HOUSE PURCHASE DEPARTMENT:
ADMINISTRATION & POLICY
(continued)
Bank Committee: March 21st 1938
The following report of the House Purchase Sub-Committee was presented:
Progressive Mortgages - Refund of Charges.
At their meeting of your Committee held on the 18th October, 1937, the proposal of your Sub-Committee to make a refund to builders and others of the Town Clerk's charges for preparation of a Progressive Mortgage in cases where purchasers of the houses entered into ordinary Mortgages with the Bank was referred back for further consideration in the light of the discussion which took place at that meeting. Your Sub-Committee have given careful consideration to a comprehensive report on the matter prepared by the General Manager after consultation with the Town Clerk. Your Sub-Committee, having regard to all the circumstances, arrived at the conclusion that it would neither be desirable to refund the charges to the builders nor to make payment of a procuration fee. They, therefore, recommend that no alteration be made in the existing practice of the builder paying the Town Clerk's charges.
Insurance of Properties in Mortgage to the Bank.
By Minute No 6082 your Committee directed this Sub-Committee to consider the question of insurance affecting the Bank, reporting thereon in due course.
The question has been very carefully considered by the Town Clerk, Treasurer and General Manager, and their observations thereon have been reported to your Sub-Committee.
It should be explained that the insurances effected at the present time come within three classes:
1. The insurance of the building against fire by
the General Manager, as required by the regulations.
2. The extension of such insurance, at the option of the Borrower, to cover risks
other than fire.
3. The insurance, at the option and direction of the Borrower, to cover the contents of the buildings, such policies being between the Insured and the Company only.
It should be explained that the insurances referred to in Nos 2 and 3 are optional and are, strictly speaking, outside the functions of the Bank; but as regards No 2, it is a common practice to obtain cover for risks other than fire in connection with buildings.
Your Sub-Committee, having considered the alternative courses open for adoption and the views of the official concerned thereon, came to the unanimous conclusion that the practice of arranging the insurance of contents of buildings be discontinued; but that, in addition to insuring the buildings against fire as required by the regulations, the present practice of extending such insurance at the option of the Borrower to cover other risks on the building only, be continued.
6177 RESOLVED:- That the views indicated in the foregoing report of the House Purchase Sub-Committee as to charges in respect of progressive mortgages, be confirmed; and that no alteration be made in the existing practice of the builder being required to pay the Town Clerk's charges.
With reference to paragraph 5 of the report of the House Purchase Sub-Committee, the Committee considered the question of outstanding commission in respect of insurance effected by the borrower with the Insurance Company to cover contents of buildings; and unanimously decided that this was a matter between the Insurance Company and the parties hitherto concerned, and that no action should be taken thereon.
6178 RESOLVED:- That the recommendation in the foregoing report as to the insurance of property in mortgage to the Bank be approved and adopted; and that the practice of arranging the insurance of the contents of buildings be discontinued as from this date.
House Purchase Sub-Committee: April 25th 1938
Valuation of properties mortgaged.
Your Sub-Committee have considered the question of the valuation of properties where applications are made for fresh advances in respect of properties now or previously in mortgage to the Bank. They are of opinion that where a period of three years or more has elapsed since the original valuation of the property, a fresh valuation should be made by the Bank's Valuer, at the expense of the application, unless the Chairman of the House Purchase Sub-Committee considers this course is unnecessary.
Bank Committee: May 16th 1938
The General Manager submitted the following report as to the progressive mortgage entered into with Messrs S J Smith & Co in respect of houses in Coombes Lane:
Progressive Mortgage - S J Smith and Co.
The borrowers have made a written request for permission to put tenants in the houses, and on consent being given they will immediately complete the decorations and apply for the final advance. After such advance has been made the borrowers desire to have the progressive mortgages discharged and ordinary repayment mortgage substituted.
I have interviewed both partners in the Firm and learn that their desire to place tenants in the houses is due to the fact that purchasers have not yet been found and they consider it would be more satisfactory to arrange tenancies as a temporary measure, but it is their intention to ultimately sell the houses. The tenancies would be weekly ones, or monthly ones with rent paid weekly.
