SPML/LMC anyone claimed for mis selling and unfair charges?

[midge61]

Hi

 

This might help

 

http://www.consumeractiongroup.co.uk/forum/show-post/post-2056602.html

[ryde]

Please,please,please the legal/equitable title debate has been done to death.

The object for everyone is to get rid of these parasites once and for all and get a new deal.

I simply cannot understand how they are all still trading.If they were a bank they'd have gone under by now and there would have been no bail out as there wasn't when lehmans went bust.

the creditors/investors are screaming for their money back in full because of the shortfalls,can anybody tell me when this lot are going to go pop.

[landy_alert]

Many thanks for this Landy. This is very disturbing. Crapstone and Midge61 should be able to confirm whether their complaints to the FOS relate to agreements before or after 6th April 2007. Hopefully they'll be along soon.

 

Who on earth Adjudicates agreements before this date?

 

Thanks EiE - a question I would very much like to know the answer to:confused:

[ryde]

Consumer Credit Act 2006 – concerns for mortgage lenders

 

This spring marks the introduction of the first substantive reforms under the Consumer Credit Act 2006 and radically overhauls and updates many provisions of the Consumer Credit Act 1974. Phil Catchpole reviews the impact of these reforms for lenders

The first set of reforms introduced in April includes a new test of unfair relationships to replace the existing extortionate credit bargain test, an extension of the jurisdiction of the Financial Ombudsman Service to consumer credit disputes and the abolition of provisions for the automatic unenforceability of improperly executed agreements.

A further set of changes will be introduced in April 2008 including the abolition of the financial limit under the Consumer Credit Act (CCA), the introduction of new post-completion transparency provisions (improving the level and quality of information given to debtors once an agreement is made), an overhaul of the existing credit licensing regime and enhanced powers of the Office of Fair Trading to take action against miscreant licence holders.

As a body of reforms, the 2006 Act significantly improves and updates existing UK consumer credit law. However, three key concerns arise from the reforms that may create uncertainty for residential mortgage lenders and the effect of these aspects of the Act need to be closely analysed by lenders in order to determine potential wider impact and consequences for forms of lending that should have remained untouched by the reforms.

Abolition of the CCA financial limit - dual regulation?

Perhaps the greatest uncertainty and the principal area of concern for mortgage lenders will be created by the abolition of the upper limit of £25,000 for CCA-regulated loans, due for implementation in April 2008. This will affect mortgage lenders when borrowers make variation to existing mortgage loans, and the unintended consequence may be that some unregulated loans become subject to the CCA and some Financial Services Authority (FSA)-regulated loans become subject to dual regulation under both the Financial Services and Markets (FSMA) and CCA.

The problem is created by the operation of variation made to original agreements under section 82 (2) of the CCA:

“Where an agreement (a “modifying agreement”) varies or supplements an earlier agreement, the modifying agreement shall for the purposes of the Act be treated as

(a) revoking the earlier agreement, and (b) containing provisions reproducing the combined effect of two agreements and obligations outstanding in relation to the earlier agreement shall accordingly be treated as outstanding instead in relation to the modifying agreement.”

Section 82 effectively operates to create a new CCA-regulated agreement comprising the earlier agreement and the modifying agreement.

For mortgage loans completed before 31 October 2004 (which are not FSA-regulated) variation of the loan by, for instance, a further advance, will most likely result in the combined loan becoming regulated under the CCA, forcing lenders to comply with CCA documentation requirements and to meet the new rules under the CCA 2006 for post-contract information such as prescribed annual statements, arrears and default notices.

For FSMA-regulated mortgage contracts (RMCs) created from 31 October 2004 that are varied by a further advance, the Department of Trade and Industry (DTI) has already acted to prevent such loans becoming subject to dual regulation through introduction of the Financial Services and Markets Act (consequential amendments) Order 2005.

This Order directly amended section 82 of the CCA, so that the revocation of the earlier agreement by the modifying agreement would not occur where the modifying agreement is an RMC. Modifying agreements that are RMCs are exempt agreements under section 16(6C) of the CCA. Though partially addressing the issue of dual regulation, the Order did not address the fact that modification may still occur in circumstances where lenders do not treat further advances as RMCs or the modification occurs as a result of an alternative type of variation to the original loan contract, such as through a transfer of equity or by an interest rate switch. To date, the possible risk of creating dual regulation by such variations remains, and the uncertainty caused (and a lack of clear guidance on the issue by the DTI) is generating increasing concern.

Retrospective application of the unfair relationships test

One of the most significant changes introduced under the 2006 Act (and directly applicable to new consumer credit agreements made from 6 April this year) is the introduction of a new test of unfair relationships, designed to allow consumers to challenge the terms of unfair credit agreements. Under the new test a court may consider all the relevant circumstances of a credit relationship to determine its fairness including:

 

• Any of the terms of the credit agreement and any related agreement;
  
• The way in which the creditor has exercised or enforced any of its rights;
  

Any other thing done by or on behalf of the creditor either before or after the making of the agreement or any related agreement.The intentional broad scope of this test gives sweeping powers to the court to examine every aspect of a credit relationship, not just the written terms of any credit agreement. However, of particular concern to mortgage lenders is that the DTI has ensured that the provisions of the new test will have a retrospective effect and will apply to any existing agreements from April 2008. From this date, it will be open to the court to find that a relationship is unfair by reason of conduct or events that have occurred at any time before the provisions came into force and to order the repayment of any payments made.

