Kensington will not disclose securitisation

[nav110]

Hi all,

 

The securitisation of mortgages seems to be the most confusing subject evenwith the information and discussion on the forum. I spoke to Kensington on thematter, they told me they are unable to give me the information as its is notrelevant to me and securitisation does not effect me or my mortgage obligations. I asked if i SAR for the info to which i was told even then they will notdisclose to whom my mortgage is securitised with. I thought under SAR theinformation i would ask for would be given but Kensington are refusing. Any onesuccessfully get securitisation info from their lenders and what should i do toget the info i am requesting?

[Conniff]

I think they might be right in that it not for disclosure. Kensington dealt with the application, Kensington gave you the money, I believe who underwrites them is an internal matter.

[nav110]

thanks connif for taking the time out.

 

with what you have stated i come to the conclusion that i dont have the right to know if my loan/debt with kensington has been sold on to third party investors even when the role/duties of the lender have changed from a lender to an administrator?

 

From what i understand my application with kensington originated the loan and the charge on the property. Once the loan was originated only then it was securitised and sold on. I feel this was the duty of the lender to inform me.

 

I would like to know does the securitisation of my loan effect the performance of the loan in the interest of the investors or with market changes?

[Conniff]

We might be at cross purposes here nav, securitized is not an English word so you will have to say exactly what it means or you understand by it ?

[nav110]

will my or your understanding of securitisation determine my entitlement to know if my loan has been securitised?

[Conniff]

Yes, thee is a big difference between securitisation and underwritting the latter you have no right to see.

[nav110]

and why would the latter be kept away from my inspection?

 

Is it not that the underwriting sheet contained my personal data including commissions paid etc which the lender has a duty to disclose?

 

Also you seem to be making a link between securitisation and the underwriting sheet, is their any link between the two? and according to your understanding what right or why would the lender refuse to disclose that data, unless their is something to hide.

[Conniff]

Because it's to do with the interest they pay some other bank or finance house.

 

What is securitisation ??

[nomorecrooks]

Because it's to do with the interest they pay some other bank or finance house.

 

What is securitisation ??

 

Kensington and many others bundle together loans as a portfolio and resell them to other investors / lenders. In addition the portfolio can be sold in different layers of risk with interest rates related to the level of perceived risk.

 

This system is widely employed around the world not just for instruments such as mortgages but also credit card debt and many other consumer finance instruments.

 

Kensington loans money on mortgages of £X in total with an average interest rate of, say, Libor + 3%. Kensington then sells off the portfolio of mortgages at, say Libor + 2% thereby keeping 1% for its trouble.

[nav110]

Because it's to do with the interest they pay someother bank or finance house.

 

I think its more than just paying interest to investors...

 

There is a radical change of the loan as its administered behind the scenes as their are Agency Agreement, Cash/BondAdministration Agreement, Standby Cash/Bond Administration Agreement, MortgageAdministration Agreement, Special Servicer Agreement, Standby ServicerAgreement,Liquidity Facility Agreement, Post Enforcement Call OptionAgreement, Bank Agreement and the Guaranteed Investment Contract.

 

These agreements administer both the original loan and the notes given to investors. This directly impacts the borrower whilst equality is compromised. I believe this process favours the lenders/investors interests whilst over looking its responsibilities to the borrower .Through securitisation the relationship between lender/borrower is broken down as everything becomes outsourced to third parties. Third party companies deal with all dealings the borrower may have with the original lender from taking payment to litigation. One major disadvantage is the inability to make a change or change the product as this becomes impossible on the basis that investors are dependant on that product. The performance of securitisation agreements are all dependant on the borrower to make his monthly payments and when a borrower is unable to perform, it not just effects the original lender but whole bunch of other interested parties whom the borrower never intended to get in bed with. In such circumstances the pressures on the borrower are more intense and responsibilities are over looked and resolution is never in benefit of borrower but in favour of investors. It is really a sick game and as you can see its not just“interest they pay some other bank orfinance house” and this is just the tip of the iceberg.

 

Back to my original question, in contract law full disclosure is a requirement, is securitisation exempt from the disclosure requirement? Bear in mind the lender had full intent to sell to investors from the onset.

Edited March 26, 2013 by citizenB

[Conniff]

Thanks guys, good posts. I was just trying to keep it small and simple so as not to make it too complicated.

 

I think the word 'securitisation' was being used in the wrong context by the op.

 

You will find that what you seek to get details on would be classed as commercially sensitive and nothing to do with you.

No shop will tell you how much they buy things for.