I have consulted Mr Coley of the Town Clerk's Department, who agrees that the application is in accordance with the terms of the mortgage, and with the terms offered to the borrowers in the first instance and the subsequent arrangement with them in regard to legal costs.
As regards the amount to be advanced, the mortgage provides for an advance of £5,940, payable in five instalments, but owing to certain points in the construction of the houses, Mr Wilde revised his valuation by £40 per house, which brings the total amount to be advanced to £5,400. Up to the moment we have advanced £4,770, and the present application is for the final advance of £630. As soon as the decorations have been completed and the final certificate for £630 is received, we shall then have advanced the full amount of £5,400, which represents 75% of Mr Wilde's amended valuation.
With regard to transferring the progressive mortgage to repayment mortgages, I am of opinion that the transfer should be arranged on the following terms:
(1)
A separate mortgage for each house in the sum of £300, representing 75% of the valuation.
(2) The term to be for 20 years.
(3) Repayments
to be on the reducing method.
(4) All the mortgages to be consolidated.
6236 RESOLVED:- That the foregoing report be approved: that the proposals therein referred to for the substitution of ordinary repayment mortgages for the progressive mortgages entered into with Messrs S J Smith & Co on the terms and conditions indicated in the report, with the additional requirement that the terms and particulars of the individual tenancies should be submitted for the approval of the Bank, be approved; and that the Town Clerk and General Manager be authorised accordingly
Bank Committee: June 20th 1938
6262 The Committee had before them particulars governing an application by Mr D J Ledbury for an advance of £390 on house No 23 Chauston Avenue, Broad Lane, King's Heath, and decided that in view of the low earnings of the applicant and other circumstances, it would not be wise to agree to the advance, although arrangements could be made to assign the freehold ground rent to the Bank.
6263 The General Manager reported that Messrs F B Clarke and A V Crawley trading as F B Clarke & Co, (House Agents) had founded a Company called the Layton Estates (Birmingham) Ltd with a limited capital of £500. It was their intention to develop an Estate at Shirley and erect 500 houses at a contract price of £295 each; such houses to be let on weekly rental. The freeholder would construct all roads, etc, and charge a ground rent of £5. 5. 0d. per plot. The Contract for building the houses would be placed with Messrs Goodway and Courtenay, of Easy Row, and when the work is completed, the latter firm would have allotted to them 160 shares in the Layton Estates Co. The Chairman of the House Purchase Sub-Committee (Alderman Morland) had considered the matter and was of opinion that the Committee should not accede to the request for an advance by way of progressive mortgage. The Committee concurred in this view.
Bank Committee: July 25th 1938
The following report of the House Purchase Sub-Committee was presented:
Austins Estate, Handsworth and Lyndon Barn Estate, Acocks Green.
Mr F P Smith has applied for an advance or advances from the Bank to enable him to discharge existing mortgages with the Corporation in respect of houses on the above Estates.
A foreclosure action to enforce repayment of the amounts due under the mortgages is now in process. Mr Smith is anxious to avoid any further legal trouble and points out that since he has been able to deal with matters himself he has considerably improved the position. At the time he took over all the properties were subject to second mortgages but these have been paid off and discharged. In 1932, there were debentures issued by Suburban Homes (Birmingham) Ltd to the extent of £60,000. These have also been paid off and discharged. When he took over there were road-making charges on Austins Estate amounting to £5,966, but he has reduced this to £800 and is under agreement of pay £100 per month until paid off.
Mr Smith is prepared to find £2,000 at once to be used for reduction of the mortgages and his request is that the Bank should arrange mortgages on the monthly reducing method for the amounts now outstanding, less the £2,000 referred to. He is prepared to give an undertaking to meet the monthly liabilities under such mortgages as they fall due, and states that, if required, his brother (Mr S J Smith) will be joined in the deed to secure repayments.
In 1932, Mr Frank Wilde was appointed by the Court as Receiver in the above-mentioned action, and he is still acting.
