Leeds Building Society has buckled under pressure from an adviser after it frustrated a client's attempt to take out a mortgage to buy a £1.3m house.
Alan Lakey, director at Highclere Financial, said his client had been left "angry and disappointed" at numerous stages of the process to take out a £940,000 mortgage.
Mark Douglas, who was already a client of Leeds, faced problems relating to lending criteria and the solicitor used, which prolonged the buying process and threatened to cost him hundreds of pounds more.
The problems started at the mortgage valuation when Leeds refused to lend the money as the property had an annex with an outside access door and separate kitchen which put it outside of Leeds’ lending policy.
Mr Douglas told Leeds he intended to remove the extra kitchen and the outside door, which would put the property within the lending criteria, and Mr Lakey suggested the mortgage offer include a special condition specifying the kitchen was removed in between exchange of contracts and completion.
This would ensure the property met the criteria and avoided any risk for Leeds.
But in an email to Mr Douglas, a spokesperson from the lender said their ‘initial decision still stood’ despite the client's offer.
At the time, Mr Lakey said the lender's rules were trumping common-sense and he was frustrated that nobody seemed prepared to override the "nonsensical" criteria.
But after several emails and a second consultation with the valuer, the firm agreed to lend on the property with the additional conditions added to the contract.
Mr Douglas then faced about £800 of extra solicitor costs and a major delay to the exchange when Leeds told him he needed to get a different solicitor because his original hire, whose name had been listed on the shared documents for eight weeks, was not on the society’s panel of approved solicitors.
At the time, Mr Lakey was fearful the delay could cause the chain to fall apart as Mr Douglas’ problems with Leeds were holding up a line of buyers and sellers.
He said: "They had the paper contract for eight weeks and they only told him about the problem at the point of exchange. It was unacceptable. Mr Douglas had liaised with his own solicitor who he had already paid some funds to and he could have faced about £800 extra in costs."
But after Mr Lakey liaised with the building society, Leeds eventually allowed Mr Douglas to carry on with his own solicitor, while the lender would use its own one from its panel.
Mr Lakey said: "Initially, Leeds was content to follow that well-trodden path of ignoring common sense in favour of obeying the dictates of an ill-thought out rule-book.
"Eventually, practicality and reasonableness managed to insinuate itself into their mindset and they have been far more flexible and are now bending over backwards to assist him.
"They have agreed to increase the loan size to £980,000, have allowed him three months to carry out the structural changes and have also sent him a hamper by way of saying sorry."
Martese Carton, head of intermediary distribution at Leeds Building Society, said: "Where possible, we will always work with customers seeking to port their existing mortgage to a new property.
"As is standard practice for a mortgage application of this type, we instructed an independent valuer who, after carrying out a full assessment, advised the property was not suitable security in its current state. Working with the customer, the valuer has agreed a small number of physical modifications, which would make the property suitable for use as security.
"The borrower probably would have received exactly the same response from any lender. The valuer who works for us also works for other lenders and their advice would have been the same in this situation."
It added: "Regrettably, the proposed conveyancer was not on our panel. While the panel is published on our website, we appreciate that this case has a number of challenging characteristics. For this reason, we have waived the panel membership application fee."
imogen.tew@ft.com
