At closing, Mortgage Funding 2008-1 PLC issued the class A and B notes and used part of the proceeds to acquire the loan pool from the sellers, Preferred Mortgages Ltd. (PML) and Southern Pacific Mortgage Ltd. (SPML).

Without reading the actual prospectus, it would be hard to conclude that it is anything other than a normal securitisation transaction.

they just didn’t comply with s.27 and committeed a criminal offence under s.123 when they “did not intend” to register – and the reason for their pretence that they were not the legal owner was to shaft the consumer and to avoid the regulator and avoid taxes such as withholding tax, income tax and corporate tax.

To enable me to fully respond, can someone please clarify one point for me.

s.123 of the LRA 2002 says:

123 Suppression of information

(1)A person commits an offence if in the course of proceedings relating to registration under this Act he suppresses information with the intention of—

(a)concealing a person’s right or claim, or

(b)substantiating a false claim.

Under s.123 there are only two possible offences.

In the course of proceedings relating to the under this act relating to registration under this act (I consider the wording to be very importantant - "proceedings relating to registration")

1) he suppresses information with the intention of concealing a person’s right or claim

2) he suppresses information with the intention substantiating a false claim.

This begs a number of questions

a) Can respossession hearings be determined to be proceedings relating to registration under the LRA 2002.

b) As a borrower, what specific right or what specific claim (bearing in mind that any right or claim would be against the legal title holder) has been concealed.

c) What false claim has been substantiated.

If they answer to a) is no, then no offence has been committed. However, if the answer to a) is yes we have to look at b) and c).

So to enable me to respond can someone please clarify for me what specific right or specific claim as a borrower has been concealed or what false claim has been substantiated.

This development of having their legal title “perfected” (rather than transferred) has more to do with PwC and the insolvency/bankruptcy issues than with anything to do with the rule of law and consumers. As I’ve always said, the SPV’s legal title was “attached” immediately that SPPL signed the mortgage sale agreement – but the SPV never “pefected” its legal title, as it is required to do by law, by registering at the LR. The current load of registrations at the LR is merely the “perfection” of their legal title rather than the “transfer” of their legal title.

Can someone please explain the above to me... Especially with regard to the meaning of "attached", "perfection" and "transfer".

I really need to know how the legal title can be transferred without first being perfected

(with supporting evidence would be nice)

Personally I would read

"attached" as meaning the purchase by the SPV of the beneficial interest in the mortgages.

"perfection" as meaning the express notice to borrowers (as recently sent to a number of SPPL borrowers)

"transfer" as meaning the transfer of the legal title.

The legalities of ownership can't be ignored.......

they just didn’t comply with s.27 and committeed a criminal offence under s.123 when they “did not intend” to register – and the reason for their pretence that they were not the legal owner was to shaft the consumer and to avoid the regulator and avoid taxes such as withholding tax, income tax and corporate tax.

While we are looking at what the legislation actually says, this is what s.27 says:

27 Dispositions required to be registered

(1)If a disposition of a registered estate or registered charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met.

(2)In the case of a registered estate, the following are the dispositions which are required to be completed by registration—

(a)a transfer,

(b)where the registered estate is an estate in land, the grant of a term of years absolute—

(i)for a term of more than seven years from the date of the grant,

(ii)to take effect in possession after the end of the period of three months beginning with the date of the grant,

(iii)under which the right to possession is discontinuous,

(iv)in pursuance of Part 5 of the Housing Act 1985 (c. 68 ) (the right to buy), or

(v)in circumstances where section 171A of that Act applies (disposal by landlord which leads to a person no longer being a secure tenant),

©where the registered estate is a franchise or manor, the grant of a lease,

(d)the express grant or reservation of an interest of a kind falling within section 1(2)(a) of the Law of Property Act 1925 (c. 20), other than one which is capable of being registered under the Commons Registration Act 1965 (c. 64),

(e)the express grant or reservation of an interest of a kind falling within section 1(2)(b) or (e) of the Law of Property Act 1925, and

(f)the grant of a legal charge.

(3)In the case of a registered charge, the following are the dispositions which are required to be completed by registration—

(a)a transfer, and

(b)the grant of a sub-charge.

(4)Schedule 2 to this Act (which deals with the relevant registration requirements) has effect.

(5)This section applies to dispositions by operation of law as it applies to other dispositions, but with the exception of the following—

(a)a transfer on the death or bankruptcy of an individual proprietor,

(b)a transfer on the dissolution of a corporate proprietor, and

©the creation of a legal charge which is a local land charge.

(6)Rules may make provision about applications to the registrar for the purpose of meeting registration requirements under this section.

