Chelsea Mortgage Complaint

[jollie79]

Dear Forum Members,

I post here in the hope that I can appeal to someone who fell foul to the Chelsea Building Society valuation fraud as publicised nationally in August 2009.

Theevidence that I have a buy-to-let mortgage based on a considerably inflatedvaluation (given by a 3rd party surveyor- appointed by my mortgage lender: Chelsea Building Society) becomes more and more compelling. Not least on accountof the huge fraud that was exposed on B2L loans from CBS and the overallcollusion to inflate valuations between 2006-2008, (revealed in Aug 09 where CBS had to write off £40m to compensate over-valued loans). Ignorantly I was unaware of this at that time but always thought the huge discrepancy (in spite of downturn) between initial valuation and open market value highly suspicious.

Iam looking in the first instance for any buy-to-let customers with CBS who havepursued action and achieved a positive resolution or recompense, if anyone hasany relevant information I would be truly grateful. I made this purchase in2007 and it has been nothing but a noose around my kneck ever since curtailingany further investment and hemorrhaging money on a monthly basis. I believestrongly that a property valued at 110k in 2007 that is now approximately at75k in 2011 - a drop that is nowhere near in line with the overall depreciationof the area is quite definitely a case for the ombudsman.

Many thanks & kind regards

Oliver Johnson

[Mortitia]

Oliver,

This is definitely a case of 'caveat emptor' (buyer beware). Property prices go down as well as up. I take it this was your first foray into buy to let? What made you enter the market - the thought of easy money?

Surely the Building Society Ombudsman is the place to go with your complaint?

Mortitia

[Melboy]

I would say Oliver that your property drop price from £110k to £75k is about right for the year you purchased.

1000's of people are in the same situation as you are right now and there is nothing you can do about it because the valuation at the time was probably in line with what property was achieving by way of pricing.

If your property had gone up by £35k would you feel the same way? Would you pay Chelsea part of the profits achieved?....no, I didn't think so.

Which reminds me back in the the 1990's there was a mortgage scheme whereby any rise in property prices meant that when you came to sell that property a percentage of the profits were passed back to the mortgage company and I remember the affected people complaining that it wasn't fair to do this.....tough.....nobody forces you sign anything.

Mel.

[Eliteclaimsservices]

Not so, you might like to research the following:

http://www.eliteclaimsservices.co.uk/surveyors-negligence-claims.html

David

[Eliteclaimsservices]

The aspect of any potential claim in this matter would fall on the facts, what I will add is simply this, we have or are in the process of recovering such claims for our clients in matters such as this.

I will add, that lenders are now issuing similar proceedings against surveyors for negligent valuations of residential properties. Now that speaks volumes!

[Carryon Regardless]

"lenders are now issuing similar proceedings against surveyors for negligent valuations of residential properties"

I hope we don't see too much success here.

The property market will be slow enough to recover anyway, if in the future surveyors in fear will only give safe conservative valuations it will enhance a lower value situation.

I as many have suffered property value devastation since 2008, I don't like it but I took my chances.

Many are receiving great assistance from the low interest, that should be considered in the whole picture.

[Eliteclaimsservices]

--I hope we don't see too much success here.

--The property market will be slow enough to recover anyway, if in the future surveyors in fear will only -give safe conservative valuations it will enhance a lower value situation.

therefore, don't you feel this approach would only serve to stabilise the housing Market in the future, thus going some way to prevent the "boom and bust" element of property purchase,

[Melboy]

It has just Happened here with a property being sold by a neigbour.

EA Values at £349,000

The property is sold in 2 days to a person who is desperate to move to this location.

Offers £ 300,000

Offer rejected.......and rightly so imo.

Offer comes back at £325,000 and as this is a cash buyer and can proceed quickly and the fact that the Vendor is elderly and recently bereaved and moving to live with his Son the offer is accepted.

Surveyer visits... does the business and then advises the client that in his opinion the property is not worth the selling price of £325K.

Whatever happened to sale value being "what someone is prepared to pay"?

I believe the sale is still going through but not sure of the new price, if any.

The property is definitely worth around £325,000 even in these austere times.

Mel.

