Mortgage Securitisation - Preferred

[Suetonius]

The Pender case is totally misunderstood. First - that court of appeal judgement concerns an appeal against a lower-court's refusal to grant a PERMISSION TO APPEAL . The judgement in the court of appeal upheld the lower-court's REFUSAL to give the Pender's permission to appeal to the court of appeal.

 

Are you 100% sure about this.

 

The original case was in 1995, followed by an unsuccessful application in 2002. I thought that the case in 2003 was in relation to the permission to appeal being declined. However, in 2004 they were allowed to appeal on a limited basis and that the 2005 case is the result of that limited allowance to appeal.

 

I only ask because of the first few words of the case and the closing comments of each Lord Justice

 

1. This is an appeal by Mr and Mrs Pender.

 

130. I would dismiss this appeal. (Lord Justice Jonathan Parker)

 

131. I agree. (Lord Justice Carnwath)

 

132. I also agree. (Lord Justice Ward)

 

From the perspective of a laymen, the subject matter of the conclusions made by Lord Justice Jonathan Parker do not appear to be limited to the merits of an appeal. 109-114 all state "In my judgement". This would appear to suggest that Lord Justice Jonathan Parker has made a judgement in relation to the merits of the points raised.

 

Whereas the 2003 case cleary states:

 

1. This is the Defendants application for permission to appeal

 

185. It follows from all of the above that the Defendants have not raised anything whether in their original case or in the later case that has any real prospect of success. I accept that I am in a position to rehear the appeal, if necessary, because of the misinterpretation of the revocation of CCR order 37 by Her Honour Judge Mayer. I refuse permission to appeal in respect of the matters argued before Her Honour Judge Mayer on matters of principle, but grant permission to appeal the application to set aside the possession order and the new points raised by the Defendants. However, they too, for the reasons set out in this Judgment have no prospect of success, so I dismiss the appeal based on these grounds also.

Edited March 24, 2009 by Suetonius

[Suetonius]

Consequently, the Pender case is NOT case precedent for the banks (under the doctrine of stare decisis: latin for let the decision stand, which is the basis of the case precedents).

 

Would ratio decidendi be applicable ? or am I barking up the wrong tree (wouldn't be the first time and I know it will not be the last)

 

As this is a judgement that would appear to have been passed in the Civil Division of the Court of Appeal, wouldn't this judgement subsequently apply to both the High Court and County Courts ?

Edited March 25, 2009 by Suetonius

[Suetonius]

Great info..incidentally the DPA is the statute most abused by the jobs-worths who don't want to do their jobs.

 

Totally agree, if in doubt quote the DPA lol

[Suetonius]

Also, the above judgment (Paragon vs Pender) stated that the LoP 1925 s.114 applies?

 

 

Does it say that s.114 applies ??

 

113. 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.

[Suetonius]

Is it not true that trading in these derivatives virtually stopped in early 2007 when it became possible that they might suddenly carry a heavy tax burden & is it not true that the 'toxic' debt was provoked by managers so that investors could have their 'investment' repaid & any losses paid for by the tax payer.

 

The implementation of the Taxation of Insurance Securitisation Companies Regulations 2007, would have had a impact on insurance SPV's

[Suetonius]

Are we really saying that the judgements stated in the Paragon case can be totally ignored ?

[Suetonius]

The SPV should be the claimant - but the SPV unlawfully conceals itself from the borrowers.

 

Even if the SPV does appoint a representative (which is lawful), that entity must declare on the claim form that it is claiming in a representative capacity on behalf of the SPV. But hey ho - so what if they fail to observe that law too!! (which is unlawful) and they fail to mention the representative capacity so that they can maintain the concealment of the SPV. That's just business as usual.

 

Upshot is: Yes, you could demand that the SPV be joined to the action because after all, it IS the SPV that has the claim against a borrower.

 

With regard to Paragon Finance Plc v Pender & Anor [2005] EWCA Civ 760 (27 June 2005). Are you saying that when Lord Justice Jonathan Parker said:

 

112.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).

 

His judgements were incorrect, bearing in mind that his judgements were agreed by Lord Justice Carnworth and Lord Justice Ward ?

 

Considering the legal experience and percieved expertise of all 3 Lord Justices, I am sure you will both appreciate and understand my confusion.

 

Career History:

Lord Justice Jonathan Parker

Lord Justice Carnworth

Lord Justice Ward

[Suetonius]

 

another great post and linking this with comments from the Riley case...