Edited December 8, 2012 by Conniff

[nav110]

You will find that what you seek to get details on would be classed as commercially sensitive and nothing to do with you.

No shop will tell you how much they buy things for.

 

"Commercially sensitive" maybe "nothing to do with me" i disagree as demonstrated in my previous post. The securitisation of the notes and the performance for them to pay the investors are dependant on my performance. They are very much linked and connected.

 

I'd like to know from someone versed in contract law if securitisation is exempt from disclosure.

[Conniff]

I did ask before - explain what you understand to mean by 'securitisation' ??

[nav110]

Conniff why do i get the feeling you want to take me around in circles. I can only conclude you repeating for my understanding of securitisation without taking pervious post into consideration is to derail my query. Apologies if this is not the case but i will quench your need for asking with the following link http://en.wikipedia.org/wiki/Securitization.

 

Back to my question in contract law is lender exempt from disclosing securitisation?

[Conniff]

Yes

 

I wasn't really interested in what Wiki said it was, I wanted to know what you thought it was.

[nav110]

Yes

 

any refrence to contract law

Edited December 8, 2012 by nav110

[bhall]

If you applied for a mortgage with Kensington Mortgages (a subsidary of Investec) after 2009, when it recommenced lending and your mortgage was securitised it would be GEMGARTO 2012-1 PLC.

 

If you applied for a mortgage prior to 2009 and it was securitied then it would be one of the 'Residential Mortgage Securities xx' (with xx denoting a different number, as an example Residential Mortgage Securities 8 plc) companies, currently running from 8 plc to 26 plc.

 

In response to your question, it is likely that within the terms and conditions of your mortgage agreement there is a specific term that states that Kensington Mortgage may assign its rights and duties etc.

 

Specific disclosure is not required and may not even be ordered as a result of any legal proceedings, as evidenced by case law. Notice of securitisation will not be provided to you, until the sale is completed by a 'perfection event' resulting in substitution of your lenders name with that of the applicable Residential Mortgage Securities / Gemgarto company (which ever is the case) on the legal charge you gave to your lender that is registered with the land registry.

 

A SAR would not provide the information you have requested as a SAR would only result in the provision of 'Personal Data' and not details of contractual agreements between your lender and a 3rd party, of which you are not a party too.

Edited December 8, 2012 by bhall

[nav110]

If you applied for a mortgage with Kensington Mortgages (a subsidary of Investec) after 2009, when it recommenced lending and your mortgage was securitised it would be GEMGARTO 2012-1 PLC.

 

If you applied for a mortgage prior to 2009 and it was securitied then it would be one of the 'Residential Mortgage Securities xx' (with xx denoting a different number, as an example Residential Mortgage Securities 8 plc) companies, currently running from 8 plc to 26 plc.

 

In response to your question, it is likely that within the terms and conditions of your mortgage agreement there is a specific term that states that Kensington Mortgage may assign its rights and duties etc.

 

Specific disclosure is not required and may not even be ordered as a result of any legal proceedings, as evidenced by case law. Notice of securitisation will not be provided to you, until the sale is completed by a 'perfection event' resulting in substitution of your lenders name with that of the applicable Residential Mortgage Securities / Gemgarto company (which ever is the case) on the legal charge you gave to your lender that is registered with the land registry.

 

A SAR would not provide the information you have requested as a SAR would only result in the provision of 'Personal Data' and not details of contractual agreements between your lender and a 3rd party, of which you are not a party too.

 

Thanks bhall for the informative post.

 

Would like further clarification as in my T&C's is it states "kensington may transfer" and the word assign not used. The context of the statement gives impression for the sale of the mortgage to a third party whom then assume all responsibility and as a borrower my dealings would be with the new party whom the mortgage has been transfered to.

 

From my understanding the securitisation process starts from the initial process of application. During underwriting applicable product are matched for the borrowers. These products are manufactured for securitisation purposes.

Firstly it would be intresting to find out how individual details are used to determine the kind of product offered.

 

What is the 'perfection event' ? is that the sale of the securities?

[bhall]

Would like further clarification as in my T&C's is it states "kensington may transfer" and the word assign not used. The context of the statement gives impression for the sale of the mortgage to a third party whom then assume all responsibility and as a borrower my dealings would be with the new party whom the mortgage has been transfered to.

 

Hello nav110,

 

Assignment be it either legal or equitable is the method by which rights are transferred between two parties. In the context of the T&C's, it would generally be accepted that the words have the same meaning.