[Grampa]

In my area the surveyors go into the estate agents to get comparisons when they go to value a property and we all know some of those prices are over inflated.

[Carryon Regardless]

Surveyors may have valued with confidence prior to 2008, but that was a reflection of the lenders being so keen to lend and buyers afraid of missing out by not moving fast.

Now the market is very different, lenders are reluctant to lend so the 'stabilising' is already in place.

Let the market find it's natural state, then I would hope for some legislative controls (hopefully intelligent for a change) to prevent crazy lending practices.

The demand of the available supply, without ridiculously easy ways to borrow money, will be enough to regulate the future markets.

Let surveyors do their job without the fear of compensation seeking litigation.

I am sure there are agents, lawyers, self serving hot shots will be eager to help the 'poor abused', that don't yet realise they have been abused till one of the aforementioned tells 'em they have been.

They should stick to following ambulances.

[Carryon Regardless]

I have been aware of surveyors that will study actual achieved prices from the net, easy to get, I do it regularly to get an idea of market movement.

This seems a reasonable way to assess a true local value as Estate Agents can ask but the achieved price is actual.

[kerbut]

In my area the surveyors go into the estate agents to get comparisons when they go to value a property and we all know some of those prices are over inflated.

I don't think they need to do that these days Grandpa, they just look at Rightmoves.

[Grampa]

On average I get 2 visits in the office and a couple of phone calls a week from surveyors wanting that sort of info. Yes your are right you can can a lot of info from Rightmove but when theres no comparisons or the property is a bit unique who do they turn to.

[Eliteclaimsservices]

In my area the surveyors go into the estate agents to get comparisons when they go to value a property and we all know some of those prices are over inflated.

I think you have hit the nail on the here, with the surveyor relying on the estate agent’s (of whom had a clear conflict of interest) advice. The High Court dictum, held that the surveyor had a ‘third party duty of care’ towards the purchaser, this is a departure from the historic legal position.

[Eliteclaimsservices]

Surveyors may have valued with confidence prior to 2008, but that was a reflection of the lenders being so keen to lend and buyers afraid of missing out by not moving fast.

>> with respect, this is not true!

Now the market is very different, lenders are reluctant to lend so the 'stabilising' is already in place.

Let the market find it's natural state, then I would hope for some legislative controls (hopefully intelligent for a change) to prevent crazy lending practices.

>> are you suggesting that parliament legislate against the free market, by introducing credit union control?

The demand of the available supply, without ridiculously easy ways to borrow money, will be enough to regulate the future markets.

Let surveyors do their job without the fear of compensation seeking litigation.

>> if the surveyors did their job, there would no need to compensate now.

I am sure there are agents, lawyers, self serving hot shots will be eager to help the 'poor abused', that don't yet realise they have been abused till one of the aforementioned tells 'em they have been. They should stick to following ambulances.

>> The recent High Court ruling is not with you on this element, it held the surveyor owed a clear duty of care, of which was breached, therefore causing the purchaser to suffer a loss. In law, this is all that is needed to establish a level of quantum due and owing (money). I am a bit bemused as to why you refer lawyers that follow the law as "ambulance chasers", when we are simply applying the law as it stands.

[Grampa]

I think you have hit the nail on the here, with the surveyor relying on the estate agent's (of whom had a clear conflict of interest) advice. The High Court dictum, held that the surveyor had a 'third party duty of care' towards the purchaser, this is a departure from the historic legal position.

Thats why estate agents dont (or should not) give valuations. They give market appraisals which is differant.

[Eliteclaimsservices]

Thats why estate agents dont (or should not) give valuations. They give market appraisals which is differant.

I agree, however the 'should nots' in your post, are the ones that have, in my view, created the legal ground for compensation

[Carryon Regardless]

>> with respect, this is not true!

Why not ?

>> are you suggesting that parliament legislate against the free market, by introducing credit union control?

The banking sector already has legislative controls, do you believe they have a free hand to do as they please ?

>> if the surveyors did their job, there would no need to compensate now.

Surveyors, in the main, will have given a valuation relative to the situation of the day. I don't see the reduction in property market values as being their responsibility.