The unfair relationship provisions apply to any credit agreement between a creditor and an individual whether or not it is a CCA-regulated agreement, apart from an agreement secured by a first mortgage over residential land that falls within the category of exempt agreement provided under section 16 (6C) CCA (an agreement that is secured by a land mortgage and entering into that agreement as lender is a regulated activity for the purposes of FSMA 2000). The effect of this is that the unfair relationships test may include within its scope the provisions and terms of any unregulated first mortgage agreements made before 31 October 2004.

RMBS

The implications for lenders that securitise receivables under residential mortgage-backed securitisations (RMBS) are potentially significant - the new test will apply to any eligible agreements entered into before lenders became aware of the extent of the new requirements. Many such agreements will have been securitised under transaction documentation that did not contemplate the test of unfair relationships. The retrospective effect of the legislation could have profound effects upon different participants in the burgeoning UK RMBS market. The potential impacts have already been well signposted by the Bank of England's Financial Markets Law Committee in its earlier report in October 2005 on the new provisions.

For originators in typical securitisations, there is a risk that following adverse case decisions on the application of the unfair relationships test, the agreements supporting the receivables to be sold are not legally binding or enforceable as they fail to comply with relevant legislation (including the CCA). Such loans may need to be removed from pools of assets or substituted by originators. There may be costs to originators compensating debtors under agreements and by becoming obliged to unwind transactions. If significant unfairness is established across whole portfolios, this could prejudice the credit standing of the originator and erode investor confidence in such securitisations.

For the special-purpose vehicles (SPVs) or trustees established to hold pools of relevant receivables, if significant unfairness is established there may be a need to assess the comparative risks of wholesale repurchase before actual problems arise against the increased possibility of receivables becoming uncollectible in the future. There is a technical risk of SPVs being joined as defendants in proceedings along with the originator (which bears the burden of proof in any proceedings). There is a potential risk that SPVs may become subject to damages claims from consumers even after closure of securitisations (though any loss may be mitigated by indemnities offered by the originator). There will be a need to review existing contractual mechanisms that allocate risk to the originator, a need to review and adjust commercial terms, to review the buy back and substitution provisions within documentation and generally ensure that warranties, representations and indemnities given operate effectively.

It is no surprise that the principle of retrospective application of the new test has been questioned and challenged by the industry, especially in relation to mortgages by the Council of Mortgage Lenders. The DTI has indicated its willingness to discuss with the industry the length of the transitional period for application of the test to existing loans. The CML has proposed that an additional six-year transitional period be included beyond April 2008 for mortgages affected so that the unfair relationships provisions would not bite until most securitisations had unwound. This is unlikely to be accepted by the DTI, which is probably not going to distinguish over retrospectivity between mortgage assets under RMBS deals and those under asset-backed securitisations comprising unsecured credit agreements.

Buy-to-let lending - CCA regulation?

A further concern raised by lenders is whether buy-to-let lending will fall under the provisions of the CCA. The concern is raised primarily by the wording of a new section 16B of the CCA 1974 inserted by section 4 CCA 2006 introduced in April:

“(1) this Act does not regulate -

(a) a consumer credit agreement by which the creditor provides the debtor with credit exceeding £25,000 … if the agreement is entered into by the debtor … wholly or predominantly for the purposes of a business carried on or intended to be carried on by him”

Section 16B (2) allows for a declaration to be made by the debtor creating a presumption that the agreement is entered into wholly or predominantly for such business purposes. The DTI has reassured the industry that it does not intend to regulate buy-to-let, and the business exemption it has introduced under the 2006 Act should provide clarification. However, concerns remain. First-time buy-to-let borrowers and buy-lo-let loans covering a small number of rental properties which were otherwise not protected by the Act may, following the abolition of the £25,000 financial limit, come within the scope of the Act, triggering a requirement for regulatory compliance by lenders. The DTI freely admits that this is an unintended consequence of the 2006 Act.

For some lending, the existing Consumer Credit (Exempt Agreements) Order 1989 will exempt smaller agreements entered into for buy-to-let purposes. But the DTI has warned lenders who use agreements that do not fall within the scope of this existing Order that they will need to ensure regulatory compliance. The DTI has suggested in its response to a recent consultation on draft statutory instruments under the 2006 Act that it would address this unintended impact on buy-to-let lending and seek to amend the CCA 1974 specifically through use of a Legislative and Regulatory Reform Order. The amendment would exempt any agreements that are entered into in order to provide credit of more than £25,000 to finance or refinance the purchase of land that is to be let for use as a dwelling, or to finance the repair or improvement of such land or the provision of any dwelling upon it, where the loan is secured on that land.

It remains to be seen when the DTI will successfully address this concern and prevent the regulation of buy-to-let lending by the back door.