 

If you refer to the section 1.1 of the Kensington General Mortgage Conditions booklet, it gives the following meaning for the word 'transfer'

 

Transfer includes a mortgage, agreement to sell, legal or equitable assignment, transfer, charge or other disposition of some or all of our rights under the mortgage.

 

From my understanding the securitisation process starts from the initial process of application. During underwriting applicable product are matched for the borrowers. These products are manufactured for securitisation purposes.

 

Firstly it would be intresting to find out how individual details are used to determine the kind of product offered.

 

I understand that Kensington do not sell mortgages directly to consumers and that applications are made through Independant Financial Advisors (IFA'S). When a IFA submits an application to a lender, it would be for a specific product - being one of a number of different products offered, such as fixed, discount or offset etc. The borrower and the IFA would agree which product to apply for before an application had reached the underwriting process.

 

What is the 'perfection event' ? is that the sale of the securities?

 

A 'perfection event' is usually a default by the lender in payment to the special purpose vehicle (be it either Residential Mortgage Securities xx or Gemgarto) or any other event that is considered to be a risk and is detailed within the 'Mortgage Sale Agreement' that results in statutory notification being given both to the borrower and to the land registry, as required by the Law of Property Act 1925 and the Land Registration Act 2002.

[nav110]

Transfer includes a mortgage, agreement to sell, legal or

equitable assignment, transfer, charge or other disposition of some or all of

our rights under the mortgage.

Ive seen arguments made regards to "legal or equitable assighnment" and if equitable assighnment for a charge is correct. To be honest this is way beyond me. What i'd like to know is, should the terms include "legal or equitable assighnment" within the mortgage conditions or is that at the lenders discreation?

 

 

I understand that Kensington do not sell mortgages directly to consumers and

that applications are made through Independant Financial Advisors (IFA'S). When

a IFA submits an application to a lender, it would be for a specific product -

being one of a number of different products offered, such as fixed, discount or

offset etc. The borrower and the IFA would agree which product to apply for

before an application had reached the underwriting process.

 

As i now understand, the products which IFA advise on are created by the lender for the IFA to sell. These products are created by the lender for the purposes of securitisation (in kensington's case).

The application (borrowers details and product) is submitted to lender for it to be underwriten. This underwritten process determines the applications success and in essence starts the securitisation process. please correct if wrong.

 

How would one obtain the relevant mortgage sale agreement?

[nomorecrooks]

@ Nav110: what is your trhinking on this point? If Kensington has the right to dispose of your mortgage and it has done so then what advantage are you trying to obtain by addressing this?

 

I too have a mortgage and am more than unhappy with Kensington. I have asked Kensington if my mortgage has been sold, transferred or hypothecated in whole or in part and Kensington simply refuses to respond. Much as I'd like to find a valid argument with Kensington on this point I cannot see any valid angle at all.

 

So, if you have a thought please do share it!

[nav110]

Lets start of by saying KML have not made it easy as their whole lending/setup and commitments are very complex. It is difficult to distinguish if any real commitment/understanding remains between KML and borrowers. Its a one way system with no real intent to provided a positive solution for borrowers but rather to penalise struggling borrowers to further put them in arrears whilst they profit from their sales and earn interest for themselves/investors.

 

Let me break it down to demonstrate how the machine is working (myunderstanding)

 

1- Joe is looking for a mortgage and through a broker is offered KML as the lender. KML do not provide direct to borrowers.

 

(In my case which i did not know the broker 'TML' where also owned by KMC whom i paid a lot of money to find me the best deal suited for me. As TML were owned by KMC it was in their best interest to provide me with a KML product rather then to work in my best interest by finding the best deal. TML also did not provide advice or breakdown of the product offered but only helped with submitting the application for underwriting purposes (they may have underwritten the loan themselves).

 

2- What the broker/lender do not tell the borrower is:

 

a) the many levels/variations of interest rates applied eg libor/KVR/additional margin, how they relate and how calculated etc

 

b) the loan was created for the purpose to be securitised and sold as shares to investors. This is a crucial understanding as KML never intended to keep a traditional style or relationship for lending, but were more interested in making huge profits. So KML’s interest was not to provide lending nor any real interest to the borrower as this was the first process to further their real goals. Through the sale process KML would get paid for the loan they lent but would remain as legal title holders whilst investors would have equitable interest. The payments borrowers make are split and paid to the various parties involved in the scheme.

 

c) KML’s role and responsibilities change after securisation. KML were the loan originators but after securitisation are no longer owners of the loan. They instead become ‘the special servicer/Cash Bond Administrator which over look the processes and agreements executed for the securitisation to take place. Their main objective is meeting the mortgage sale agreement and that which is set outin the securities document rather than to serve and support the interest oftheir borrowers.