(7)In subsection (2)(d), the reference to express grant does not include grant as a result of the operation of section 62 of the Law of Property Act 1925 (c. 20).

Except for the confirmation of completing by registration, I am someone stuck on this one too..

Can someone please clarify or explain this one for me too....

Many Thanks

A party cannot appeal a decision made in bankruptcy proceedings by reason only of a personal interest in the outcome. An economic interest is a pre-requisite.     This was confirmed by the court in Sands and another v Monem and another, in which the bankrupt had transferred the interest in his home to his wife before being made bankrupt. The transfer was made allegedly in order to settle a debt, although this was not reflected in the documentation. That transfer was successfully set aside as a preference by the bankrupt's trustee.

The bankrupt appealed against that order, arguing that his wife had an equitable charge over the property. The trustee argued that the bankrupt had no standing to make the application as he had no economic interest in the property, whatever the outcome. If the application succeeded, the transfer to the wife would be reinstated but the bankrupt would not gain any interest in the property. If the appeal failed, his interest in the property formed part of his estate but there was no prospect of a surplus being returned to him.

The court confirmed that as the bankrupt had no economic interest in the outcome of the appeal, he had no standing to bring the application. The court did not therefore have to go on and consider the merits of the appeal.

Things to consider

It is interesting to note that the bankrupt's wife did not appeal the decision, despite the fact that she would have had an economic interest in the outcome

Nothing to do with honouring the rule of law,

The phrase "rule of law" has been used numerous times on this thread with regard to securitisation.

While I am asking questions, can someone please confirm what this phrase means.

For me it is with regard to legislation and legal precedents, but obviously in the context it has previously been used it must have another meaning that I am not aware of.....

You see, if the SPV did not have a legal title attached when they gave the Trustee a Form 395 mortgage at Companies House, then the Trustee’s mortgage (which is registered at CH) would be fraud! So, if they want to pretend that the SPV only had an equitable title when they created a LEGAL charge at Companies House, then that legal charge is a fraud and unlawful.

Halsbury's Laws of England states:

586. Securitisation of mortgages.

Securitisation is the sale of a package of mortgage debts to a corporate vehicle (the 'issuer') established for the purpose of issuing securities usually in bearer form such as bonds1. One or more mortgagees (the 'originator') may agree to sell debts and related security to the issuer.

This effects an equitable assignment of the mortgages which is not perfected by notice to the mortgagors or by registration. The issuer is entitled to call for a legal transfer of legal title to the mortgages in certain circumstances such as the persistent default or insolvency of the originator.

The issuer is given an irrevocable

................................................................................................................

To enable me to fully respond, can someone please clarify one point for me.

 

s.123 of the LRA 2002 says:

 

123 Suppression of information..........

...................................................................................

Will have to deal with this one bit at a time.

The way I read it is that the purpose of the originator /lender was to acquire loans for securitisation.These loans were sold to the spv in a true sale but for the fact the spv used its prerogative which it could only do by being the true owner, not to register simply by intentionally not informing the borrower,its benefits by not doing so were preserved yet in all respects it was the true owner of the loan able to set interest rates avoid regulation etc etc.

the right that was concealeed was the spvs true ownership,thats how it reads to me.

The originator retains the powers of the mortgagee, including the right to possession3 but agrees to act in accordance with the instructions of the issuer in relation to matters such as

................................................................................................................

To enable me to fully respond, can someone please clarify one point for me.

 

s.123 of the LRA 2002 says:

 

123 Suppression of information..........

...................................................................................

Will have to deal with this one bit at a time.

The way I read it is that the purpose of the originator /lender was to acquire loans for securitisation.These loans were sold to the spv in a true sale but for the fact the spv used its prerogative which it could only do by being the true owner, not to register simply by intentionally not informing the borrower,its benefits by not doing so were preserved yet in all respects it was the true owner of the loan able to set interest rates avoid regulation etc etc.

the right that was concealeed was the spvs true ownership,thats how it reads to me.

 

Good Afternoon Peter,

 

I would have to question your reference to true ownership. With regards to the land registry and for that matter the entire title to sue issue, it is Legal Ownership....

 

Legal and Equitable titles are derived from ownership. Ownership is the state or fact of exclusive rights and control over property, which may be an object, land/real estate or intellectual property. Ownership involves multiple rights, collectively referred to as title, which may be separated and held by different parties.

 

Title is a legal term for a bundle of rights in a piece of property in which a party may own either a legal interest or an equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document that serves as evidence of ownership. Conveyance of the document may be required in order to transfer ownership in the property to another person. Title is distinct from possession, a right that often accompanies ownership but is not necessarily sufficient to prove it. In many cases, both possession and title may be transferred independently of each other.