 

"In accordance with section 114 of the Law of Property Act 1925, the deeds operate to transfer all rights to sue on the security to Greenwich International in America, rather than City Mortgage Corporation" (bold emphasis mine)

 

It seems to my non legal-eagle mind, that on these two premises hinges much of the debate. In order to make any headway, one has to find out

 

1. Exacly WHAT the seller (lender) has sold to the SPV

2. Evidence that they contracted to supress and conceal this from the Land Registry

3. Confirmation of the document exists where the seller (lender) transfers ALL RIGHTS to the SPV and not just the beneficial rights/interest.

 

This should put a stop to the main argument the UK lenders' currently employ to affirm their right to enforce repossession which is the beneficial interest vs legal interest tack which they still claim to hold and therefore legitimises their charge at the LR.

 

But the above evidence from 1-3 would PROVE that this is in fact incorrect.

 

The challenge appears to be obtaining the specific information in points 1-3 in time to make a proper defence/claim.

 

Am I right in these summaries?

 

113. 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.

 

 

From the view point of the judicial system, it may be beneficial to remember that the Riley case was in a County Court, whereas the Paragon Case was held at a higher judicial level. Therefore, in relation to section 114 wouldn't it be reasonable to assume that the judgement of a Lord Justice would take priority over a judgement of a County Court ?

 

However, I do consider that the goal would have to be, to establish exactly what has been transfered.

 

It may be the case that this is not always the same and may vary between different lenders and different SPV's.

[Suetonius]

Suetonius = From the view point of the judicial system, it may be beneficial to remember that the Riley case was in a County Court, whereas the Paragon Case was held at a higher judicial level. Therefore, in relation to section 114 wouldn't it be reasonable to assume that the judgement of a Lord Justice would take priority over a judgement of a County Court?

I'm not a lawyer but I think that's how it works. However, it's also true that case law is most applicable when the facts and circumstances surrounding rulings are most similiar.

 

It may be the case that this is not always the same and may vary between different lenders and different SPV's.

Again I'm not an expert on securitisations but I do know that the way they are packaged and bundled into tranches and sold to investors, it would be to lenders' advantage to standardize transfers as much as possible to make sales and buy back easier.

 

They cover their tracks well cos they don't want the mug punters to clue up - but these charades all have a sell by date.

 

Totally agree...

 

When I first read this thread it appeared to be very one sided, I thought I would take the opportunity to play devils advocate (my usual role) and show that there are two sides to every story.

 

For some reason the judgements detailed in the 2005 case (not the 2003 application to appeal case) seemed to be totally ignored and I was not quite sure why. Especially as it refers to the points of law as discussed in this thread and the SPML thread.

[Suetonius]

Just one more post before I scoot off.

 

Suetonius, are you aware of some of the successes people have been having in the US using a similiar line of argument? Over there they call it the 'Show me the note' strategy. See http://webofdebt.wordpress.com/2008/07/30/standing-up-to-the-banks-how-to-challenge-your-foreclosure-in-court/ and http://www.consumerwarningnetwork.com/2008/06/19/produce-the-note-how-to/. When I say successes, I mean stopping repossessions, suspending mortgage payments and maybe renegotiating the terms - not necessarily cancelling the mortgage.

 

I'm sure we'll eventually find a way to do the same things here, even if it's not through the LRA 2002 breaches. Why? because what they've done is based on greed and deceit and where those two are found together, there'll be something illegal in there somehow. Just have to keep digging!!!

 

Yes, I am aware of what has happend on the other side of the pond and we do normally follow where America leads. But we still have to bear in mind the points made in relation to the specific legisation.

 

I personally do not consider that it should be ignored or brushed under the carpet

[Suetonius]

It's been very helpful to have CAGgers that argue for the lenders. Thank you Vincenta and Suetonis for your contributions.

 

Supersleuth

 

Thanks but I don't recall arguing for the lenders.

 

My posts have been purely in relation to the judgements made in the Paragon case (2005 not 2003)

 

As it would appear that the legislative points raised by Carmel Butler in her submission are similar to the points of that particular case.

 

i.e

 

LPA 1925 s.33 & s.34

LOP 1925 s.114, s.87 (1), s.136

LRA 1925 s.34 (1) s.33 s.27

LRA 2002

 

 

The case also refers to the involvement of a SPV in the legal process.

 

It is important to note that these are not comments or recommendations by people within the financial industry but judgements of 3 Lord Justices.

 

Personally, I think instead of putting this case to one side, people should learn from it and look at ways to overcome the judgements made.

 

After all would a lower Court rule that these judgements are incorrect ?