The property values were rising as high as 30% pa, the lenders were confident that any high valuation would soon be passed by the future inflation, an example here is 100% (and more mortgages) with cash back, legals and surveys paid for. And you wish to blame the surveyors for being irresponsible.

You view that they should have suppressed the market by giving 'low' valuations, there for they now should compensate those that jumped in with the pound signs flashing before their eyes. I don't share your view of who is responsible, or your justification for making revenue at the expense of those that are recently presented as a viable target.

>> The recent High Court ruling is not with you on this element, it held the surveyor owed a clear duty of care, of which was breached, therefore causing the purchaser to suffer a loss. In law, this is all that is needed to establish a level of quantum due and owing (money). I am a bit bemused as to why you refer lawyers that follow the law as "ambulance chasers", when we are simply applying the law as it stands.

The High Court is the start of such claims, maybe you should defer your excitement until the progressive appeals process has been followed.

There may be some cases of individuals who have acted in a corrupt fashion but historically this was to aid in the receiving greater mortgage funds for a corrupt end, not to aid individuals in gaining a mortgage for more domestic reasons. There is limited incentive for a surveyor to take a back hander so Joe Blogs can buy a house.

To feel the flood gates have been opened due to the ruling of 23rd May is likely to be premature.

Should this develop into an attack against a large number of surveyors do you not think that as a collective body there will be at least one progressive appeal ?

High Court and Appeal Court findings are overturned regularly, tis early days.

[Eliteclaimsservices]

>> with respect, this is not true!

Why not ?

>>> for reason of the framework that existed then, also exists now. One merely has to listen to the radio today with the CML allegedly being in talks with lenders, in order to assist first time buyers with a 95% LTV product.

>> are you suggesting that parliament legislate against the free market, by introducing credit union control?

The banking sector already has legislative controls, do you believe they have a free hand to do as they please ?

>>> would you assist, by directing me to such legislation that control as you suggest; the lender, the borrower and the surveyor

>> if the surveyors did their job, there would no need to compensate now.

Surveyors, in the main, will have given a valuation relative to the situation of the day. I don't see the reduction in property market values as being their responsibility.

The property values were rising as high as 30% pa, the lenders were confident that any high valuation would soon be passed by the future inflation, an example here is 100% (and more mortgages) with cash back, legals and surveys paid for. And you wish to blame the surveyors for being irresponsible.

You view that they should have suppressed the market by giving 'low' valuations, there for they now should compensate those that jumped in with the pound signs flashing before their eyes. I don't share your view of who is responsible, or your justification for making revenue at the expense of those that are recently presented as a viable target.

>>> I dont wish to annoy, however, it is a truism, that the lynch pin of any property market in the main the surveyor and, the HC have held that they owe a retrospective third party duty of care, for both the rental and capital assessment at the point of valuation (only)

>> The recent High Court ruling is not with you on this element, it held the surveyor owed a clear duty of care, of which was breached, therefore causing the purchaser to suffer a loss. In law, this is all that is needed to establish a level of quantum due and owing (money). I am a bit bemused as to why you refer lawyers that follow the law as "ambulance chasers", when we are simply applying the law as it stands.

The High Court is the start of such claims, maybe you should defer your excitement until the progressive appeals process has been followed.

>>> indeed, however, consensus is the ruling will be upheld, albeit on individual facts pertaining to each case

There may be some cases of individuals who have acted in a corrupt fashion but historically this was to aid in the receiving greater mortgage funds for a corrupt end, not to aid individuals in gaining a mortgage for more domestic reasons. There is limited incentive for a surveyor to take a back hander so Joe Blogs can buy a house.

>>> I have made no such suggestion, in any event, what you aver is a different subject altogether.

To feel the flood gates have been opened due to the ruling of 23rd May is likely to be premature.

Should this develop into an attack against a large number of surveyors do you not think that as a collective body there will be at least one progressive appeal ?

>>> already done

High Court and Appeal Court findings are overturned regularly, tis early days.

>>> stats show otherwise, however, I am willing to be moved on the matter

<BR style="mso-special-character: line-break"><BR style="mso-special-character: line-break">

[SPEEDTWIN]

A buy-to-let landlord has won a long-running legal case

against a surveyor judged to have overestimated the rental income

on a new-build flat, paving the way for future challenges from

other aggrieved investors.