 

The equitable title refers to the actual enjoyment and use of a property, whereas a legal title implies actual ownership. An example of such is a trust. In a trust, one person may own the legal title, such as the trustees. Another may own the equitable title such as the beneficiary.

 

A trust is the separating of the legal (legal title) and the beneficial (equitable title) ownership of property. A trust consists of three parties:

 

• Settlor (the owner of both the legal and equitable title aka absolute owner)
  
• Trustee (Administor of the trust, which owns the legal title)
  
• Beneficiary (the owner of the equitable title)
  

In securtisation, the settlor and the trustee is usually the same party (i.e mortgage lender). Therefore, the trustee is granted the legal powers to enforce any rights in relation to the property.

 

The beneficiary is the SPV, which purchases the equitable title to the property. However, as beneficiary and the owner of the equitable title, it does not have any legal powers to enforce any rights in relation to the property.

 

Trusts have always been used as a method of limiting the exposure of assets to taxes and other legal claims as well as to specify the use of those assets in ways not otherwise recognised under the law.

In the scope of a trust, the trustee (mortgage lender) acts to protect the interests of the beneficary (SPV).

 

Therefore, when a mortgage lender instigates repossession proceedings (and the mortgage has been securitised), it is doing so as the trustee of the trust. Therefore, any actual financial loss directly to the mortgage lender is immaterial.

 

I think that Her Majesty's Revenue & Customs (HMRC) explains far simplier than I can:

 

What is a trust?

 

The law of trusts is based upon the concept of English law that property rights can be split into:

• the legal ownership,
  
• and the beneficial interest.
  

A person who is the absolute owner of property has both the legal and beneficial interest in it.

 

This means that the owner will show up as legal owner, e.g. on a land register or on a company register, and will also enjoy any benefit produced by the property.

 

The absolute owner may split the legal interest from the beneficial enjoyment. This can be done by giving the legal ownership to trustees and the beneficial interest to a named beneficiary (or beneficiaries). Alternatively the owner can retain the legal title and make himself a trustee."

The originator retains the powers of the mortgagee, including the right to possession3 but agrees to act in accordance with the instructions of the issuer in relation to matters such as

interest

rates and enforcement.

 

Is this not in direct contravention of fsa rules where an unregulated entity plays an active direct part in a regulated activity?

In direct response to your question, no not really....

The following confirmation is provided by the treasury

http://archive.treasury.gov.uk/docs/2001/mortgage_response.html

And subsequently further confirmed by the implementation of the RAO

Securitisation

15. Most responses agreed with the Government’s view that securitisation should not be compromised by mortgage regulation. However, they suggested that the concept and definition of a rights holder did not meet the Government’s policy of having, at any one time, each mortgage linked to only one FSA authorised firm with mortgage permission. This is because trustees of special purpose vehicles (SPVs) were entitled to take all or most of the key decisions with respect to enforcement and operation of the mortgage loan and meant that the SPV would need FSA authorisation.

16. In the light of these concerns, the Government sought to clarify the position with the industry in order to consider how it could meet its policy whilst not compromising the securitisation market.

17. In the light of these discussions, the construction of the RAO was changed. It no longer relies upon the exercise of rights by a rights holder as a regulated activity. Instead, the RAO focuses on administering the mortgage, and this will be a regulated activity, in addition to ‘entering into a regulated mortgage contract as lender’. The RAO defines administration as notifying the borrower of changes in interest rates or payments due under the contract, or of other matters of which the contract requires, and taking necessary steps to collect or recover payments.

18. The RAO also deals with the extreme circumstances where an administrator, working under contract to a SPV lost its authorisation or went into liquidation. In such circumstances, the SPV could not be authorised to carry on regulated mortgage business as it neither enters into regulated mortgage contracts, nor administers them, and to do either would be a criminal offence. It was also important to take account of the fact that a number of firms could be sub-contracted to do different administration activities and the Government wanted to ensure that only one person was responsible and had permission from FSA to carry on that regulated activity.

19. The Government therefore has put in two exclusions to take account of these circumstances. Firstly, arranging administration by an authorised person is not an authorisable activity, and secondly, a person who administers the mortgage contract under contract from an authorised person would not need to be an authorised.

I am not sure if anyone would dispute that being the legal title holder the original lender (pre-notification) is in the eyes of the law (or rule of law, if you prefer) is the owner

To enable me to fully respond, can someone please clarify one point for me.