The properties involved are as follows:
|
|
Properties |
Approximate
amounts outstanding on the Mortgages (£. s. d.) |
|
Mortgage No 1. (9 houses) |
33 Landgate Road. 25, 31, 33, 35, 39, 43, 47, & 55 Linchmore
Road. |
4,103. 4. 10. |
|
Mortgage No 2. (11 houses) |
9 & 19 Landgate Road. 30, 36, 42, 46, 52, 56, 58, 60 & 66 Linchmore Road. |
4,121.
11. 7. |
|
Mortgage No 3. (23 houses) |
2 & 4 Landgate Road. 1, 2, 3, 4, 5, 6, 8 &17 Bush Grove. 6, 10, 12, 14, 16, 18, 19, 20, 21, 23,
25, 27 & 29 Cranbrook Road. |
10,434. 3. 9. |
|
Mortgage No 4. (10 houses) |
350, 352, 354, 358, 360, 364, 368, 374, 388 &
392 Clay Lane. |
4,114. 18. 9. |
|
|
|
22,773. 18. 11. |
Mr Wilde's present valuation of the houses is £23,050. 0. 0d.
Deducting the £2,000 deposit offered by Mr Smith from the £22,773. 18. 11 an amount remains of £20,773. 18. 11d which represents about 95% of the valuation.
All the houses except two are let at rentals varying from 15/-d to 22/6d per week plus rates and water charges, but whether these rentals can be maintained is a matter of doubt.
Your Sub-Committee, after giving this application very careful consideration, realise that it would be advantageous to the Corporation to have their outstanding loans consolidated. Having regard to all the circumstances, however, they consider that the total amount to be advanced by the Bank, without indemnification of the properties and that Mr Smith should be required to deposit the balance of the amount outstanding.
They therefore recommend that authority be given to make such arrangements, on the understanding that there should be a consolidated Mortgage in such form as the Town Clerk considers expedient.
With reference to the foregoing report relating to the application of Mr F P Smith in respect of the houses on Austin's Estate, Handsworth, and the Lyndon Barn Estate, Acock's Green, the Committee gave further consideration to the matter, and after discussion and hearing the views of the Town Clerk thereon, it was:
6281 RESOLVED:- That with regard to the application of Mr F P Smith for a loan from the Bank to enable him to discharge existing mortgages with the Corporation in respect of houses on the Austin's Estate, Handsworth and the Lyndon Barn Estate, Acock's Green, this Committee are prepared, subject as hereunder mentioned, to advance up to 85% of the Bank's Valuer's valuations of the properties in question:
(1) Provided that the Finance Committee are willing to indemnify the Bank in respect of an amount representing the first 5% of such valuation until the principal outstanding has been reduced to 80% of the valuation;
(2) Mr Smith to be required to reduce the existing mortgage loan to a figure representing 85% of the valuation, to clear existing legal charges connected with the foreclosure action now in process and to meet any other legal charges, stamp duties, etc, in connection with the proposed transfer of mortgages;
(3) That the mortgages be consolidated in such manner as the Town Clerk considers expedient and that he be authorised and instructed to prepare any necessary documents, affixing the Corporate Seal thereto, if required.
Bank Committee: October 17th 1938
6294 On Minute No 6281 (F P Smith - Proposed Loan to discharge existing Mortgages - Austin's Estate, Handsworth and Lyndon Barn Estate, Acock's Green), the following resolution of the Finance Committee was received agreeing to the indemnification desired by the Bank:
With reference
to Minutes Nos 7999/8376 (The Corporation v F P Smith and Others) a resolution of the Bank Committee was submitted. The Chairman also
submitted a report on the matter.
8697 RESOLVED: That the resolution of the Bank Committee be received and entered on the Minutes, and that the action of the Chairman in authorising the Treasurer to inform the General Manager of the Municipal Bank that this Committee will agree to indemnify the Bank Committee in respect of an amount representing the first 5% of the Bank's Valuer's valuation of the properties in question until such time as the principal outstanding has been reduced to 80% of the valuation, be confirmed, it being understood that Mr F P Smith will be prepared to make a cash payment in order to reduce the existing mortgage to a figure representing 85% of the valuation to meet costs already incurred or to be incurred, in connection with the foreclosure action now in process, and to meet any other charges, stamp duties, etc, relating to the proposed transfer of mortgages.
