the General Manager and would not pass through the accounts of the Bank.

Your Sub-Committee feel that this is a service which the Bank through its officers can render to mortgagors, and that such service should be rendered. They are satisfied that the scheme is a desirable one, and will be a boon to those mortgagors who can afford to take it up, and they accordingly recommend that the General Manager be authorised to carry the same out in conjunction with the Royal Insurance Company.

Your Sub-Committee intend to further explore the question of insurances such as this, and at a later date hope to present a further report on the matter, but they do not consider the further investigations they propose to conduct need delay the operation of the scheme now submitted.

Example of the effect of the scheme in reference to a Loan of £400 granted for 20 years,

and taken up by a Mortgagor whose age next birthday would be 35.

Annual premium (£. s. d.)	Income Tax abatement	Net cost per annum (£. s. d.)
- on £400 for 5 years: 8. 8. 0.	16. 9.	7. 11. 3.	At the end of the fifth year one policy could be surrendered for a cash payment of £4. 16. 0.
- on £300 for 5 years: 6. 6. 0.	12. 6.	6. 13. 6.	At the end of the tenth year another policy could be surrendered for a cash payment of £10. 4. 0.
- on £200 for 5 years: 4. 4. 0.	8. 4.	3. 15. 8.	At the end of the fifteenth year another policy could be surrendered for a cash payment of £16. 0. 0.
- on £100 for 5 years: 2. 2. 0.	4. 2.	1. 17. 10.	At the end of the twentieth year this policy could be surrendered for a cash payment of £22. 0. 0.

From the foregoing examples of the Scheme it will be seen that the net cost to the mortgagor for the whole twenty years, after taking into account the surrender values, works out at £2. 1. 6½d. per annum, as follows:

5 years' premium at	£. s. d.
£7. 11. 3d . =	37. 16. 3.
£5. 13. 6d. =	28. 7. 6.
£3. 15. 8d. =	18. 18. 4.
£1. 17. 10d. =	9. 9. 2.	£94. 11. 3
Less Surrender Values:
£4. 16. 0.
£10. 4. 0.
£16. 0. 0.
£22. 0. 0.		£53. 0. 0.
Net cost for 20 years		£41. 11. 3.
Net cost per annum		£2. 1. 6½d.

Bank Committee: May 15th 1926

On Minute No 2343, the General Manager reported that the necessary steps were being taken for putting into operation the Scheme approved by the Bank for the life assurance of mortgagors, and the question of any improvements that might be later introduced into the Scheme was receiving consideration by the Finance and House Purchase Sub-Committee.

Finance & House Purchase Sub-Committee: May 15th 1926

Borrowers in Arrear - Cases where second Mortgages have been entered into.

As directed by the Committee at their last meeting in the cases in question the borrowers and second Mortgagees (Messrs Philip Baker & Co) were notified of the Bank's intention to appoint a Receiver and take any further necessary steps to exercise their powers in the matter.

A communication has been received from Messrs Philip Baker & Co agreeing to pay the arrears in each of the four cases concerned. No further action is therefore contemplated.

Mortgagor in Bankruptcy (A H Williams).

In this case the affairs of the borrower who has been adjudicated a bankrupt are in the hands of the Official Receiver, and in order that such action as is necessary may be taken in the matter, your Sub-Committee recommend that Mr A S Taylor be authorised (consulting the Town Clerk so far as may be necessary) to make proof of debt to sign proxies and to act generally on behalf of the Bank in the bankruptcy; and that the Town Clerk be authorised to prepare and affix the Corporate Seal to any necessary documents.

As the first creditor's meeting was fixed for Wednesday, the 12th instant, your Sub-Committee as a matter of urgency acted as the Bank Committee under the Chairmanship of Alderman Lovsey and authorised the appointment of Mr Taylor as above referred to.

Finance & House Purchase Sub-Committee: July 26th 1926

Life Assurance Scheme for Mortgagors.