Phil Catchpole is an associate at national law firm Shoosmiths, advising on consumer credit, mortgages and financial service regulation. Tel: 08700 868314.

 

 

this says an awful lot especially re securitization

Edited November 8, 2009 by ryde

[ryde]

eie

have copy of pml mortgage deed is that any good?probably same as spml

[enoughisenough]

 

From the post above the one immediately preceding this one

 

The CML has proposed that an additional six-year transitional period be included beyond April 2008 for mortgages affected so that the unfair relationships provisions would not bite until most securitisations had unwound

 

Is this not proof positive of the intent not to fulfil the term?

Edited November 8, 2009 by enoughisenough

[enoughisenough]

Midge

 

Since you are floating around could you possibly clarify your earlier post. Did the FOS say they wouldn't look at it and was their justifiaction the same as Landy's?

[enoughisenough]

Hello Guests...

[the thiefs]

Please,please,please the legal/equitable title debate has been done to death.

The object for everyone is to get rid of these parasites once and for all and get a new deal.

I simply cannot understand how they are all still trading.If they were a bank they'd have gone under by now and there would have been no bail out as there wasn't when lehmans went bust.

the creditors/investors are screaming for their money back in full because of the shortfalls,can anybody tell me when this lot are going to go pop.

Hopefully soon !!!!!! the creditors and investors should recieve nothing they gambled and lost. You dont get payed if your horse falls at the first do you.

[enoughisenough]

In respect of equitable -v- legal. With respect that is not why I was seeking the sale agreement.

 

The sale agreement remember is not the contract between us and them. What I really want to know is whether such agreements indicate the redemption period in ink. i.e. Six years. That nails it for us.

 

Wonder if any investor who is totally peed off would like to come forward, given the old maxim of my enemy's enemy is my friend?

[midge61]

Hi

 

I think at the time I complained ( it was about them taking payments and not applying them to the account so I wanted them back) the FOS had not been given the remit of loans. Will have to try and find the letter to confirm.

 

I won anyway, took me 6 months of pure bloody minded persistance though!

[wonderman]

EIE,

 

Yes, borrower are led to believe that they have a contract where the lender loans the money for 25 years - rubbish. Just look at the company accounts for any of the SPV and/or the registered "lender". You will see in their directors report that their strategy is to settle up within 5 years. The mortgage loans are only 5 year loans. For the borrower this means that you WILL be forced to remortgage within 5 years - which is the experience of ALL borrowers and if you don't - arrears will be fabricated to make it look like "arrears" and you WILL be repossessed. That is the REALITY. Never mind the rule of law, the courts will back up the "lenders" and rubberstamp this strategy.

[enoughisenough]

Hi Midge

 

Did you go to court to get this sorted or did you just keep pushing at my fabled 'open door'?

 

Wonderman

 

Your recent contributions have been excellent. Your most recent post confirms my suspicion, about the 'temporary' nature of the contract and our useless courts and regulatory institutions. Somebody deserves a royal kick in the nether regions for this mess.Come to think of it this is the only country in Western Europe where we are subjects rather than citizens.

Edited November 8, 2009 by enoughisenough
Mistake in typing

[the thiefs]

EIE,

 

Yes, borrower are led to believe that they have a contract where the lender loans the money for 25 years - rubbish. Just look at the company accounts for any of the SPV and/or the registered "lender". You will see in their directors report that their strategy is to settle up within 5 years. The mortgage loans are only 5 year loans. For the borrower this means that you WILL be forced to remortgage within 5 years - which is the experience of ALL borrowers and if you don't - arrears will be fabricated to make it look like "arrears" and you WILL be repossessed. That is the REALITY. Never mind the rule of law, the courts will back up the "lenders" and rubberstamp this strategy.

My loan is over 25 years i have made every payment since i went to court for arrears. im not sticking up for these guys But they have not added any litigation charages since i went to court.If they was to do that and force me out of my house there would be big trouble i would never let them get away with it even if i had to protest out side there offices

[gustavius rex]

Hi Guys,

 

have just finished my first batch of N244's which will go to the courts tomorrow. However, having gone through the thread in detail today, l am dismayed to see that you all seem to have found your own tails again. Ryde, l agree with you and almost all you say, but, with one clarification. The investors claim against Lehman had nothing to do with us. the only entities we are dealing with are Lehman subsidiries, i.e. SPML, PML, LMC and so on. They are all Private Limited Stand Alone Companies and ca therefore not be DIRECTLY part of the Lehman bankrupcy. But, and this is a big but, should the FSA/FSO/OFT/DTI or whomever fine any of these paper outfits for unfair trading, then they will all automatically be insolvent and have to stop trading. Ryde is absolutely right when he says that they have no money. What they all relied on was the Draw Down Funds and they are all gone. What is left are the incoming mortgage payments and until they dry up completely the investors through their Trust Company cannot do diddly squat! lt's risk investment and they can only invoke the right to transfer the securities in the case of bankrupcy or total lack of performance, which is about the same. The problem for the investors are the enormeous amounts they will have to pay in stamp duty once they take over, not to talk about the amin. mess. lt shall be interesting to see how it all will develop.

