Mortgage Securitisation - Preferred

[mercyblue]

If you look in your terms and conditions there will be a section called transfer of the comany rights or something similar. In there you will find they can transfer it to anybody they want and that you have consented to such (by signing for the mortgage).

Interestingly (on mine at any rate) it also states once the mortgage is sold "the company will be released from furthur obligations to the borrower under the mortgage".

[JonCris]

If you want to know about securitisation please ask, I was the audit manager for it so I know it back to front.

 

In short, it doesn't matter who owns your mortgage, they can't change the terms and conditions.

 

What does everybody want to know?

 

Meph

 

But they do change & quite drastically & that's the reason for much of the contention. The bargain is no longer the bargain it once was & most importantly in my opinion is that all of this takes place unknown to the borrower who has the final liability for the debt

 

Analogy It's like an allegedly respectable lender passing your loan onto a back street loan shark & you only discovering this unpalatable fact when the loan shark turns up at your door threatening to break your legs unless you pay a lot of money often much more than you originally thought you owed because the bulk of your monthly payments have gone to pay investors & not your loan

[Liz Southern]

Analogy It's like an allegedly respectable lender passing your loan onto a back street loan shark & you only discovering this unpalatable fact when the loan shark turns up

 

Exactly - and that's my point. There's the weakness. It goes back to tort of contract. Can a mortgagor (little 'ol peasant customers us) be expected to know about a clause written in such a fashion, or understand it if we do know about it, and if it's hidden in the small print that one day someone else will "own" our debt, surely it's an unfair business relationship, and can be challenged in the High Court? If not contract law, then Human Rights? I have to go and look up the HRA. I'm at work.

 

I'm not dropping this. Their tactics have annoyed me. As far as I'm concerned, I don't care about the repossession hearing - I'll deal with that. And in the meantime I'll carry on with their downfall.

 

Bye

Liz

[JonCris]

Liz there are a lot of people on your side & agree wholeheartedly Suggest you search for any threads or posts by supersleuth amongst others for a broader picture or indeed search for securitization threads of which there are many

[Mephistopheles]

Exactly - and that's my point. There's the weakness. It goes back to tort of contract. Can a mortgagor (little 'ol peasant customers us) be expected to know about a clause written in such a fashion, or understand it if we do know about it, and if it's hidden in the small print that one day someone else will "own" our debt, surely it's an unfair business relationship, and can be challenged in the High Court? If not contract law, then Human Rights? I have to go and look up the HRA. I'm at work.

 

I'm not dropping this. Their tactics have annoyed me. As far as I'm concerned, I don't care about the repossession hearing - I'll deal with that. And in the meantime I'll carry on with their downfall.

 

Bye

Liz

 

 

I sincerely think that won't happen. Look, all mortgage contracts have the clause but not all companies do it, interesting some of the terminology you use about respectable to back st loan shark.

 

You are aware that the biggest securitiser in the last few years was Halifax then Bradford and Bingley?

 

As to the person who point out they can change the T&C's, please post an example, the mortgage is a contract and as such cannot be changed without consent of both parties unless there is a clause in said contract that allows one to do so.

 

Without an example, it simply isn't something you can except as fact.

 

Morally you may not agree, but legally, this is generally watertight, and believe me it is because you are talking £100's of millions if not billions.

[elizabeth1]

If you look in your terms and conditions there will be a section called transfer of the comany rights or something similar. In there you will find they can transfer it to anybody they want and that you have consented to such (by signing for the mortgage).

Interestingly (on mine at any rate) it also states once the mortgage is sold "the company will be released from furthur obligations to the borrower under the mortgage".

 

 

Just curious - was that written in the -actual mortgage offer that you signed or in the "bumpf" leaflets that came with your mortgage?

 

(with my mortgage there is the offer papers like 5 A4 page, also there was a few leaflets containing small print information)

[Suetonius]

Just curious - was that written in the -actual mortgage offer that you signed or in the "bumpf" leaflets that came with your mortgage?

 

(with my mortgage there is the offer papers like 5 A4 page, also there was a few leaflets containing small print information)

 

Depending upon the lender, it is usually detailed within a seperate booklet/leaflet

[elizabeth1]

Depending upon the lender, it is usually detailed within a seperate booklet/leaflet

 

Thanks - I'd looked in the mortgage offer papers that we signed and couldn't find this.

 

I'll look in the booklets to see if I can find it.

[JonCris]

In most if not all such contracts there is a clause which permits them to vary the terms arbitrarily + they are permitted to dispose of the mortgage to whom they see fit without the borrowers consent + we know that securitization alters the lender borrower relationship considerably. The management company will refuse to negotiate & often just press ahead with repossession even the case of only 2 months arrears

[Suetonius]

As to the person who point out they can change the T&C's, please post an example, the mortgage is a contract and as such cannot be changed without consent of both parties unless there is a clause in said contract that allows one to do so.