 

s.123 of the LRA 2002 says:

 

123 Suppression of information

 

(1)A person commits an offence if in the course of proceedings relating to registration under this Act he suppresses information with the intention of—

(a)concealing a person’s right or claim, or

(b)substantiating a false claim.

 

Under s.123 there are only two possible offences.

 

In the course of proceedings relating to the under this act relating to registration under this act (I consider the wording to be very importantant - "proceedings relating to registration")

 

1) he suppresses information with the intention of concealing a person’s right or claim

2) he suppresses information with the intention substantiating a false claim.

 

This begs a number of questions

 

a) Can respossession hearings be determined to be proceedings relating to registration under the LRA 2002.

b) As a borrower, what specific right or what specific claim (bearing in mind that any right or claim would be against the legal title holder) has been concealed.

c) What false claim has been substantiated.

 

If they answer to a) is no, then no offence has been committed. However, if the answer to a) is yes we have to look at b) and c).

 

So to enable me to respond can someone please clarify for me what specific right or specific claim as a borrower has been concealed or what false claim has been substantiated.

Therefore, the question is still

what right or claim has been concealled

These loans were sold to the spv in a true sale but for the fact the spv used its prerogative which it could only do by being the true owner, not to register simply by intentionally not informing the borrower,its benefits by not doing so were preserved yet in all respects it was the true owner of the loan able to set interest rates avoid regulation etc etc.

the right that was concealeed was the spvs true ownership,thats how it reads to me.

With regard to "true sale"

True Sale

'Courts in the U.S. and UK view true sales and asset isolation differently'

A sale is a sale – except when it’s a loan. 'Lehman Brother's' repo 105, General Growth Properties, and Extended Stay America’s Chapter 11 cases all touch on the complicated issue of sales verses loans and asset isolation. The controversy swirling around Repo 105 is a result of the complex interplay of U.S. case law around repo agreements, true sales opinions, elaborate securitisation structures and accounting rules. Off-balance sheet transactions are currently of particular importance because markets are recovering and any regulatory or opinion practice changes should, ideally, be in place first.

Courts in the U.S. and UK view true sales and asset isolation differently – and both of these concepts are central to securitisation structures and repo agreements. Repo 105 highlights the intersection of cross-border deal structures and true sales opinions that are apparently pushing the limits of U.S. accounting standards. The recent questions posed by Lehman Brother’s bankruptcy examiner could factor in future legal, accounting, and disclosure of off-balance sheet transactions.

The potential glitch in securitisations and repo agreements is when is a "sale" not a sale, but instead a financing or charge. A repo is a form of short-term financing where the borrower agrees to sell a security to a lender and to buy the security (or equivalent security) back from the lender at a fixed price at some later date. Under the U.S. Statement Financial Accounting Standards 140 (SFAS 140), balance sheet de-recognition requires the transferor to surrender control of an asset. To have surrendered control under SFAS 140, a sale which isolates the transferor from the assets must take place – in other words, a “true sale”.

True sales are viewed differently under U.S. and UK law. It basically comes down to substance verses form. In Major’s Furniture Mart, Inc. v. Castle Credit Corporation, Inc., the Third Circuit ruled that a purported sale of furniture receivables was actually a secured loan. The court cited Kelter, Tr. v. American Bankers' Finance Co, which stated, "Courts will not be controlled by the nomenclature the parties apply to their relationship." The appellant court further stated, “The question for the court then is whether the Nature of the recourse and the true nature of the transaction are such that the legal rights and economic consequences of the agreement bear a greater similarity to a financing transaction or to a sale." In the U.S., courts apparently know a sale when they see one and law firms are often leery of offering true sale letters under U.S. law.

UK courts, on the other hand, view true sales in a different light. In Welsh Development Agency v Export Finance Co Ltd, a case centering on receivables of floppy disks the Appeals Court overruled a lower court’s finding that the purported sales agreements were charges because:

“There was no clear touchstone by which it could be said that a document which was not a sham and was expressed as an agreement for sale must as a matter of law amount to no more than the creation of a mortgage or charge on the property expressed to be sold. Looking at the provisions in the master agreement as a whole, it was valid as what it purported to be, namely an agreement for the sale by Parrot to Exfinco of goods about to be sold by Parrot to overseas buyers, and not merely an agreement for secured loans.”

The drastically different rulings by U.S. and British courts on sales versus financing arrangements affect true sale opinions and securitisation structures on both sides of the Atlantic.