GR

[gustavius rex]

GR

With reference to your repossession, look at Norgan's Law, I think you will find it on google, it worked for me.

All the very best

M

 

 

Thank You so much Eagleforms,

 

Have included Norgan's Law in my defence as the case is almost equal to mine. Have also spoken to my lender, who suddenly seems more willing to look for alternative solutions??? We shall see how it goes, but, am not particularily worried as l shall use the Statutory Instrment 1999 too and that seems to be more worrying for our friends in the banking industry than Norgan's law.

 

Again thank You,

 

Gustavius

[brassed-off-2]

Gus

 

Wishing you all the best!!

 

b-o-2

[ryde]

Can anyone answer this one if Price waterhouse decide to sell the spml/pml mortgage books who on earth is going to want to buy them.

Think about it spml etc own a huge bundle of paper legal titles they got what they originally paid for these(ie what they originally gave us for our mortgages) from eurosail the spv for the beneficial/equitable titles they sold them... eurosail then traded these as investment bonds on the irish stock exchange so all the income via repayments comes from us to spml to eurosail to multiple investors.so the spml mortgage book is worthless because the real owners by legal guarantee are the bondholders so how can you sell something which is worthless and in reality has been diced up and sold to thousands of different entities and spml is obligated to pay the returns on the investments to eurosail and then to the bondholders.

Can anyone get their head round that lot and who'd want to buy what amounts to a massive debt obligation.???to make it saleable you would have to buy back all the equitable titles or eurosail would have to obtain all the legal titles (which i think they can under guarantee) if this is the case the legal titleholder and name on the 1st charge on your property will change to eurosail as it is with some peoples insurance does this make sense because this to me is the big picture.

Edited November 8, 2009 by ryde

[midge61]

Hi EIE

 

The one I won was against a secured lender. sub prime but not SPML. They are as bad if not worse though as they charge you £250 as soon as you are late with a payment for passing you to their in house collectors.

 

They ignored all my letters and faxes but in the end I think they gave in because i was not going away even though I was right and they were wrong.

 

They were in the press recently for the re-possession that cannot be for 5 years;)

Edited November 8, 2009 by midge61
spelling!

[ryde]

I'm posting this link in in full for easy reference and so people who haven,t seen it can see what this is all about in full.You can easily extract bits from this and expand by personal experience because i think this will cover the lot.Its a big one but so important directly for so many reasons and almost like the sum of all these 100+ posts.

 

 

ttees > Treasury > Treasury Mortgage arrears and access to mortgage finance - Treasury Contents

 

 

Written evidence submitted by Mr Fulcher

 

EXECUTIVE SUMMARY

1. The following submission, in response to the Treasury Select Committee's call for submissions, made 17th June, 2009, submits evidence of widespread consumer detriment experienced as a result of practices in the "sub-prime" mortgage market which are systemic, in breach of regulatory instruments, and by consequence therefore unlawful. These practices, as will be identified, fall within the oversight and compliance responsibilities of the FSA, the OFT and FOS.

 

2. The scale of consumer detriment is both unparalleled & appalling. The CML[35] figures serially underestimate the real scale of repossession action. The repossession figures will typically only reveal 1st charge repossessions, will not reveal how many repossession claims are brought in relation to 2nd charge mortgages which are prevalent in the sub-prime sector, will not reveal how many possession claims are "in the pipeline" and will also never fully disclose the vast quantity of suspended possession orders which are waiting now to be converted, alas all to easily, to full possession orders.

 

3. The submission will present three main points; (i) systematic abuse of consumers of sub prime mortgages in origination, and subsequent management and operation by TPAs (Third Party Administrators); (ii) regulatory failure, not in the substance of the regulations themselves (clarity prevails), but in their enforcement, chiefly the responsibility of Financial Services Authority and the Office of Fair Trading and finally, (iii) the inability or unwillingness of the County Courts to exercise application of the law in relation to examining the terms and conditions of the contracts, due scrutiny of the defendant's defence statements, examining fully the claimant's locus standi and examining the bona fides of the claimant's alleged calculations of arrears which are often substantially comprised of unlawful and therefore unrecoverable charges.

 

SUBMISSION

Origination:

4. Almost without exclusion most sub prime mortgages originate through a broker. These brokers have clear responsibilities under law. The lenders also are governed by responsibilities for the broker's actions.[36] It is sadly far from uncommon that brokers act with cavalier disregard for the consumer. It is paramount that the deal is struck and the commission is paid. The commission is then added on to the loan, and compound interest is added over the lifetime of the mortgage.

 

5. The consumer of such products will inevitably pay a higher rate of interest (between 8 and 14% is not uncommon) on even relatively small 2nd charge mortgages. The assumption has hitherto been that the consumer in question is a higher category of risk. Often these will have been the very consumers who have fallen foul of punitive and unlawful charges in other aspects of their finances, thus resulting in negative, and sometimes unlawful, entries on their credit references. It is worth noting that the vast majority of bank charge and credit card or other personal finance settlement claims have not resulted in a full removal of default notices applied to the consumer's credit record, thus artificially creating this "higher risk category" of consumer. In this respect the consumer is therefore pressurized (if not forced) into the "specialised" sector of the market for his, her or their mortgage.