 

I wonder what Carmel Butler would make of this thread. Then again going by her high power and successful career history, I very much doubt she would ever have had the need for a mortgage with Capstone/Preferred/SPML/London Mortgage etc..

[Suetonius]

I've spent some of today reading about what's going on across the pond in the States with regard to this and it's bigger than I ever dreamed. There are websites set up telling people how to hold up to these banks and what to do. Looks like there are many claims companies too bringing this to the publics notice. I've learned one or two things from these sites which either puts a hold on repo's, challenges outright the bank to show who the 'note' holder is ( I take it that means Title holder here) in court and how the Judges are throwing out repo cases if the banks can't show they own the title. There is also a lot of discussion about the banks acting as servicing agents only and the actual validity of the trusts set up to hold these bulks of mortgage packages within the securitisation tranche.

 

Fascinating stuff and it seems they are a bit ahead of us on this.

 

Yes it really is

[Suetonius]

The answer to this hurdle lies in your own signature -

 

non in legendo sed in intelligendo legis consistunt

 

- the laws depend not on being read, but on being understood

 

For the the time being, this may seem to be a cryptic answer to the points you have correctly understood and identified- but have you considered the possibility that there may be an answer to this hurdle?

 

My signature was chosen in jest, I do not consider that anyone really understands the law. Most areas of law and for that matter legislation (CCA 1974 is a clear example) are widely open to interpretation. With regard to the CCA, even Goode and Bennion disagree about the implications of the act, for example multiple agreements.

 

I personally consider that the law is continually evolving and as it evolves its implications change. Therefore, I do not consider it is truely possible for anyone to really say they understand law.

 

Because I personally consider that the law continues to evolve the answer to your question is yes, I do consider the possibility.

 

However, I consider that legal arguments should be treated like a game of chess. Yes your moves (legal arguments) are important, you just have to remember that your opponents moves (legal arguments) are just as equally important. Otherwise you will be in checkmate before you bat an eyelid.

 

Anticipate their move (argument) and be prepared to react and overcome.

Edited March 27, 2009 by Suetonius

[Suetonius]

I've had a nice little drinky poo)

 

That is an excellent idea.. I think I will join you..

[Suetonius]

Incidentally as your into dead languages do you know where Cae Urfa is:p

 

It is north of the Watford Gap, if you see Hadrian's Wall, you have gone to far

[Suetonius]

Caer Urfa! Well done give yourself another drink

why thank you kind sir

[Suetonius]

Suetonius, have you spotted any opportunities for the consumer in the Pender 2005 case?

 

Looking at the case, I would start by looking very closely at the Land Registration Act 2002. I would say this because, at the time of pender, compared to the LOP etc, the LRA 2002 was a relatively new piece of legisation. The implications had not been truely considered.

 

I would also say this because it is hardly mentioned within pender, so by basing any arguments on the LRA 2002, you are diverting arguments away from the problems caused by pender.

 

I would also recommend looking for any cases involving the

 

LRA 2002

SPV

Securities

 

to see if there are any useful judgements.

 

I would also suggest taking a very close look at the MBNA and Cap1 cases in relation to securities to see if anything could be of benefit. They may establish what a credit sells/transfers to an SPV..

[Suetonius]

Is this your fault Suetonius?

 

[Suetonius]

The reason I consider that the Cap1 case needs to be looked at closely, especially when basing any conclusions on events over the pond. In her submission Carmel Butler states:

 

 

"There are no bad debts on the banks books. And if there is any bad debt, the amount is de minimis. A primary purpose of a securitisation is: to remove the credit risk from the bank’s books. The bank, under a ‘true sale’ will sell all its rights and title in the mortgages to the SPV and the SPV will in return pay the bank cash for the mortgage assets."

 

 

However the Cap1 case states:

 

 

"Two of the exceptions are the consequence of US requirements. The first, which the Appellant contends is reflected in substance and in form in the structure which has been achieved, is that the assignment must be a true sale; it may not be an assignment by way of security if US accounting standards are to be respected (necessary because COBE is a wholly-owned subsidiary of a US corporation which is subject to US standards). No such requirement is imposed by UK accounting standards, nor by the FSA"

 

This appear to suggest that in the US securitisation can only take place under a true sale. However, this does not appear to always be the case here in the UK. Therefore, it would be paramount to establish:

 

a) has securitisation taken place

b) was it under a true sale

Edited March 29, 2009 by Suetonius

[Suetonius]

 

This appear to suggest that in the US securitisation can only take place under a true sale. However, this does not appear to always be the case here in the UK. Therefore, it would be paramount to establish

 

 

This view would appear to be supported by HM Revenue & Customs (well at least in relation to credit card debt securitisation)

Guidance for specific trade sectors: Finance: Securitisation arrangements

 

"The credit card company transfers the beneficial interest (not the legal interest) in the receivables on a block of accounts to the trust."