 

Without an example, it simply isn't something you can except as fact.

 

As I understand it, the argument is that securitisation of a mortgage by a lender, places limits and restrictions on its ability to provide rate switches and further advances.

 

As you will know Mephistopheles, most prospectuses include a condition stating something along the lines of:

 

"Risk factors

Loans subject to product switches and further advances will be repurchased by the seller from the mortgages trustee, which will affect the prepayment rate of the loans, and this may affect the yield to maturity of the issuer notes and Assignment of the loans and their related security."(1)

 

Therefore, it could be argued that the lender would have to comply with the above requirement before providing either a product switch (which could include conversation from repayment to interest only) or a further advance (which could include capitalisation of arrears).

 

Taking into consideration the current economic climate and that the majority of subprime lenders are in the process of reducing with the intention to close their loan books, would they be want to repurchase the loans ?

 

Admittedly the right to a product switch or a further advance, may not be technically given to a borrower under a standard mortgage agreement. However, the effect of arrears not being capitalised and mortgages not being switched from repayment to interest only, is having a negative impact upon some consumers.

 

Lenders are obligated to treat consumers fairly (2). The effect of securitisation may have a negative effect on a lenders ability or desire to do that.

 

(1) HOLMES FINANCING (NO. 5) PLC prospectus - page 78

(2) Mortgage Code - Section 1.1 (Mortgages provided between 1 July 1997 - 31 October 2004)

FSA Handbook section PRIN 2.1.1 (6) & MCOB 13.3 (Mortgages provided after 31 October 2004)

Edited July 10, 2009 by Suetonius

[Suetonius]

Liz there are a lot of people on your side & agree wholeheartedly Suggest you search for any threads or posts by supersleuth amongst others for a broader picture or indeed search for securitization threads of which there are many

 

Just remember that there are others with different views* which may be less popular but no less valid (until proven otherwise)

 

 

*I still contend that the title to sue remains with the lender.

Edited July 10, 2009 by Suetonius

[Suetonius]

In most if not all such contracts there is a clause which permits them to vary the terms arbitrarily + they are permitted to dispose of the mortgage to whom they see fit without the borrowers consent

 

Just to confirm JC's above comments:

 

 

House of Lords - Mulkerrins (formerly Woodward (FC)) (Appellant) v. Pricewaterhouse Coopers (a firm) (formerly trading as Coopers & Lybrand) (a firm) (Respondents)

 

Judgments - Mulkerrins (formerly Woodward (FC)) (Appellant)

v.

Pricewaterhouse Coopers (a firm) (formerly trading as Coopers & Lybrand) (a firm) (Respondents)

 

 

13. The general rule is that the benefit of a contract may be assigned to a third party without the consent of the other contracting party. If this is not desired, it is open to the parties to agree that the benefit of the contract shall not be assignable by one or either of them, either at all or without the consent of the other party.

 

There is nothing objectionable in this; a party is entitled to insist that he deal only with the particular party with whom he has contracted: see Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85, 105, per Lord Browne-Wilkinson.

 

But unless he takes the precaution of including in the contract a prohibition of assignment, he has no right to object to it. A debt is freely assignable both at law and in equity without the debtor's consent. Section 136 of the Law of Property Act 1925 requires notice of the assignment to be given to the debtor if it is to be effective at law; it does not require his consent.

[Mephistopheles]

As I understand it, the argument is that securitisation of a mortgage by a lender, places limits and restrictions on its ability to provide rate switches and further advances.

 

As you will know Mephistopheles, most prospectuses include a condition stating something along the lines of:

 

"Risk factors

Loans subject to product switches and further advances will be repurchased by the seller from the mortgages trustee, which will affect the prepayment rate of the loans, and this may affect the yield to maturity of the issuer notes and Assignment of the loans and their related security."(1)

 

Therefore, it could be argued that the lender would have to comply with the above requirement before providing either a product switch (which could include conversation from repayment to interest only) or a further advance (which could include capitalisation of arrears).

 

Taking into consideration the current economic climate and that the majority of subprime lenders are in the process of reducing with the intention to close their loan books, would they be want to repurchase the loans ?

 

Admittedly the right to a product switch or a further advance, may not be technically given to a borrower under a standard mortgage agreement. However, the effect of arrears not being capitalised and mortgages not being switched from repayment to interest only, is having a negative impact upon some consumers.

 

Lenders are obligated to treat consumers fairly (2). The effect of securitisation may have a negative effect on a lenders ability or desire to do that.

 

(1) HOLMES FINANCING (NO. 5) PLC prospectus - page 78

(2) Mortgage Code - Section 1.1 (Mortgages provided between 1 July 1997 - 31 October 2004)

FSA Handbook section PRIN 2.1.1 (6) & MCOB 13.3 (Mortgages provided after 31 October 2004)

 

 

 

Excellent point, in fact I would argue it is not about whether the lender wanted to repurchase the loans but whether they could.