 

6. Further, it is never fully and transparently disclosed in plain and intelligible terms that the consumer has contracted to a contract which provides that the mortgage will then be "marketed" and sold as an investment opportunity. The typical attraction of these "notes" for the investor are the high rates of interest, and crucially, their early redemption period. To clarify for the committee: early redemption in respect of these mortgages does not usually mean that the borrower is able to pay off the mortgage earlier than the stipulated term. It typically means asset stripping the equity in the mortgagee's home through repossession. The lender thereby has a vested interest in pursuing an aggressive repossession strategy. At no time has any consumer of these mortgage products consented either expressly or otherwise to the subsequent sale of their mortgage, nor typically was he or she ever informed.[37] The issue of securitization and subsequent consumer detriment has been submitted before this committee in prior submissions on the banking crisis.

 

7. Terms are not individually negotiated, and express consent to all terms whether lawful of not is not possible.

 

Operation and performance

8. There is growing disquiet concerning the treatment of consumers in the sub prime sector.[38] The anecdotal evidence, behind which lies a real life story, is also growing. The costs of family breakdown as a result of malicious and often unlawfully premised repossession will mount if serious regard is not in the first instance given to lender's lawful responsibilities, and the duty of enforcement by the various regulatory authorities and services.

 

9. The scale of misconduct and consumer detriment is enormous. In a submission of 3000 words it is impossible to even begin to scratch the surface of the seriously deficient maladministration of consumer accounts, the mistreatment of consumers including those who are able to meet their onerous obligations, and the treatment of those who fall short of meeting theirs. The mortgage products are deliberately designed to result in alleged default, typically within a three to five year period of origination.[39]

 

10. Consumers of these products will variously and typically experience the following:

 

 

 

• (a) failure of notification of the fact that their mortgage has been securitized usually within three to six months;
  

 

 

• (b) absence of consent to a disposition of property as mandated by law
  

 

 

• © failure to lawfully perfect the sale of the mortgage
  

 

 

• (d) Failure of notification that by default any sub prime mortgage is placed on a block building insurance policy even if the consumer of the mortgage product has valid buildings insurance; compound interest is charged thereon;
  

 

 

• (e) alleged none payment where payment has been tendered;
  

 

 

• (f) alleged late payment where payment has been tendered upon date due;
  

 

 

• (g) falsely alleged shortfalls in payments;
  

 

 

• (h) failure to change payment due date to reflect that not all consumers are paid on regular dates or even the same date as collection is deemed due;
  

 

 

• (i) false entries onto consumer accounts regarding alleged failed payments;
  

 

 

• (j) failure to correct such entries after complaint;
  

 

 

• (k) failure to amortize the debt with payments made over and above the interest due, thus creating a higher level of compound interest over the term of the mortgage and increasing over time the likelihood of default;
  

 

 

• (l) failure to acknowledge consumer complaints;
  

 

 

• (m) failure to respond within a reasonable time scale to consumer complaints;
  

 

 

• (n) failure to comply with Data Protection Subject Access Requests;
  

 

 

• (o) willful ignorance of duties under CPR 31.6 in respect of planned or listed litigation;
  

 

 

• (p) commission of offences against both the Telecommunications Act 2003 and the Harassment Act 1997 in the form of unwarranted and intrusive telephone calls often designed to cause embarrassment for example with frequent calls made to the consumer's workplace; unlawfully threatening repossession via a telephone call;
  

 

 

• (q) routine monthly access to and entry upon consumers credit reference files;
  

 

 

• ® Unlawful and punitively raised charges with no prior notification of their application; compound interest applied thereon;
  

 

 

• (s) Failure to provide a breakdown of solicitors cost; dumping said costs onto arrears and applying compound interest thereon;
  

 

 

• (t) undue haste in litigation and claiming to observe the CJC pre action protocols but failing absolutely to do so.
  

 

 

• (u) Threatening consumers with costs which are at the discretion of the court;
  

 

 

• (v) Breaches of the FSMA (2000); Mortgage Conduct of Business (MCOB) rules; the UTCCRs (1999) The Unfair Consumer Practices Directive (2008) and where applicable the Consumer Credit Act (2006); breaches of the criminal law in failure to register that a disposition of land has taken place (s.2 Property Act, 1989, s.127 Land Registry Act 2002); breaches of s.1 and s.5 of the Fraud Act, 2006.
  

 

 

• (w) In litigation, failure to seek possession only as a last resort; failure to serve documents upon the defendant; failure to offer to capitalize genuinely constituted arrears; failure to accept temporarily reduced payments without inferring delinquency; failure to accept payments from customers in arrears where the full alleged arrears is not tendered, failure to refund unlawfully applied charges and compound interest applied; failure to waive charges where a performing arrangement for arrears clearance is in place;
  

 

 

• (x) In suspended cases, the application of charges without notice in excess of the overage paid by consumers to clear their arrears; misrepresentation to the courts that such arrangements will clear the arrears when typically they will not, as a consequence of yet further charges disguised with various nomenclature as arrears management fee, litigation fee, arrears interest, interest charged and so on;
  

 

 

• (y) Willful exaggeration of the consumer's genuine level of arrears, which may be typically half of the overall total claimed.
  