"True sale" in the context of English law securitisation structures for existing receivables is used in two contexts. First, the risk that the purported sale will be recharacterised as a loan secured by a mortgage of the receivables, such that the resulting "security" is void for want of registration. Second, the risk that the sale will be set aside under one of the grounds of challenging antecedent transactions under the Insolvency Act. The ground of challenge of a sale to which most attention is paid in English law securitisation is a transaction at an undervalue.

As for recharacterisation risk, under the principles set out in Re George Inglefield, Ltd., as considered and applied by the Court of Appeal in Welsh Development Agency v. Export Finance Co., Ltd. (the Exfinco case), a court could find that the transfer constitutes a sale rather than the incurring of a debt and the granting of a mortgage or other security

interest

.In Re George Inglefield, Ltd., Romer LJ prescribed three indicia that distinguish a sale transaction from a transaction of mortgage or charge:

First, in a sale transaction, the vendor is not entitled to get back the subject matter of the sale by returning to the purchaser the money that has passed between them. In the case of a mortgage or charge, the mortgagor is entitled (until he has been foreclosed) to get back the subject matter of the mortgage or charge by returning to the mortgagee the money that has passed between them.

Second, if a mortgagee realizes the mortgaged property for a sum that is insufficient to repay him, the mortgagee is entitled to recover from the mortgagor any balance, whereas in a sale and purchase contract the purchaser has to bear any loss suffered on a subsequent sale of the asset by him.

Third, if a mortgagee realizes the subject matter of the mortgage for a sum more than sufficient to repay (together with interest and costs), the money that has passed between him and the mortgagor, he has to account to the mortgagor for any surplus. Whereas, in a sale and purchase contract, any profit realised by the purchaser is for the purchaser's account.

The Exfinco case is authority for the proposition that a transaction structured by the parties as a sale will be upheld as such for the purposes of the registration of company charges provisions of the U.K. Companies Act unless either (i) the transaction is, in substance, a mortgage arrangement and not a sale, or (ii) the transaction is a sham.With regard to (i) above, if one or more provisions of the relevant document is inconsistent with a sale, then the court will look to the provisions of the document as a whole to determine the substance of the transaction. None of the indicia of a mortgage identified by Romer LJ in Re George Inglefield, Ltd. is necessarily inconsistent with a sale: a transaction structured as a sale may be upheld as such notwithstanding the fact that it bears all three of these indicia. Indeed, all of the indicia may be present in a transaction without necessarily raising a material risk of recharacterization of the purported sale as a security arrangement. In particular, the extent of recourse to the seller does not raise a particular cause for concern. With regard to (ii) above, the court will find the transaction to be sham where the documents do not represent the intentions of the parties.

 

As a practical matter, significant recharacterisation risk does not arise frequently in an English law, properly documented securitisation of existing receivables. It has, however, arisen in the context of trade receivables securitisation transactions. Practical bankers occasionally have wished to let sellers apply the cash proceeds of "sold" receivables in a manner inconsistent with the sale documents; that is, by treating them as their own. To the extent that there are informal arrangements between the seller and purchaser that represent a departure from what is prescribed in the sale documents, the risk arises that the documents will not be found to represent the intentions of the parties. There is also a risk that the court might possibly treat the transaction as a secured funding arrangement importing a charge, which ought to have been (but which would not be, as a matter of securitisation practice) registered under the Companies Act.

The other context for "true sale" (challenges on undervalue or other grounds) is rarely considered problematic in the context of English law securitisation structures. Undervalue generally is considered in the context of the transaction as a whole, and not only the sale document. This allows deferred consideration and other profit extraction devices to be taken into account. These devices invariably result in the seller, or a member of its group, receiving consideration whose value is not significantly less than the value of the receivable sold by the originator.Other grounds, such as a transaction defrauding creditors, tend to be addressed in transaction opinions for the sake of completeness but do not raise material risks

Good Afternoon Peter,

 

I would have to question your reference to true ownership. With regards to the land registry and for that matter the entire title to sue issue, it is Legal Ownership...

To put it beyond a reasonable doubt exactly who is legally the owner:

Books:

Securitisation Law & Practice in the Face of the Credit Crunch

Read from (bottom of page 21 and continued on page 22 & 23 ) 2.19 Assignments and 2.20 Title Perfection Events

The handbook of European fixed income securities

This relates to commercial mortgage loan securitisation but further confirmation of equitable assignment (page 400) True Sale Transactions

Also with regard to s.136 of the LOP & securitisation

The Law of Corporate Finance ... - Google Books

Under English law.......