 

For example the American secondary market and all the warehouse lenders who went bust.

 

Also depends upon your definition of product, mortgage type IO or C/R could be argued to not be product at all.

 

And the restriction is on those cases where the lender is usually obligated to make an advance and usually they don't form securitisation notes for that very reason.

 

You are correct that lenders are obligated to treat customers fairly but not where it would place themselves at a competitive disadvantage to do so.

 

Can you really see all the purchase agreements unravelling given the complex nature of them and the trading on the back of them, that's what started the mess in the first place.

 

Can you also see a court setting precedent to do so, knowing that 1 case could then lead to whole deals unravelling and bringing down the lender who sold them in the first place.

 

Justice is blind, but it also lives in the real world.

[Sparkie1723]

I would suggest that you look to the New Fraud Act 2006....I agree with most of what has been said there is a clause of assignment in 99% of all contact agreements and you agree that this can be done..BUT and here is the big BUT....if you are not aware of the timing of the assignment and had no knowledge of it, the rest of it is irrelavent. You are kept in the dark ...it has been done in secret, Lord Denning defined the interpretation of Fraud by concealment. I can supply that if required it is on my main PC, but the New Fraud Act says this and I think this maybe the best method of attack.

 

sparkie

 

Fraud by failing to disclose information

A person is in breach of this section if he—

(a) dishonestly fails to disclose to another person information which he is

under a legal duty to disclose, and

(b) intends, by failing to disclose the information—

(i) to make a gain for himself or another, or

(ii) to cause loss to another or to expose another to a risk of loss.

18. Section 3 makes it an offence to commit fraud by failing to disclose information to another person where there is a legal duty to disclose the information. A legal duty to disclose information may include duties under oral contracts as well as written contracts. The concept of "legal duty" is explained in the Law Commission's Report on Fraud, which said at paragraphs 7.28 and 7.29:

 

 

• "7.28 ..Such a duty may derive from statute (such as the provisions governing company prospectuses), from the fact that the transaction in question is one of the utmost good faith (such as a contract of insurance), from the express or implied terms of a contract, from the custom of a particular trade or market, or from the existence of a fiduciary relationship between the parties (such as that of agent and principal).
  

The Assignor becomes the agent the assignee becomes the principle in this case Sparkie

• 7.29 For this purpose there is a legal duty to disclose information not only if the defendant's failure to disclose it gives the victim a cause of action for damages, but also if the law gives the victim a right to set aside any change in his or her legal position to which he or she may consent as a result of the non-disclosure. For example, a person in a fiduciary position has a duty to disclose material information when entering into a contract with his or her beneficiary, in the sense that a failure to make such disclosure will entitle the beneficiary to rescind the contract and to reclaim any property transferred under it."
  

[JonCris]

Just to confirm JC's above comments:

 

 

House of Lords - Mulkerrins (formerly Woodward (FC)) (Appellant) v. Pricewaterhouse Coopers (a firm) (formerly trading as Coopers & Lybrand) (a firm) (Respondents)

 

Judgments - Mulkerrins (formerly Woodward (FC)) (Appellant)

v.

Pricewaterhouse Coopers (a firm) (formerly trading as Coopers & Lybrand) (a firm) (Respondents)

 

 

13. The general rule is that the benefit of a contract may be assigned to a third party without the consent of the other contracting party. If this is not desired, it is open to the parties to agree that the benefit of the contract shall not be assignable by one or either of them, either at all or without the consent of the other party.

 

There is nothing objectionable in this; a party is entitled to insist that he deal only with the particular party with whom he has contracted: see Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85, 105, per Lord Browne-Wilkinson.

 

But unless he takes the precaution of including in the contract a prohibition of assignment, he has no right to object to it. A debt is freely assignable both at law and in equity without the debtor's consent. Section 136 of the Law of Property Act 1925 requires notice of the assignment to be given to the debtor if it is to be effective at law; it does not require his consent.

 

 

I agree assigning the debt is acceptable without the borrowers consent - however I contend that with assignment the law assumes the terms of the loan will remain the same & will not be to the detriment of the borrower whereas the reality is that it is & the borrower is never given a choice to move to another lender who won't securitize because they don't know

[Suetonius]

Excellent point, in fact I would argue it is not about whether the lender wanted to repurchase the loans but whether they could.

 

For example the American secondary market and all the warehouse lenders who went bust.

 

Also depends upon your definition of product, mortgage type IO or C/R could be argued to not be product at all.

 

And the restriction is on those cases where the lender is usually obligated to make an advance and usually they don't form securitisation notes for that very reason.