Post possession treatment

11. The willful mistreatment of consumers does not end with possession. Rather this is just the beginning. Consumers will be faced with costs in respect of: eviction; clearance and storage of goods; locksmiths; often unnecessary "improvement" to the property; valuation fees; estate agency costs and ancillary legal fees; finally there is the grossly excessive "early redemption figure" which in absence of a true redemption should not be charged at all but in practice is used to strip the remaining equity out of the property; post—possession harassment of consumers is sadly as common as the harassment endured pre-possession.

12. Multiple anecdotal evidence of such treatment is available in the form of often desperate postings made to consumer web sites. Such information is readily available to committee members; see for example the consumer action group's website.

 

Regulatory failure

13. A strange conundrum arises when one considers the regulatory framework that binds the operation of consumer contracts including mortgages. Historic and recent legislation and regulations, prima facia, provide the consumer with a great deal of protection from unfair terms, contractual irregularities or breaches and unlawful conduct by the credit provider. The conundrum is a simple and powerful one. How is such treatment of consumers even possible?

14. The FSA took on responsibility for mortgage regulation in 2004. FSA Statutory objectives include securing the appropriate degree of protection for consumers (The Financial Services and Markets Act 2000 (Part 1, Section 3)

15. The FSA also regulates by reference to its own principles of good regulation amongst which are that a firm must conduct its business with due skill, care and integrity; observe proper standards of market conduct and pay due regard to the interests of its consumers and treat them fairly. Finally a firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.

 

16. The FSA's own performance report has nine high level indicators by which to assess performance in achieving its strategic aims. Indicator four is particularly instructive: (4)Firms are financially sound, well managed and compliant with their regulatory obligations;

17. Furthermore in reference to the FSA Treating Customers Fairly—outcomes for consumers, July 2006.

 

 

 

• "Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture. Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale"
  

Further:

 

 

 

• "Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint."
  

18. If a firm breaches FSA's rules, enforcement action may follow. If enforcement action is taken the FSA has a range of disciplinary, civil and criminal powers which it can use against regulated and non-regulated firms. The sanctions include financial penalties, removal of authorisation or even criminal prosecution in cases of misconduct.

 

19. Additionally, The Unfair Commercial Practices Directive (UCPD 2008) [40]seeks to protect consumer interests from unfair business-to-consumer commercial practices. In particular, commercial practices will be unfair if they are misleading (this includes both acts and omissions) or aggressive.

 

20. Further the UTCCRs (1999) provide that: (a) a consumer may challenge a standard term in an agreement on the basis that it is "unfair" within the Regulations and therefore not binding on the consumer.

 

21. The scale of consumer detriment by consequence of the practices identified in paragraph 10are part of the corporate culture of the so called "sub-prime" market. Such practices represent clear contempt for the rules and regulations the FSA in conjunction with the OFT and the FOS have laid down.[41] Regulation is clearly insufficient. Only the FSA, together with the FOS and the OFT can give consumer protections real effect. Qui custodientipsoscustodes?

22. There has been much recent discussion elsewhere that the regulatory systems and authorities have failed in their primary duties of oversight and compliance and that better governance is needed.[42] It is submitted before this committee that where the law is clear then observation of the various laws and regulations must be enforced. In absentia the rule of law and the sovereignty of parliament are subjugated to the will of the finance industry, a clear case of the tail wagging the dog.

 

23. The regulatory instruments are clear but seem unable to prevent breaches so as to lack effect. The FSA seems unable to sanction firms breaching its own regulations, often arising from EU directives, which if inadequately applied lay the state itself (or various emanations thereof) potentially open to damages claims, chiefly under the Francovich principle.[43]

 

The role of the County Courts

24. The FOS may take many months to investigate individual complaints against traders[44] and since the process of repossession is often very swift, it invariably falls to the courts to ensure the application of the overriding objective of the Civil Procedure Rules.

25. In many, if not all instances, the consumer is a litigant in person, in ignorance of the law. Anecdotal evidence suggests that the litigant in person does not receive fair treatment before the courts, with defence statements summarily dismissed in some cases.[45]

 

26. In possession claims the courts rely on four outmoded assumptions. These are as follows. (a) that repossession doesn't benefit the lender and that therefore the lender will avoid it whenever they can; (b) that only people who have built up unsustainable arrears will be repossessed; © that the alleged arrears are always accurately calculated; (d) that where breaches of an arrangement are made these are borrower breaches and never lender breaches.

 

27. Under [2000] EUECJ C-240/98[46] courts are mandated by operation of this decision to assess the fairness of the terms of a contract on the consumer's behalf, even if the consumer does not ask the court to do so. On this premise alone the legality of many thousands of possessions which have already taken place is subject to challenge. There has been a visible error in law where courts have not assessed the fairness of the terms of the mortgage contract.