The Committee were informed that Mr Smith has agreed to the conditions in question and the Town Clerk was now proceeding to prepare any necessary documents in accordance with Minute No 6281.
The Town Clerk submitted the following report as to arrangements for the preparation of Mortgages with S J and F P Smith in respect of 18 houses in Coombes Lane, Northfield:
10th October, 1938
Minute No 6236
Re 18 Houses in Coombes
Lane, Northfield.
Mortgagors - Messrs S J and F P Smith.
By the above Minute, I was authorised to prepare 18 separate repayment Mortgages for £300 in substitution for the three progressive Mortgages now in existence. The ground rent on each of the houses was only to be £6 per annum.
I have to report that the terms, suggested in the General Manager's Report cannot be carried out without a legal apportionment by the Lessors of the respective ground rents of £36, reserved by each of the three Leases. The Freeholders, however, will not consent, nor will they join in the Mortgage Deeds to release their right of re-entry and forfeiture.
The Borrowers' Solicitors do not particularly require a separate Mortgage for each house and they agree with me that it would be preferable to have only three ordinary repayment Mortgages, one in respect of each Lease.
Accordingly, I shall be glad to have a further resolution for the above Minute.
6298 RESOLVED:- That the instructions to the Town Clerk contained in Minute No 6236 be amended so that only 3 Repayment Mortgages (one in respect of each Lease) be entered into instead of 18 separate Repayment Mortgages as previously suggested, and that the Town Clerk be instructed to prepare any necessary documents accordingly, affixing the Corporate Seal thereto if required.
The Town Clerk submitted the following report as to the action proposed to be taken arising out of judgement against Messrs Hemlingford Estates, in consequence of non-payment of ground rent under the Head Leases in respect of ninety-two houses:
14th October 1938
21, 27, 35 and 41 Calthorpe Road, Handsworth, (Perrins, Gaskins, Wood and Parsons).
11, Barnaston Road, Hall Green
(Gummer).
13 and 60 Cubley Road, Hall Green. (Howard and Jarvis).
151 and 171 Sarehole Road, Hall Green. (Allison and Preece).
The above Underleasehold premises are in mortgage to the Municipal Bank in respect of advances made to the borrowers.
In consequence of the non-payment of the respective ground rents under the headleases, the freeholders have obtained Judgments by default against the lessees (Hemlingford Estates Co Ltd) in seven actions in respect of 92 houses.
The headleases became forfeited but neither the Bank nor their borrowers were aware of the proceedings until after Judgment, when notice was given of the intended application for vacant possession.
I immediately got into touch with the freeholders' Solicitors and have been assured by them that they are anxious to put the matter right at the minimum of expense and consequently, pending negotiations, they will not enforce the Judgments.
A meeting of Solicitors acting for all the underleases has been held and , in order to save considerable expense, one application is being made to the Court for relief and, no doubt, there will be an Order under which the owners will hold their respective properties direct from the freeholders.
Each party interested in the houses will, of course, have to contribute towards the costs of the proceedings and the balance of the ground rents due to the freeholders and any damages, if demanded. It is suggested that Mortgagees pay one half of the proportion payable by their respective Borrowers.
Nine of the houses are in mortgage to the Municipal Bank and, as no separate application need be made on their behalf, I consider that assistance should be given to the Bank's borrowers to at least one half of the costs payable by them.
I shall be glad to have your authority.
6299 RESOLVED:- That the foregoing Report of the Town Clerk be approved and the suggested contribution towards the costs of the proceedings mentioned therein be authorised; and that the Town Clerk, in conference, where necessary, with the Chairman, Alderman Morland and the General Manager, be empowered to take any further action that may be deemed advisable in the matter.