 

You are correct that lenders are obligated to treat customers fairly but not where it would place themselves at a competitive disadvantage to do so.

 

Can you really see all the purchase agreements unravelling given the complex nature of them and the trading on the back of them, that's what started the mess in the first place.

 

Can you also see a court setting precedent to do so, knowing that 1 case could then lead to whole deals unravelling and bringing down the lender who sold them in the first place.

 

Justice is blind, but it also lives in the real world.

 

Don't get me wrong, if you read some of my posts you will see that i strongly disagree with the majority in relation to the securitisation of mortgages, especially with regard to the type of assignment and the title to sue.

 

However, I do consider that some of the points raised with regard to the treatment of consumers, do have some merit.

[Mephistopheles]

I agree assigning the debt is acceptable without the borrowers consent - however I contend that with assignment the law assumes the terms of the loan will remain the same & will not be to the detriment of the borrower whereas the reality is that it is & the borrower is never given a choice to move to another lender who won't securitize because they don't know

 

 

But the terms of the loan will remain the same??

 

The contention surely is whether the securitisation restricts the loan not that it alters the terms?

 

As to the Fraud Act, I accept the point, except that notification will be sent to the customer the day after completion, most customers will bin the letter on the basis of not knowing what it means therefore fraud is not applicable as the party has been informed.

 

Meph

[Sparkie1723]

Jon Chris'quote;

I agree assigning the debt is acceptable without the borrowers consent - however I contend that with assignment the law assumes the terms of the loan will remain the same & will not be to the detriment of the borrower whereas the reality is that it is & the borrower is never given a choice to move to another lender who won't securitize because they don't know.

 

And this is where the New Fraud Act 2006 comes in for what it was enacted for

 

sparkie

[Mephistopheles]

Don't get me wrong, if you read some of my posts you will see that i strongly disagree with the majority in relation to the securitisation of mortgages, especially with regard to the type of assignment and the title to sue.

 

However, I do consider that some of the points raised with regard to the treatment of consumers, do have some merit.

 

 

I agree, wholesale of debt though is not a new thing, this is perhaps just a new way of it happening

 

Apologies, I havn't had time to read all the posts, I do accept points made though.

 

Interestingly, securitisation could be argued as a contributing factor to the prevalation of cheap credit which in itself is a major factor in driving boom's?

[Sparkie1723]

Lord Denning made the point clear in his definition of Fraud it is not the pure fact of what or who it affected in what way that is not the issue it is the ACT of doing it that is the point...he even went on to make an analogy of a man digging coal ...."I'll dig it out tomorrow sometime":)

 

sparkie

[Suetonius]

I agree assigning the debt is acceptable without the borrowers consent - however I contend that with assignment the law assumes the terms of the loan will remain the same & will not be to the detriment of the borrower whereas the reality is that it is & the borrower is never given a choice to move to another lender who won't securitize because they don't know

 

From the same case:

 

15. The reason that the debtor's consent is not required to an assignment of a debt is that the assignment cannot prejudice him.

[Suetonius]

Justice is blind, but it also lives in the real world.

 

Sad but very true

[mercyblue]

With regards to the terms and conditions what I quoted came from the booklet of terms and conditions.

Now I know for a fact that my mortgage has been securitized but the terms and conditions haven't changed. What it does mean though is that it is now set in stone, I cannot for negotiate with the "lender" to alter anything which does of course make a mockery of the govt pre-action protocols.

As for the fraud act again from the terms and conditions "the company in its absolute discretion at any time and without notice to the borrower transfer its rights under the loan conditions and/or the mortgage to any person or persons whatsoever" so I think that covers them.

A better path to go down, as me and sue have said before, is the fact that when these mortgages are sold off with the expectation that they all will be paid off within 4-5 years and that in reality there was never any intention to lend you the money for 25 years.

[Crapstone]

So writing to both with your intentions of sticking it out for the overall mortgage term, as sold, may worry them.

 

Dear Sir,

 

Contrary to the terms and conditions under which my mortgage was securitized I can assure you that I have no intention of voluntarily vacating my property within x years. The term of my mortgage is xx years and I will defend all and any action in full regarding repossession of my property using all the applicable legislation available during that time.

 

.....

Edited July 11, 2009 by Crapstone

[Crapstone]

But the terms and conditions quoted doesn't mean they are legally enforcable. I only signed an offer and none of these were mentioned and, as they state, the offer is subject to change. I signed a deed but there is no contract that is signed by both parties to conclude what the mortgage terms were. The full terms and conditions were sent after the contract was 'made' and because I wasn't aware of them at the time they should be invalid.

 

The company, SPML, have lost all the records apart from the signed deed and the copy of an offer, which isn't correct as it's 18 months more than the term I signed for.

 

I'm still chasing the broker but he really likes Florida and his games of tennis.