This one applies to Australia but I am sure you will get the point

Salomon Smith Barney guide to mortgage-backed and asset-backed securities

There is of course the old favourites

Securitization: The Financial Instrument of the Future by Vinod Kothari

• Publisher: John Wiley & Sons; Har/Cdr edition (18 Aug 2006)
  
• Language English
  
• ISBN-10: 0470821957
  
• ISBN-13: 978-0470821954
  

Page 611 (continued on Page 612)- Equitable Assignment

"Why Equitable Assignment?

"Why do entities resort to equitable assignment? Essentially, to avoid the difficulties involved in full-scale legal transfer. These difficulties may either include having to notify the debtor (as under U.K. or Hong Kong law) or the stamp duties associated with a conveyance that the receivables (as in U.K. and India). Some preconditions for effecting an equitable transfer are:

• There must be an express intention on the part of the transferor to assign receivables.
  
• The receivables must be identified
  
• The buyer must have paid the consideration
  
• Though the obliger is not notified, the transaction must be carried out between the transferor and transferee as if full scale transfer had taken place. Therefore, the seller must not be paying from his general funds, but out of a specific fund or collections from the receivables.
  
• To allow the transferee to proceed against the obligors if the need arises, the transferor should be given a power of attorney authorizing the transferee to collect payments from the obligors.
  
• To support and strengthen the power of attorney specified above, a mandate should also be given requiring the obligors to pay the transferee."
  

And.......

Securitization Law and Practice: In the Face of the Credit Crunch (International Banking & Financial Law Series) by Jan Job de Vries Robbe

• Publisher: Kluwer Law International (30 Jun 2008-)
  
• Language English
  
• ISBN-10: 9041127151
  
• ISBN-13: 978-9041127150
  

Page 399 - 9.26 Legal Risks

"In English Law governed securitization transactions, one of two forms of assignments are used, equitable or legal assignment. If the assignment is equitable only, without notification to the borrower, then it only allows for protection under equity to the SPV as assignee. To ensure full protection at law however, the underlying borrowers must be notified of the assignment. The is generally done after the occurance of certain trigger events, which could indicate an increased risk of insolvency of the seller"

In my opinion, the important segments of the above securitisation structure are:

1) "Equitable Assignment of mortgage loans. The legal title is retained by the Originator (trustee) and the SPV aquires an equitable one (beneficary)"

2) "The SPV, who is the issuer of the MBS (mortgage backed securities) and a bankruptcy remote vehicle, creates, owns in equity and manages the pool of mortgages. He is the new equitable mortgagee."

Point 1, confirms that the originator retains the legal title and the SPV aquires the equitable title. Point 2, confirms that the SPV becomes the new equitable mortgagee, which may explain the letters some caggers have received relating to insurance policies.

3) "He (trustee of the issue) receives a mortgage over the pool of mortgage loans (sub-mortgage) and a floating charge over the SPV's assets in warranty of the over the MBS holders."

The above diagram was taken from:

Innovation in Securitisation: Yearbook 2006 (International Banking & Finance Law) (International Banking & Finance Law Series)

• Publisher: Kluwer Law International (1 Jun 2006)
  
• Language English
  
• ISBN-10: 9041125337
  
• ISBN-13: 978-9041125330
  

Page 126 - Section 3.2 The Role of the Trust in an English Securitisation Process.

In addition to the above books, there is of course case law

Pender 2003

137. I am only concerned of course with the taking of possession, because there was no monetary judgment. I do not see that either section 114 LPA 1925 nor the provisions of the LRA 1925 have impact on the enforcement of the mortgage debt. For there to be a legal assignment of that it seems to me self evident that it must be completed by notice under section 136 LPA 1925 and until so done, even by virtue of section 114, it will remain an equitable assignment only.

Pender 2005 (paragrapgh 109 onwards)

1) In my judgment Mr and Mrs Pender's case on this issue is misconceived. It is common ground that Paragon, as registered proprietor of the Legal Charge, retains legal ownership of it. One incident of its legal ownership – and an essential one at that – is the right to possession of the mortgaged property. I can see no basis upon which it can be contended that an uncompleted agreement to transfer the Legal Charge to the SPV (that is to say an agreement under which, pending completion, the SPV has no more than an equitable interest in the mortgage) can operate in law to divest Paragon of an essential incident of its legal ownership. In my judgment as a matter of principle the right to possession conferred by the Legal Charge remains exercisable by Paragon as the legal owner of the Legal Charge (i.e. as the registered proprietor of it), notwithstanding that Paragon may have transferred the beneficial ownership of the Legal Charge to the SPV.

2) It follows, in my judgment, that Paragon, so long as it remains the registered proprietor of the Legal Charge, is a necessary party to any claim to possession of the Property in right of the Legal Charge.