Your Sub-Committee have given further consideration to this question, and have had before them particulars of alternative schemes to the one already available for Mortgagors of the Bank. Your Sub-Committee feel that the annual premiums under the present scheme are too high for the majority of Bank Mortgagors, and they have accordingly given consideration to a scheme which while insuring that the mortgaged property passes to the legal representative on the death of the Mortgagor free from incumbrance, provides for the payment of lower annual premiums on the following basis, the example given being of a £400 insurance taken up by a Mortgagor whose age next birthday is 35:

	Annual Premium (£. s. d.)
First 5 years	3. 17. 0.
Second 5 years	2. 18. 0.
Third 5 years	1. 19. 0.
Fourth 5 years	1. 0. 0.

Your Sub-Committee recommend that the General Manager be authorised to draw the attention of Borrowers to this new scheme as an alternative to the present one.

Finance & House Purchase Sub-Committee: October 18th 1926

Stamp Duty on Vacating Receipts.

The Inland Revenue authorities have recently communicated with the Town Clerk pointing out that stamp duty should be paid on the vacating receipts endorsed on the Bank Mortgages on discharge, as there was an express understanding to this effect at the time parliamentary powers to set up the Bank were obtained. Your Sub-Committee are informed that a definite assurance was given by the Corporation's London Agents during the Parliamentary proceedings that vacating receipts should be subject to stamp duty.

As a result of correspondence which has taken place between the Town Clerk and the Inland Revenue it has now been agreed that all future vacating receipts shall be stamped with a duty of 6d. per £100 of the consideration money, and your Sub-Committee recommend that the payment in question should be borne by the Bank, and not made a charge to the mortgagors.

Finance Sub-Committee: January 17th 1927

Propaganda

Your Sub-Committee have given consideration to a very comprehensive report prepared by the General Manager on the question of propaganda, dealing with the various methods by means of which the Bank could be more prominently brought to the notice of all classes of the community.

After careful considering the suggestions put forward in the report, your Sub-Committee recommend ....

[Number 11 of 11 proposals] The display of a long notice across the wall at each Branch advocating the purchase of houses, and where permission can be obtained, the exhibition of a similar notice on gable ends of houses.

[An example of one of these notices can be see in the interior photograph of Duddeston branch]

House Purchase Sub-Committee: February 21st 1927

Administration of House Purchase Department and Procedure with regard to arrears.

In view of the increase in the number of mortgagors in arrear with their repayments it has been considered necessary that a closer investigation should be made on the part of the Bank into the circumstances of applicants for loans for the purchase of houses, especially in respect of Municipal Houses, and with this object in view, the General Manager has submitted to your Sub-Committee his recommendations with regard to some administrative changes considered necessary in the House Purchase Department.

These provide that Mr A S Taylor, the Controller of the House Purchase Department, should personally interview every applicant for a loan and satisfy the General Manager that the case is a suitable one for an advance before the application is acceded to; also that Mr F Ellison, the Assistant General Manager, should take over the Arrear Cases and endeavour to obtain a reduction therein.

In dealing with arrears it is proposed to revert to the practice of notifying the borrowers when they are in arrear for one month, and again when the equivalent of two months' arrears has been reached, a third and final notice being sent to Mortgagors when they are three months in arrear under the Mortgage. This final notice would inform the Borrower that the necessary action would be taken by the Bank to enforce their powers under the Mortgage unless the arrears are paid within seven days; and in order to save delay it is proposed that the Town Clerk be empowered to take all necessary proceedings in such cases on evidence from the General Manager of the Bank that the Borrower is over three months in arrear and subject to the approval of the Chairman of the General Committee or the Chairman of the House Purchase Sub-Committee being obtained in each case.

Cases in arrear which arise from time to time where the circumstances of the borrower warrant sympathetic consideration and some relaxation of the terms of repayment would be brought before the House Purchase Sub-Committee for consideration and decision.

Your Sub-Committee feel that in many of the arrear cases it would be preferable for the Bank to exercise their powers of sale of the properties rather than to appoint a Receiver. They have therefore instructed the Town Clerk to report his recommendations as to whether this course can be adopted in suitable cases without a Receiver having first been appointed.

Bank Committee: February 21st 1927

With reference to the last paragraph in the forgoing report, the Town Clerk reported that in Arrear Cases the statutory powers of sale were exercisable by the Corporation without any notice to the Borrower and in addition or as an alternative to the appointment of a Receiver.