 

d) Administration of borrower accounts is carried out by third party companies whom have no interest in the original loan or to the borrowers. They act under the provisions of the KMC name but execute administrative duties for thousands of other mortgage lenders whom are also in the securitisation boat. This creates a major communication breakdown as well as shortfall in responsibilities. These third parties are unable to provide alternatives/support/assistance and plans to move forward as the balance and interest of lender/borrower is changed.

 

e) as the relationship between the lender and borrower is deteriorated, the lenders interest now favours its investors, as the balance shifts, this then creates unwarranted and excessive pressure on borrowers to perform on contracts which arguably are unfair from the onset.(ive not gone into the terms of these contracts but many contain unfair t/c’s, I know mine does).

 

f) the borrower is unable to change the product with KML even when other products are available. This is due to the performance of the product the borrower has and its effects on the investors who bought the loans. If KML complied and helped their borrowers change products then they would have upset investors who are not receiving the returns expected/promised.

 

g) as and when the mortgage become difficult to perform, pressure is applied to the borrower in the interest of the investors. Under the KML model, the more favourable and likely outcome for when a borrower is not properly performing is re-possession. Re-po is not the last resort for KML.

 

As you can see from the above there is no fairness or balance between KML and the borrower. As the borrower is already the weaker party entering into a mortgage agreement, little does he know what to expect, as when the mortgage is securitised the borrower is not left just weak but also vulnerable. KMLdisposes of any real, relationship/help/support/responsibilities/further lending/change of product etc in favour of its investors creating an unbalanced and unfair relationship. How many borrowers would commit to such companies if they knew what they were getting in to. I think that’s why the securitisation is kept quiet as well as other questionable acts within the whole setup and process.

 

The process has created unfair and unbalanced relationship and KML have negotiated and sold our rights and their responsibilities to third parties.

Edited December 14, 2012 by nav110

[nomorecrooks]

@ Nav110:

 

I accept that your argument is logical and has a chilling and disheartening conclusion, however:

 

• I think that your argument is as much with the mortgage broker as it is with KMC per se (though they are in your case one in the same)
  
• Part of me says: "and so what"; it is a cruel and unfair world populated by many unattractive individuals and organisations. That said I believe that if it could be proven that KMC will strenously avoid any variation to the mortgage terms & conditions irrespective of its obligations under statute as a result of its contractual position with the investors then one might be able to argue that KMC is in breach of its requirements under MCOB.
  

Have you or has anyone here attempted to test if a mortgage company is in breach of MCOB due to its contractual requirements with investors via a securitisation?

[nav110]

 

Part of me says: "and so what"; it is a cruel and unfair worldpopulated by

many unattractive individuals and organisations.

 

 

We shouldn’t turn a blind eye to the tyranny and oppression, as by being contempt to what’s going on is acknowledging their actions as they continue to oppress borrowers.

 

Check out the panorama's Britains Hiddien Housing Crisis http://www.bbc.co.uk/programmes/b01pc1qbas this is just the tip of the iceberg.

 

 

That said I believe that if it could be proven that KMC will strenouslyavoid

any variation to the mortgage terms & conditions irrespective of its

obligations under statute as a result of its contractual position with the

investors then one might be able to argue that KMC is in breach of its

requirements under MCOB.

 

 

Breach of MCOB is a secondary matter which i think are useless provisions as they only regulate mortgages from 31 Oct 2004 onwards and not prior to the date even when it was identified prior to the date the misconduct of lenders. So unregulated mortgages are left out with the wolves which were the very foundation for the MCOB to be implemented.

 

Breach of duties/responsibilities do not necessary require MCOB provisionsas a breach in contract is a primary matter which can be easily identified by assessing the terms and intent before and after the contract and the performance of either party. Contracts go back a long time and remain the principal for any agreement to be in effect. The general provisions of a contract dictate the fairness and equality of the parties involved. A disclosure is a pinnacle factor for a contract to be in force with many other factors and without proper disclosure, important matters are left in the dark which could be critical effecting how either party performs under the contract.This non disclosure creates unfairness and an imbalance leaving either party vulnerablet o the elements. Im not a professional in the field of contracts/law but alotis common sense as that is how law originally developed.

 

Its not difficult to understand or prove the lack of ownership/duties/responsibilitiesfrom the originating lender to the borrower in the case of KML. KML is restricted within the group and bound to the other agreements which took effecton securitisation. Duties/responsibilities are therefore sent through the various channels at the discretion of those whom remain owners or in charge of the loans/Notes.

