Mortgage Securitisation - Preferred

[uneverdid]

Hi,

 

Can anyone advise if i need to do anything with regards to the Power of Attorney i have received or should i just file it with my other pile of rubbish.

 

Sorry for keep asking its just this is such a long thread and really tricky to get your head round.

 

Thankyou

[littledotty27]

If they produce the assignment at the next court date,then it would make absolute!!

[uneverdid]

Sorry can u explain a bit further for me please. What do you mean by absolute and how will this effect me.

[Suetonius]

If they produce the assignment at the next court date,then it would make absolute!!

 

I think we overlaping two different things here.

 

Is it SPML that have taken you to Court ?

 

Because SPML is not a SPV in the sense of securitisation

[Suetonius]

Sorry can u explain a bit further for me please. What do you mean by absolute and how will this effect me.

 

Do you have a thread ?

 

Without knowing more it is hard to comment, without knowing the proper context.

[littledotty27]

Yes it is spml taking me to court

[Suetonius]

Yes it is spml taking me to court

 

Therefore, SPML would have to prove that

 

a) your mortgage was assigned to it and

b) that you had been sent a notice of assignment to make that assignment legal / absolute.

 

It is only if you had been sent a notice of assignment that SPML could commence proceedings against you in it's own name only.

[littledotty27]

I have just found this on search engine as a pdf file under council of mortgage lenders website.

 

Residential mortgage backed securities (RMBS)

Lenders can raise funds from issuing mortgage-backed securities via the process of securitisation.

A specific group of mortgages from an existing portfolio is identified as collateral for a financial

instrument. These assets are transferred from the balance sheet of the mortgage lender (the

originator) to a company that is legally distinct and remote from the mortgage originator, called a

special purpose vehicle (SPV). The SPV acquires legal title to these assets and issues the RMBS.

Payments to investors are derived exclusively from the performance of that specific pool of

loans.

Separation is important for three reasons. First, so that these loans are protected should the

originator go bankrupt. This makes the securities more attractive to investors but, if the

securities themselves default, the investor has no recourse to the originator for any shortfall.

Secondly, separation allows the security to be rated independently of the originator. This is

particularly important for those originators with a poor or no credit rating. The third reason is so

that the lender no longer has to set aside regulatory capital for these assets.

[JonCris]

The notice is one of the important things that make an assignment legal / absolute.

 

 

Is the assignment retrospective beyond the point of litigation...or for it be legal should it be delivered as the time of securitization??

[Suetonius]

I have found this.. Although not an ideal source, still a source nonetheless

 

Loan securitisation and risk transfer

 

It does seem to imply that a notice would need to be sent to the borrower

"Types of assignment

 

There are three methods by which a portfolio of loans can be sold outright to an SPV: novation, legal assignment and equitable assignment.

Novation is not technically a type of assignment, but rather the replacement of each loan agreement between a borrower and the originator by a new one made between the borrower and the SPV on the

same terms.

 

It is usually impractical both because it requires the borrower’s involvement and because, under any facility containing an undrawn commitment, the SPV would be left with an obligation to make further advances to a borrower. Assignment is the transfer of the benefit but not the burden of an agreement.

 

To be a valid legal assignment under English law and so transfer title from assignor to assignee, an assignment of a loan must be in writing, be signed by the assignor, be absolute and unconditional, cover the whole of the loan and be notified in writing to the borrower.

 

A legal assignment of a loan would therefore involve the borrower being notified of the assignment, which may not be commercially desirable. Additionally, a legal assignment of a facility containing an undrawn commitment would leave the originator with an obligation to make further advances to a borrower, but the SPV with the right to receive repayments.

 

In order not to disrupt the originator’s relationships with the borrowers under securitised loans, the loans will often be the subject of an assignment which is equitable rather than legal. An equitable assignment may not necessarily be of the whole of a loan agreement and the underlying borrowers may not be notified of it unless the originator defaults under its obligations or a right of set-off arises between the originator and the borrower (in which case the assignment will have to be perfected by notification). Consequently, the originator will remain the lender of record.

 

The originator will usually enter into an administration agreement under which it is appointed administrator of the loans as agent for the Issuer, so that borrowers continue to deal with the originator and remain unaware that their loans have been securitised. After an equitable assignment, the originator retains the responsibility for advancing sums in respect of outstanding undrawn commitments and the right to receive repayment of such amounts."

 

 

 

Edited April 9, 2009 by Suetonius
Missed a bit

[Suetonius]

Is the assignment retrospective beyond the point of litigation...or for it be legal should it be delivered as the time of securitization??

 

 

For the assignment to be legal, thus give the right to commence litigation, I would presume that the notice could be sent at any point after securitisation and before the instigation of legal proceedings.

[Suetonius]

I have just found this on search engine as a pdf file under council of mortgage lenders website.

 

 

Now this is getting more interesting...

 

Another good find

[midge61]

SPML are the originators and as a subsidiary of Lehmans are just about bust. A check on companies house shows they are late providing accounts and their address changed to that of Capstone after Lehmans went belly up.