The Town Clerk pointed out that at the present time no charge was made by him in respect of the preparation of Appointments of Receivers. These cases were becoming more numerous and he considered that the Mortgagor should pay the appropriate legal charges.

2606 RESOLVED:- That the Town Clerk, in consultation with the Chairman and General Manager, be authorised to fix a suitable charge in respect of the preparation of Deeds of Receiver in arrears cases, such charge to be borne by the Mortgagor.

Bank Committee: March 21st 1927

2634 The following report of the House Purchase Sub-Committee was presented:

Power of Sale under the Mortgage.

The Bank Committee at their last meeting instructed this Sub-Committee to consider the question of the desirability of exercising in arrear cases a powers of sale under the Mortgage where the circumstances justify this course be taken.

Your Sub-Committee feel that it is very desirable that this method of enforcing the Bank's powers should be adopted in appropriate cases, and they recommend accordingly; further, in order to save delay in cases where it is desirable that speedy action should be taken, they recommend that the Town Clerk be empowered (as in case of appointments of Receiver) on evidence from the General Manager of the Bank that a Mortgagor is over three months in arrear, and subject to the approval of the Chairman of your Committee or of this Sub-Committee, to take any necessary steps for exercising the Bank's power of sale; and that the Town Clerk be authorised to prepare and affix the Corporate Seal to any necessary documents in any such case.

In the following cases, where the Receiver has been unable to obtain satisfactory payments and the circumstances warrant that the Bank's power of sale should be put into effect, the Town Clerk has already been authorised to so act, and your Sub-Committee ask that the action taken in the matter be confirmed:

Wimbury, W of 50, Webb Lane, Hall Green

Davies, P J of 94, Aubrey Road, Small Heath

Mrs M A Bennet of 9, Cole Valley Road, Hall Green

With reference to the paragraph in the foregoing report relating to power of sale under the Mortgage, Mr Martin, Chief Assistant Solicitor, who attended the meeting on behalf of the Town Clerk, suggested that in each case where the Bank desired to exercise their power of sale, the Town Clerk should receive definite instructions whether or not possession of the property is to be obtained as a preliminary step. After discussion it was:

2635 RESOLVED:- That the Town Clerk be instructed, on the evidence of the General Manager of the Bank that a Mortgagor is over three months in arrear and subject to the approval of the Chairman of this Committee or the Chairman of the House Purchase Sub-Committee, to take any necessary steps for giving effect to the Bank's power of sale under the Mortgage, the Town Clerk to be notified in each case whether as a preliminary step he is to obtain possession of the property; further that he be authorised and instructed to prepare and affix the Corporate Seal to any necessary documents.

House Purchase Sub-Committee: May 16th 1927

Sale of Properties.

Your Sub-Committee report that in accordance with the instructions of your Committee, the undermentioned properties were sold by auction on the 26th April last. In one instance the property was sold at the amount fixed by the Bank as the reserve and in the other two cases the reserve was exceeded:

Wimbury, W of 50, Webb Lane, Hall Green

Davies, P J of 94, Aubrey Road, Small Heath

Mrs M A Bennet of 9, Cole Valley Road, Hall Green

Mortgagors in Arrear.

Your Sub-Committee report that the General Manager has had prepared a detailed list of all cases in arrear as at the 31st March 1927.

An analysis of the list discloses the fact that the arrears on 209 Municipal Houses amount to £896. 8. 4 while the arrears on 190 other houses amount to £833. 14. 10. On examination it is found that of the 209 cases above-mentioned 81 are three months in arrear, 38 are two months, and 90, one month, and of the 190 cases, 46 are three months in arrear, 40 are two months, and 104 one month.

Further analysing the three months' cases, it is found that in 35 cases the sum involved is less than £5, in 72 cases less than £10, in 17 cases less than £15, while there are only 3 cases where the arrears are over £15, the circumstances of which are well known to your Sub-Committee.

Having regard to the large number of Mortgages in existence, the position is considered to be satisfactory, and in the opinion of your Sub-Committee the procedure for dealing with the cases is effective and does not call for any alteration.

By way of contrast it should be pointed out that the sum of £83,693. 11. 8 has been received in excess of the amounts fixed by the Mortgage Deeds.