Emmett Scullion, a self-employed builder from Portsmouth,

bought an apartment in Cobham, Surrey, to augment his pension.

The property was valued at its asking price of £352,950 in a

valuation by local surveying firm Colleys, now part of Lloyds

Bank. The survey said the flat could be let for £2,000 a month.

Scullion bought the apartment in 2002, based on the figures

given in the valuation, but found he could let it only at about 50%

of the surveyor's estimate. He sold the property in 2006 at a loss,

a full year before the downturn in the housing market.

He subsequently took legal action against Colleys, claiming

the surveyor owed him a duty of care, and was awarded £72,000

this month. The damages cover his loss of rental income and the

transaction costs of purchasing and then selling the flat.

Legal experts say this could encourage other buyers to take

similar action.

From Residential Landlord winter 2010/11

[Gee]

Some very good points have been made here, however I would disagree with ECS, you would appear to have reinvented the wheel! It has been well established in case law for 25 years or so that the surveyor owed a duty of care to the applicant. Lenders and purchasers have been able to make claims against surveyors for years particularly in a falling market. When you think of the millions of valuations that are carried out every year, it is perhaps no surprise that a small percentage are found to be negligent - just like any other profession.

The Scullion case is not ground breaking, it is only of interest because it is a Buy to Let case, unlike the purchase of a home to live in by a layman, who may not know what they are doing, As I understand it, Scullion was in the property business and at the time of purchase thought that the purchase price and proposed rents was correct and would know about the pitfalls of Buy to Let and the risk of prices falling. The surveyor felt it was a bit rich that Scullion then claimed that he relied upon the valuers report which was carried out for the lender and the surveyors defence was that Scullion knew what he was doing and was not therefore entitled to make a claim. Rightly or wrongly the Courts have found in Scullions favour and from memory the surveyor was only deemed to be negligent in carrying out the rental valuation. It is hardly a ground breaking case. Rather like AST cases, the law favours the tenants and applicants. An increase in claims from people looking for someone to blame for their own greed following the collapse of the property market is to be expected. Whether they succeed....

Upon a point of interest, in carrying out a valuation the surveyor should take into consideration the recent sales of 2 or 3 similar properties in order to reach an opinion of value (known as comparables). The surveyor will have a very large data base of comparables which will include information such as size, accomodation and condition etc, however there will be times when he has seen a property for which he is lacking sufficient comparables and as such he will talk to a number of local estate agents (as Grandpa rightly said) and make specific enquiries as to what has been recently sold and their size, condition etc. This information is often very up to date. The information on the sales in Rightmove will be at least 3 months old and do not give any indication of the size, accommodation and condition. Often the description of house type is wrong and some sales do not appear at all. A surveyor who relies upon Rightmove will be found out at audit stage. The asking prices in Right move are little help because they are not actual sales, but they are of interest if there are similar properties available on Rightmove for £100K and the surveyor is looking at a property where a figure of say £130k has been agreed.

As for the original post, in 25 years I have never been told by a Lender how to value, they rely upon our expertise, they will ask for valuations to be reconsidered if the applicant complains, however a polite request for relevant comparables to justify the request normally makes the applicant reconsider. This tactic does not deter some mortgage brokers, who just make it all up and should be imprisioned for fraud - just a personal opinion!

Rant over!

Gee

[Eliteclaimsservices]

Some very good points have been made here, however I would disagree with ECS, you would appear to have reinvented the wheel! It has been well established in case law for 25 years or so that the surveyor owed a duty of care to the applicant. Lenders and purchasers have been able to make claims against surveyors for years particularly in a falling market. When you think of the millions of valuations that are carried out every year, it is perhaps no surprise that a small percentage are found to be negligent - just like any other profession.