 

I hope you see why im asking for the information to help me with my journey. Ive managed to get my securities document where my mortgage is located part of the pool. Its quite an interesting read, now I need to find the mortgage sales agreement and some pointers in the right direction.

 

By the way where are all the experts on securitisation what happened to them? I know im late in this game as some of the securitisation threads go way back, have they signed non disclosure agreements, to not let others know what they managed to find out?

Edited December 15, 2012 by nav110

[bhall]

Lets start of by saying KML have not made it easy as their whole lending/setup and commitments are very complex. It is difficult to distinguish if any real commitment/understanding remains between KML and borrowers. Its a one way system with no real intent to provided a positive solution for borrowers but rather to penalise struggling borrowers to further put them in arrears whilst they profit from their sales and earn interest for themselves/investors.

 

Let me break it down to demonstrate how the machine is working (myunderstanding)

 

1- Joe is looking for a mortgage and through a broker is offered KML as the lender. KML do not provide direct to borrowers.

 

(In my case which i did not know the broker 'TML' where also owned by KMC whom i paid a lot of money to find me the best deal suited for me. As TML were owned by KMC it was in their best interest to provide me with a KML product rather then to work in my best interest by finding the best deal. TML also did not provide advice or breakdown of the product offered but only helped with submitting the application for underwriting purposes (they may have underwritten the loan themselves).

 

2- What the broker/lender do not tell the borrower is:

 

a) the many levels/variations of interest rates applied eg libor/KVR/additional margin, how they relate and how calculated etc

 

b) the loan was created for the purpose to be securitised and sold as shares to investors. This is a crucial understanding as KML never intended to keep a traditional style or relationship for lending, but were more interested in making huge profits. So KML’s interest was not to provide lending nor any real interest to the borrower as this was the first process to further their real goals. Through the sale process KML would get paid for the loan they lent but would remain as legal title holders whilst investors would have equitable interest. The payments borrowers make are split and paid to the various parties involved in the scheme.

 

c) KML’s role and responsibilities change after securisation. KML were the loan originators but after securitisation are no longer owners of the loan. They instead become ‘the special servicer/Cash Bond Administrator which over look the processes and agreements executed for the securitisation to take place. Their main objective is meeting the mortgage sale agreement and that which is set outin the securities document rather than to serve and support the interest oftheir borrowers.

 

d) Administration of borrower accounts is carried out by third party companies whom have no interest in the original loan or to the borrowers. They act under the provisions of the KMC name but execute administrative duties for thousands of other mortgage lenders whom are also in the securitisation boat. This creates a major communication breakdown as well as shortfall in responsibilities. These third parties are unable to provide alternatives/support/assistance and plans to move forward as the balance and interest of lender/borrower is changed.

 

e) as the relationship between the lender and borrower is deteriorated, the lenders interest now favours its investors, as the balance shifts, this then creates unwarranted and excessive pressure on borrowers to perform on contracts which arguably are unfair from the onset.(ive not gone into the terms of these contracts but many contain unfair t/c’s, I know mine does).

 

f) the borrower is unable to change the product with KML even when other products are available. This is due to the performance of the product the borrower has and its effects on the investors who bought the loans. If KML complied and helped their borrowers change products then they would have upset investors who are not receiving the returns expected/promised.

 

g) as and when the mortgage become difficult to perform, pressure is applied to the borrower in the interest of the investors. Under the KML model, the more favourable and likely outcome for when a borrower is not properly performing is re-possession. Re-po is not the last resort for KML.

 

As you can see from the above there is no fairness or balance between KML and the borrower. As the borrower is already the weaker party entering into a mortgage agreement, little does he know what to expect, as when the mortgage is securitised the borrower is not left just weak but also vulnerable. KMLdisposes of any real, relationship/help/support/responsibilities/further lending/change of product etc in favour of its investors creating an unbalanced and unfair relationship. How many borrowers would commit to such companies if they knew what they were getting in to. I think that’s why the securitisation is kept quiet as well as other questionable acts within the whole setup and process.

 

The process has created unfair and unbalanced relationship and KML have negotiated and sold our rights and their responsibilities to third parties.

 

Except for your comments about the advisor, how is KM really any different with regard to securitisation to every other lender ?

 

Virtually all lenders securitise debts, be it mortgage debt, credit card, hire purchase etc. Even the Bank of England is involved in securitisation, there are also now numerous legal cases involving consumers, questioning securitisation - most recently two Northern Irish cases.

 

In every case, it has been concluded that legally there is nothing wrong with securitisation.