Edited April 9, 2009 by midge61
spelling wrong after too many beers!

[littledotty27]

With regards to english law..is this what you mean suetonius?

 

The Viability of Asset Backed Securitisation in Emerging Markets With Reference to South Africa:Stewart Makura 2002

 

bottom of page 34 united kingdom-legal and onto page 35.

[JonCris]

For the assignment to be legal, thus give the right to commence litigation, I would presume that the notice could be sent at any point after securitisation and before the instigation of legal proceedings.

 

OK .............. what about champerty?............... and what about the inability to comply with the mortgage & banking code as a result of securitization

[Suetonius]

SPML are the originators and as a subsidiary of Lehmans are just about bust. A check on companies house shows they are late providing accounts and their address changed to that of Capstone after Lehmans went belly up.

 

Take a look at the directors for Capstone and SPML/Preferrred

[uneverdid]

Just a thought should Capstone have sent the Power of Attorney by recorded delivery to ensure customer has defo got it. I ask this because Capstone told me they had informed all SPML and Preferred customers in January of this change of circumstances. I didnt get a letter to that effect the only letter i got was one telling me not to worry about the Lehmen brothers and that my mortgage would remain exactly the same and no changes would be made. This is clearly incorrect.

[Suetonius]

OK .............. what about champerty?............... and what about the inability to comply with the mortgage & banking code as a result of securitization

 

Mortgages are not subject to the Banking Code. In relation to the applicable rules, it would depend if it was pre or post 31 October 2004. (I need to have a quick read of them, it has been a while)

 

With regards to champerty, I am still investigating...

 

However, I do consider that the securisiation can have an adverse effect on the relationship between lender and borrower. Therefore, as you have previously said it could be argued that following securitisation there is an "unfair relationship"

Edited April 9, 2009 by Suetonius

[Suetonius]

With regards to english law..is this what you mean suetonius?

 

The Viability of Asset Backed Securitisation in Emerging Markets With Reference to South Africa:Stewart Makura 2002

 

bottom of page 34 united kingdom-legal and onto page 35.

 

Boy, you are really going for gold today

 

Yes top of page 35

[JonCris]

Just a thought should Capstone have sent the Power of Attorney by recorded delivery to ensure customer has defo got it. I ask this because Capstone told me they had informed all SPML and Preferred customers in January of this change of circumstances. I didnt get a letter to that effect the only letter i got was one telling me not to worry about the Lehmen brothers and that my mortgage would remain exactly the same and no changes would be made. This is clearly incorrect.

Tried clicking on your link & got taken to elsewhere please explain what the PA says

[Suetonius]

Mortgage Code

 

(section 8 would appear to be applicable)

 

MCOB (FSA rules)

 

MCOB 13 Arrears & Repossession

Council of Mortgage Lenders

 

1)CML statement of practice - Handling of arrears and possessions

2)Industry guidance on arrears and possessions to help lenders comply with MCOB 13 and TCF principles

Edited April 9, 2009 by Suetonius
A few updates

[Suetonius]

Just a thought should Capstone have sent the Power of Attorney by recorded delivery to ensure customer has defo got it. I ask this because Capstone told me they had informed all SPML and Preferred customers in January of this change of circumstances. I didnt get a letter to that effect the only letter i got was one telling me not to worry about the Lehmen brothers and that my mortgage would remain exactly the same and no changes would be made. This is clearly incorrect.

 

If the POA was to be deemed a notice of assignment (which I don't think it is)

 

You could argue that under s.196 of the Law of Property Act 1925, it should have been sent by recorded delivery and not returned by the postal service as defined by the Postal Services Act 2000. But as you received it, I don't think that argument would have merit

[JonCris]

Quote [if the securities themselves default, the investor has no recourse to the originator for any shortfall. Secondly, separation allows the security to be rated independently of the originator. This is particularly important for those originators with a poor or no credit rating]unqote

 

Now I'm thinking indemnity principal

[Smarterchick]

Poor old uneverdid posted up those two letters and everyone's ignored the poor fellow whislt in the depths of this securitisation talk...sorry Uneverdid, but I personally do not know the answers to your question, just so you know I for one am not ignoring you..

 

Edit: and as I type up this about uneverdid - suetonius jumps in and answers - typical

 

Now, reading littledotty's wonderful finds, it again makes clear that the originators have to be legally remote from the SPV's, but then this Stewart Makura reference says that they may be subsidiaries of the originators to benefit from stamp duty relief. Holmes Financial, the Abbey National SPV has its office in Abbey's headquarters Triton Hse- I haven't been able to check out the directors, but that doesn't sound legally remote to me other than it may be a seperate Ltd company which, perhaps may be enough to make it 'legally remote'. What difference does this make?

[JonCris]

Sue I think it's clear they cannot meet their obligations under the codes which I think means the borrower was misled at the time of entering into the contract

 

uneverdid who signed the PA which claims (probably wrongly) to be a deed of assignment cos unless it's signed by the assignor it ain't worth squat anyway