 

28. The courts also fail in the primary duty to place claimants to a strict burden of proof that they retain locus standi following securitisation of mortgages in the mortgage pool. Possession is a drastic measure of last resort and should only take place where the locus standi of the claimant is fully satisfied. References to the Land Registry entry of charge and the mortgage deeds are insufficient given the practice of securitisation, where the originator of the loan clearly states in their Offering Circular that they do not "currently intend to effect any registration at the Land Registry of England and Wales."[47]

 

29. Further the court sanctions an abuse of its own process when it allows suspended orders to be made or suspended orders to become full possession orders. Without full satisfaction of the claimant's locus standi there can be no right of claim.

 

CONCLUSION

30. This submission has been presented in a personal capacity by the witness, as a consumer of a "sub-prime" mortgage product.

31. The overall impact of these widespread practices is that consumers are being serially and unlawfully overcharged, treated with contempt and subject to reprisals when making complaint. They are then ultimately (and often unlawfully) repossessed, in addition to which the equity is then stripped from their homes with hugely disproportionate early redemption charges, following on from repossession. Often their only valuable asset is knowingly undersold in order to realize any cash value remaining, in an uncertain property market, not for the benefit of the former owner, but for the benefit of the possessing party, and on the behalf of those for whom they act, as a consequence of the securitization process.

 

32. Furthermore, the Financial Services Authority and the Office of Fair Trading have failed in their duty to regulate effectively these firms, the Financial Ombudsman Service is too slow to act on consumer complaints and enforce the regulations in this area, and the courts themselves consistently fail in their duty to examine the fairness of standard terms in the terms and conditions of the relevant mortgage contracts as they are mandated by virtue of Murciano Quintero (Environment and consumers) [2000] EUECJ C-240/98 (27 June 2000).

 

33. The courts place too much faith in outmoded concepts of the "honourable" wronged lender seeking a last resort lawful remedy for breach by a "delinquent" consumer, when in fact it is the lender that is delinquent in origination and subsequent operation and performance of the contract.

 

34. The devastating cumulative impact is as follows; family breakdown, homelessness, unemployment and increased child poverty and neglect. Few studies have been conducted but one such study was reported as follows: Understanding the social consequences of mortgage repossession by Sarah Nettleton, Roger Burrows, Jude England and Jenny Seavers, and was published on behalf of the Joseph Rowntree Foundation by York Publishing Services Ltd.[48] These are the inevitable but entirely avoidable consequences of the drive for possessions neither mandated in law or in any meaningful sense fair to the consumer. The regulations are adequate (though far from perfect); compliance with the regulations is woeful. Exhortation has failed. It is time for the "big stick" of compliance enforcement.

 

June 2009.

 

 

 

 

35 CML revises repossession forecast downwards Back

 

36 The Non-Status Lending Guidelines for Lenders and Brokers issued by the OFT in July 1997 and revised in November 1997 apply to all secured loans made to "non-status borrowers". The Guidelines provide guidance as to the activities of lenders and brokers in the non-status secured lending market in areas such as advertising and marketing, loan documentation and contract terms, selling methods, underwriting, dual interest rates, flat interest rates and early redemption payments. According to the Guidelines, advertising and other promotional material must be clear and easily legible and should not be misleading, and the Guidelines prohibit unfair sales tactics. Brokers are obliged to disclose at the outset of the transaction their status with regard to the borrower and the lender, together with details of any fee or commission payable to them as broker or if they are tied to a particular lender. Lenders must take all reasonable steps to ensure that brokers and other intermediaries regularly marketing their products do not engage in unfair business practices or act unlawfully, that they serve the best interests of the borrowers and explain clearly the documentation and consequences of any breach or early repayment by the borrowers. The actions of any broker or other intermediary involved in marketing a lender's products can jeopardise the lender's fitness to hold a consumer credit licence, and the Guidelines make clear that lenders must take all reasonable steps to ensure that such brokers and other intermediaries comply with the Guidelines and all relevant statutory requirements. This is so even if the lender has no formal or informal control or influence over the broker. Back

 

 

37 "The effect of (i) not giving notice to the Borrowers of the sale of the relevant Loans and their Collateral Security to the Issuer and the charging of the Issuer's interest in the Loans and their Collateral Security to the Trustee and (ii) the charge of the Issuer's rights thereto in favour of the Trustee pursuant to the Deed of Charge taking effect in equity (or extending over the Issuer's beneficial interest) only, is that the rights of the Issuer and the Trustee may be, or may become, subject to equities as well as to the interests of third parties who perfect a legal interest prior to the Issuer or the Trustee acquiring and perfecting a legal interest" SPML Offering Circular to Investors 8 August 2005 p.69 Back

 

38 http://www.consumeractiongroup.co.uk/forum/mortgages-secured-loans/170607-spml-london-mortgage-company.html Back

 

 