3) The only question then is whether the SPV should have been joined in the proceedings as an additional claimant. In my judgment, the answer to that question is plainly: No. On the assumption that the consideration for the transfer of the Legal Charge has been paid in full, Paragon has since retained its legal ownership of the Legal Charge as trustee for the SPV (see Whiteley v. Delaney [1914] AC 132 at 141 per Viscount Haldane LC). But it does not follow that in that situation the SPV, as the owner of the Legal Charge in equity, is a necessary party to the claim; and on the facts of the instant case joinder of the SPV is wholly unnecessary. There is, after all, no issue between the SPV and Paragon as to the exercise of the mortgagee's rights under the Legal Charge: indeed the SPV has, by virtue of the administration agreements, expressly authorised Paragon to exercise such rights on its behalf.

4) In my judgment, therefore, there is no substance in the contention that the SPV should have been joined as an additional claimant in the proceedings. Nor, in my judgment, can the fact that Paragon has failed to describe itself as suing in its capacity as trustee affect the validity of the proceedings or of the orders made in the proceedings (in particular, the possession order). In any event, even if that failure could be said to amount to a formal defect in the proceedings (and I do not regard it as such) the court has ample powers under the CPR to correct such defects (e.g. under CPR Pt 17).

5) In my judgment Mr Page's reliance on section 114 of the Law of the Property Act 1925 is wholly misplaced, for the reason which the judge gave: viz. that section 114 is concerned with transfers of mortgages of unregistered land (transfers of mortgages of registered land being dealt with by section 33 of the Land Registration Act 1925). To interpret section 114 as applying also to transfers of mortgages of registered land would produce a fundamental and wholly illogical conflict between the two regimes in relation to transfers of mortgages. Bearing in mind what Lord Oliver of Aylmerton said in Flegg (quoted in paragraph 85 above), I can see no conceivable basis for interpreting section 114 in a way which produces that result and every reason for not doing so. Accordingly I respectfully agree with the observations of this court in Marks with reference to the instant case (see paragraph 95 above).

6) Nor, in my judgment, can Mr Page find any support for his submission in the Land Registration Act 2002, or in the Law Commission Report which preceded it. In my judgment it is verging on the absurd to seek to interpret a provision in a statute by reference to a provision in a different statute enacted some eighty years later.

In any event, I agree with the judge that the administration agreements demonstrate a clear contrary intention, sufficient to disapply section 114 if (contrary to the conclusion which I have just expressed) the section would otherwise apply.

GMAC RFC LIMITED - v - SINCLAIR

1. During the course of the argument my attention has been drawn to an interesting case, namely City Mortgage Corporation Ltd v Reilly and Reilly, which was an unreported decision of Judge Rubery in the Stroke-on-Trent county court, dated 28th November 1997. On analysis that decision does not, in my judgment, assist the applicant for this reason. There the claimant was City Mortgage Corporation Ltd, which was the original lender and mortgagee. The original mortgage was dated 15th March 1996. On I think the same day a transfer of what Judge Rubery held to be the legal and beneficial interest in the charge was transferred to another company called Greenwich International Ltd. The transfer was not dated and it was submitted on behalf of the claimant, which was City Mortgage Corporation Ltd, that it took effect only in equity and not in law. I should add that notice to the defendants of the transfer was given on the same day, 15th March 1996.

2. The judge rejected the claimant's submission and held that the transfer operated as a transfer of the legal interest and that notice of that transfer had been given to the defendant, so that the transferor or assignor, City Mortgage Corporation Ltd, no longer had any rights under the charge. Those rights were vested in the transferee or assignee, namely Greenwich International Ltd. Accordingly, the claim failed.

City Mortgage Corporation Ltd v Reilly and Reilly

An unreported decision, details of judgements as detailed above

That is of course not forgetting the most recent case

BNY Corporate Trustee Services Ltd v Eurosail- UK 2007- 3BL Plc & Ors [2010] EWHC 200

Which clearly states:

"The first step in the securitisation transaction was the acquisition of the benefit of those mortgage loans by the Issuer"

i ponder Equity and the "clean hands" principles here for a moment, a person seeking to rely on equity must have clean hands, if there is wrong doing, such as unfair relationships, then the court will not allow equity to assist

i ponder Equity and the "clean hands" principles here for a moment, a person seeking to rely on equity must have clean hands, if there is wrong doing, such as unfair relationships, then the court will not allow equity to assist

This is similar to the point raised previously by both JonCris and EiE with regard to unfair relationships (feels like years ago now) but for some reason this angle does not appear to have been pursued rather continous attempts to question the title to sue etc...