>> I wish we could reinvent the wheel, that said, it was a HC judge that changed the law. By the above i assume you refer to the case in Smith v Bush [1990] 1 AC 831, where the ratio was held that a purchaser of a >>modest home for residential purposes is owed a duty of care by the lender's valuer notwithstanding an exclusion clause in the valuation report and the absence of a contractual relationship. Just on a minor point this >>was 20 years ago. The distinguishing element in Scullion and Smith was that the court held that Scullion was an "ordinary residential purchaser". Thereby, recognizing the third party duty of care owed by the surveyor >>and thus allowing BTL investors to claim. Whereas, under Smith hitherto, this was not a legal head of claim.

The Scullion case is not ground breaking, it is only of interest because it is a Buy to Let case, unlike the purchase of a home to live in by a layman, who may not know what they are doing, As I understand it, Scullion was in the property business and at the time of purchase thought that the purchase price and proposed rents was correct and would know about the pitfalls of Buy to Let and the risk of prices falling. The surveyor felt it was a bit rich that Scullion then claimed that he relied upon the valuers report which was carried out for the lender and the surveyors defence was that Scullion knew what he was doing and was not therefore entitled to make a claim. Rightly or wrongly the Courts have found in Scullions favour and from memory the surveyor was only deemed to be negligent in carrying out the rental valuation. It is hardly a ground breaking case. Rather like AST cases, the law favours the tenants and applicants. An increase in claims from people looking for someone to blame for their own greed following the collapse of the property market is to be expected. Whether they succeed....

>>I am not with you on the matter of ground breaking, I simply ask, "what say the BTL investor that has been wronged to the average extent of £45,000"? This judgment is most certainly ground breaking, if not then why >>has it got the all those that exist in the surveyor's profession in a tiz, also, why have lenders come on board in likewise suits?

Upon a point of interest, in carrying out a valuation the surveyor should take into consideration the recent sales of 2 or 3 similar properties in order to reach an opinion of value (known as comparables). The surveyor will have a very large data base of comparables which will include information such as size, accommodation and condition etc, however there will be times when he has seen a property for which he is lacking sufficient comparables and as such he will talk to a number of local estate agents (as Grandpa rightly said) and make specific enquiries as to what has been recently sold and their size, condition etc. This information is often very up to date. The information on the sales in Rightmove will be at least 3 months old and do not give any indication of the size, accommodation and condition. Often the description of house type is wrong and some sales do not appear at all. A surveyor who relies upon Rightmove will be found out at audit stage. The asking prices in Right move are little help because they are not actual sales, but they are of interest if there are similar properties available on Rightmove for £100K and the surveyor is looking at a property where a figure of say £130k has been agreed.

>> this is a moot point, one which was argued and summary dismissed in the HC by the judge.

As for the original post, in 25 years I have never been told by a Lender how to value, they rely upon our expertise, they will ask for valuations to be reconsidered if the applicant complains, however a polite request for relevant comparables to justify the request normally makes the applicant reconsider. This tactic does not deter some mortgage brokers, who just make it all up and should be imprisoned for fraud - just a personal opinion!

>> this is entirely your opinion and does not reflect mine

Rant over!

Gee

[Gee]

Afternoon ECS.

What I am trying to point out is that you and your firm appear to be trying to make out that on the basis of the recent Scullion case (via your website link), that buy to let puchasers can now sue a surveyor if they have been negligent, the implication being that before this case they couldn't and that the surveying profession is now in a tiz and that lenders are now coming on board. What rubbish!

As I said previously, this duty of care was established at least 25 years ago, well I was wrong - the Yianni case case 30 years old (how time flies by).

The Scullion case, in which it appears the surveyor was negligent, the solicitors for the surveyor/insurer tried a new defence that Scullion was a professional and should know what he was doing, the courts disagreed and this defence was rejected and compensation was awarded because of the negligence. The effect on the surveying profession, the lenders and purchasers was nil.

Surveyors are now just as liable now as we were 30 years ago, we are well used to the liability. The case has no bearing on the lenders, because they are the client (not a third party) - and we have always had a Duty of Care to the Client. The purchaser is no better or worse off than before. It is the Status Quo, so no tiz, I am afraid.

Lenders are not now coming on board because of the Scullion case, it is not applicable to them. As I said before, in the event of a fall in the housing market, there is always an increase in claims from Lenders, who have been left with a vandalised repossessed house that sells for considerably less than it was worth at the height of the market when it was in good condition. This time I expect considerably more, as lenders look for someone to blame for their irresponsible lending policies and the fall in the market. These attempts by the lenders are often a try on (like most alleged negligence claims) and just fizzle out, but wastes considerable time and money.