 

AND

 

"The credit card customer is not informed of these arrangements and the contract between the company and the cardholder is unchanged (i.e. there is no novation of the contract). This means that the exempt supply is still between the credit card company and the cardholder.

 

This was confirmed by the Tribunal in Capital One Bank (Europe) Plc (COBE) [VTD19238] and the High Court in MBNA Europe Bank Ltd."

[Suetonius]

Suetonius, interesting reading. Looks like you've arrived where SS has been pointing all along

 

 

Not really, the quote you have used is from Revenue & Customs and the beneficial interest, would only be the equitable interest, rather than the legal title

[Suetonius]

A Mortgagee is entitled under s.136 of the Law of Property Act 1925 to make an ABSOLUTE transfer its LEGAL TITLE , but there is nothing in that provision to entitle the lender to separate the equitable title from the legal title and transfer only the equitable title. In fact, that provision by implication only gives the statutory power to transfer an ABSOLUTE assignment and therefore does not provide a power to separate the equitable and legal titles.

 

It is precisely because of the s.136 of the Law of Property Act that I disagree with you.

 

For the assignment to be ABSOLUTE, one very important step must be taken.

 

136 Legal assignments of things in action

(1)Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice—

 

 

"Any absolute assignment is effectual in law to pass transfer from the date of such notice"

 

Has such a notice been given and if so, when is it dated ?

 

If there has not been such a notice, s.136 the Law of Property Act clearly confirms that the assignment cannot be ABSOLUTE. Therefore, if any assignment has taken place it can only be equitable.

 

However, s.136 may be a mute point.

 

Paragon v Pender (not an application for an appeal)

 

 

1. As to Mr Page's reliance on section 136 of the Law of Property Act 1925, that too is in my judgment misplaced. He fails to distinguish between the right to sue at law for the mortgage debt and the proprietary interest created as security for its repayment. Section 136 applies only to the former.
    
   
2. Accordingly in respectful agreement with the judge I reject Mr Page's submissions on the title to sue issue.
   

[Suetonius]

if the lender purports to have separated the legal and equitable titles, what law permits such separation? Clearly s.136 does not empower a separation of titles. So again, do you know of any powers under real property law where the lender can lawfully separate the legal and equitable titles?

 

So for the delay in responding, I am at work.

 

The Law of Trusts

 

 

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
  

[Suetonius]

Plus to separate the legal and equitable titles there must be a separation of the legal and equitable title. Under property law/contract law, which require certain legal formalities to be observed in order to be valid at law (and in equity), what property law or contractual right empowered the lenders to separate the legal and equitable titles without the concurrence and expressed agreement of the borrower?

 

A Mortgagee is entitled under s.136 of the Law of Property Act 1925 to make an ABSOLUTE transfer its LEGAL TITLE , but there is nothing in that provision to entitle the lender to separate the equitable title from the legal title and transfer only the equitable title. In fact, that provision by implication only gives the statutory power to transfer an ABSOLUTE assignment and therefore does not provide a power to separate the equitable and legal titles.

 

So in the context of mortgage: what law or right are the lenders exercising when they claim to be entitled to separate the legal and equitable titles of a mortgage deed?...and if there's no legal entitlement to separate these titles, how can they be deemed to have lawfully separated these titles?.

 

I don't really understand your point.

 

If it is not possible to seperate the legal and equitable title, s.136 still means that the legal right to sue (which I understand is one of the main points being debated), remains with the Assignor, in this instance the mortgage provider.

 

"Any absolute assignment is effectual in law to pass transfer from the date of such notice"

 

Without such a notice, the right to sue cannot not be assigned.Thus it legally has to remain the the Assignor.

[Suetonius]

I have also found this from the House of Commons

 

House of Commons - Explanatory Note

 

11. If, as expected, the loans eventually sold are securitised, legal structures will be created to hold the legal and equitable interests in the loans in the names of different parties. Lords Amendment 6 would make clear that the provisions of clause 3 relating to onward sale of the loans do not apply to the creation or transfers of equitable rights that occur in a securitisation. Rather, it clarifies that clause 3 relates only to the onward transfer of legal title to the loans. The amendment ensures that the transfers of equitable interests that occur as a normal part of a securitisation are separate from the onward transfer of legal title, and which do not require the same protections.