There is clear evidence to show that the securitisation process does have an adverse effect upon the borrower -

Third party administrator being unable to agree to capitalise arrears

Third party administrator being unable to change the payment date

Third party administrator being unable to change a mortgage to interest only

Third party administrator being unable to offer different interest rate products

etc etc

Going back to the LRA 2002, can it really be said that an offence has been committed ?

To say that one has would of course be ignoring the fact that the charge has not been legally transferred in the first place which in itself voids the arguments with regard to s.27, which by default then makes any argument with regard to an offence totally irrelevent

(of course the above only applies pre notification)

Thanks for that exhaustive dissection.May take a few months to digest but I'll try.

It has been written that we may as well all do away with selling our properties in the normal and traditional way and just use the same contract that the spvs use and sell the equitable title with exclusive occupancy rights to the buyer,this would avoid all the numerous fees and the title could just be sold on ad infinitum,the original owner still being registered as proprietor.The land registry would be almost redundant.

This is similar to the point raised previously by both JonCris and EiE with regard to unfair relationships (feels like years ago now) but for some reason this angle does not appear to have been pursued rather continous attempts to question the title to sue etc...

There is clear evidence to show that the securitisation process does have an adverse effect upon the borrower -

Third party administrator being unable to agree to capitalise arrears

Third party administrator being unable to change the payment date

Third party administrator being unable to change a mortgage to

Thanks for that exhaustive dissection.May take a few months to digest but I'll try.

My apologies Peter, it is just my expression of my frustration of seeing the same old flawed arguments with regard to securitisation being posted time and time again. Without any consideration being given to what the applicable legislation or case law actually states on this topic. Instead mysterious powers of interpretation and translation are used.

I don't know how many times for example Crapstone has posted in this thread about the FOS and charges. How many people have actually bothered to follow her good advice and make a complaint and reclaim charges. Everything needed including a completed template FOS form can be found on this thread.

That should be the first place people start, following Crapstone's lead and reclaim charges... If you want to hit these companies where it hurts, hit them in their pockets.... refunds cost money, complaints cost money and for these companies within the current climate money is in short supply.

In addition to Crapstones sound advice, both JonCris and EiE have posted with regard to unfair relationships etc... Why has this not been pursued further, it gives the Courts far reaching powers...

When I read some of the posts (including mine) it just looks like a battle of ego's like stag's clashing horns..... They are mostly pointless and achieve very little.

This is similar to the point raised previously by both JonCris and EiE with regard to unfair relationships (feels like years ago now) but for some reason this angle does not appear to have been pursued rather continous attempts to question the title to sue etc...

 

There is clear evidence to show that the securitisation process does have an adverse effect upon the borrower -

 

Third party administrator being unable to agree to capitalise arrears

Third party administrator being unable to change the payment date

Third party administrator being unable to change a mortgage to

interest

only

Third party administrator being unable to offer different interest rate products

 

quote suetonius.

 

Exactly it,

By contractural agreement with the spv the administrator cannot change the type of loan ,payment date or capitalise arrears this conflicts directly with the pre action protocols and mcob I think it is 11, 12 or 13 in regulated agreements.

 

But the question has to be if this were proved which is not difficult,documentary evidence to this effect I have read exists,to what extent will this benefit the borrower,could a legal challenge be raised to the effect.that such constraints and the unfair relationship due to the constraints of securitisation would make the loan unenforceable?

What remedy is there here for the borrower?

As you are with SPPL, mcob doesn't apply

"There is clear evidence to show that the securitisation process does have an adverse effect upon the borrower -

Third party administrator being unable to agree to capitalise arrears

Third party administrator being unable to change the payment date

Third party administrator being unable to change a mortgage to

The only option would seem to be compensation, as you may have both benefited from the initial agreement and it's implausable that you'd be put back to where you were before the mortgage. Terms are different from conditions in a contract. You either go for it or you don't, you have nothing to lose..I'll adjust that a bit as they do try to come down on you, but if you stick it out you will get a result. You don't need a big win..just getting the charges back puts them in a position that they know they can't fool you again and are very aware of what they are trying to do and have done. As I've said countless times, the FOS know them very well already so that's half of the job done before you start. It's OK arguing the bigger picture but you have to start off by saving your home first..and then you can move on when all their threats become a distant memory and you have those charges refunded.

As you say Peter, the vast majority of this thread relates to spml. As the situation is now completely different with regard to your lender SPPL, I would suggest starting your own thread and detailing your problems and cause for complaint. That will enable fellow posters to respond to your specific problems and assist you....

Once you have created your thread, you should post a link here, so everyone can find it..