In answer to the original post, both Mortitia and Melboy, correctly indicated that the property market is subject to rises and falls and you should not look to blame someone if it falls. Indeed, your website even acknowledges that losses due to falls in the market are irrecoverable, so why then do you disagree with our most senior members and your own website in your 1st post!

I don't understand your moot point, I was merely explaining to the Forum, how a surveyor obtains comparable evidence, particularly the quality of evidence, rather than the perceived idea that we just look asking prices on Rightmove etc.

I don't understand your last point either. I am a Chartered Surveyor, who for 25 years worked directly and as a panel surveyor for all the major lending Institutions. They issue lots of instructions on what properties they won't lend on, how quickly they want the job doing and most importantly how they want the form filling in. I repeat, the one thing they do is to tell you how to value. It is a fact not an opinion, on what basis is your opposing opininion formed and which instituions tell the surveyors how to value? I really am interested.

Regards

Gee

[Gee]

ECS

Apologies - the last paragraph should read, the one thing they do NOT do is tell you is how to value.

[Eliteclaimsservices]

Afternoon ECS.

What I am trying to point out is that you and your firm appear to be trying to make out that on the basis of the recent Scullion case (via your website link), that buy to let puchasers can now sue a surveyor if they have been negligent, the implication being that before this case they couldn't and that the surveying profession is now in a tiz and that lenders are now coming on board. What rubbish!

>> "what rubbish" is a legal term i would not consider placing on a pleading! that said, the ratio of the judgment speaks for itself, together with lenders now suing surveyor firms. Therefore, i suggest at best you are mistaken, by the use of the aforementioned phrase. Just to clarify, third party duty of care, was not a head of damage prior to Scullion, if you disagree, please provide reference to your authority on the matter.

As I said previously, this duty of care was established at least 25 years ago, well I was wrong - the Yianni case case 30 years old (how time flies by).

>> you are mistaken on this point, again as above, please provide authority, if possible

The Scullion case, in which it appears the surveyor was negligent, the solicitors for the surveyor/insurer tried a new defence that Scullion was a professional and should know what he was doing, the courts disagreed and this defence was rejected and compensation was awarded because of the negligence. The effect on the surveying profession, the lenders and purchasers was nil.

>> i am not sure the point you are making here?

Surveyors are now just as liable now as we were 30 years ago, we are well used to the liability. The case has no bearing on the lenders, because they are the client (not a third party) - and we have always had a Duty of Care to the Client. The purchaser is no better or worse off than before. It is the Status Quo, so no tiz, I am afraid.

>> You seem to be agruing against your earlier remarks above.

Lenders are not now coming on board because of the Scullion case, it is not applicable to them. As I said before, in the event of a fall in the housing market, there is always an increase in claims from Lenders, who have been left with a vandalised repossessed house that sells for considerably less than it was worth at the height of the market when it was in good condition. This time I expect considerably more, as lenders look for someone to blame for their irresponsible lending policies and the fall in the market. These attempts by the lenders are often a try on (like most alleged negligence claims) and just fizzle out, but wastes considerable time and money.

>> I cant move your point any further, i feel time will tell in any event.

In answer to the original post, both Mortitia and Melboy, correctly indicated that the property market is subject to rises and falls and you should not look to blame someone if it falls. Indeed, your website even acknowledges that losses due to falls in the market are irrecoverable, so why then do you disagree with our most senior members and your own website in your 1st post!

>> quantum is assessed on the valuation at the relevant time and not further down the line, I believe this is common ground.

I don't understand your last point either. I am a Chartered Surveyor, who for 25 years worked directly and as a panel surveyor for all the major lending Institutions. They issue lots of instructions on what properties they won't lend on, how quickly they want the job doing and most importantly how they want the form filling in. I repeat, the one thing they do is to tell you how to value. It is a fact not an opinion, on what basis is your opposing opininion formed and which instituions tell the surveyors how to value? I really am interested.

>> i dont understand this question, sorry