39 Prior to enforcement, the Notes will be subject to mandatory redemption in part on each Interest Payment Date in accordance with Condition 5(b) (Mandatory redemption in part of the Notes). This mandatoryredemption in part will be funded primarily by scheduled principal payments by the Borrowers under the Loans and principal prepayments (whether voluntarily by the Borrowers, as a result of enforcement of security in respect of the related Property or otherwise) and/or by Loan Sale Principal Proceeds not applied to purchase Additional Loans. (Source Mortgage Funding PLC 2008-1 Prospectus, 18th March 2008) p.14. Back

 

 

40 [ARCHIVED CONTENT] Unfair Commercial Practices Directive - BERR Back

 

 

41 http://www.fsa.gov.uk/pubs/other/concordat08_fsa_oft.pdf Back

 

 

42 FT.com / Registration / Sign-up 40.html Back

 

 

43 Francovich principle Back

 

 

44 your complaint and the ombudsman - our consumer leaflet Back

 

 

45 http://www.consumeractiongroup.co.uk/forum/mortgages-secured-loans/170607-spml-london-mortgage-company.html Back

 

 

46 http://www.eipa.eu/files/repository/product/20070813130142_EA_07_w_01e.pdf Back

 

 

47 SPML/SPPL Offering Circular to Investors 8 August 2005 p.69 Back

 

48 http://www.jrf.org.uk/sites/files/jrf/F829-social-consequences-mortgage-repossession.pdf Back

Edited November 10, 2009 by ryde

[Crapstone]

Many thanks for this Landy. This is very disturbing. Crapstone and Midge61 should be able to confirm whether their complaints to the FOS relate to agreements before or after 6th April 2007. Hopefully they'll be along soon.

 

Who on earth Adjudicates agreements before this date?

 

I remortgaged in 2003 with SPML and made a complaint to the FOS in 2007. There was no question that it didn't come under their jurisdiction, the complaint was looked at from the start of the mortgage and backdated prior to the 6/04/07.

 

It took 2 years to get a final ruling. I won based on the fact that SPML/Capstone would not provide any list of charges/tariffs or justify them to the FOS. They came out with nonsense that they were repeatedly seen as at fault by the FOS and in their opinion their charges were fair. They deviated from our case into an arguement with the FOS that had nothing to do with us and referred to other cases they had lost but believed they should have won.

Edited November 9, 2009 by Crapstone

[ryde]

This bit on arrears charges is taken from which magazines submissions to the same committee just click the link under contents to see whole text,very useful as details applicable legislation.there are many more this must be an excellent basis for any defence in any litigation and well worth looking at in depth if you have some hours to spare!

Mortgage arrears fees and charges

9. Which? are concerned that arrears charges are being applied unfairly and are used to enhance lenders' profits rather than being a real reflection of the additional administrative costs involved. Levying excessive charges on consumers in mortgage arrears worsens their financial difficulty and does not help them resolve their situation.

 

10. As can be seen from the table in Annex A, firms levy a variety of fees and charges on consumers who fall behind with their mortgage payments. Examples of the charges levied include:

 

 

 

— Charges of £25 to £35 for missing a payment/Direct Debit. This could be on top of any fee levied by the consumer's current account provider for missing the payment. Requests for payment could be resubmitted within the same month, resulting in a further set of charges.

 

 

— Charges for sending letters/making telephone calls of up to £35 for each occasion. Some limit the number of letters/telephone calls that can be charged for each month. Other banks charge a lower amount for the first letter.

 

 

— Monthly administration charge when a consumer is in arrears ranging from £25 to £60.

 

 

— Charges are incurred if the lender makes an appointment for the consumer with a debt counsellor or collection agent of up to £150.

 

 

— When a lender instructs a solicitor to begin repossession proceedings a further charge may be levied or the monthly arrears charge increased. Further charges will be levied if the property is repossessed and has to be sold.

11. Many (if not all) mortgage arrears charges will be imposed where a consumer is in breach of their mortgage contract. Under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs), contractual terms that require consumers to pay a "disproportionately high sum in compensation" to a business when the consumer is in breach of that contract are void and unenforceable. According to clear guidance issued by both the OFT and FSA, a charge will be "disproportionately high" where it does not reflect a genuine pre-estimate of the direct costs to the business of dealing with that consumer's default, for example, the administrative costs of writing to that consumer regarding the breach. The FSA's Mortgage Conduct of Business (MCOB) rules state that "Any arrears charges must be a reasonable estimate of the cost of the additional administration required as a result of the customer being in arrears."[11] Draft OFT guidance on second-charge lending states that any default or other charges should be limited to what is reasonable, doing no more than covering the lender's necessary administrative costs.

 

12. While a business can identify an average cost per consumer, the estimated costs cannot include a proportion of the company's overhead costs, nor be a means through which businesses can increase profits or offset costs from other parts of the business. The OFT adopted such an analysis when it ruled on credit card default charges in April 2006.[12]

 

13. In some circumstances mortgage arrears charges may be imposed where, upon a precise wording of the contract, there is no actual breach of the contract. Such a situation would be similar to that being considered in the current bank charges litigation. This is a case, taken by the OFT, addressing the charges which banks levy when consumers exceed their overdraft limit or a payment is rejected and can be up to £35 each time this occurs. The banks argue that the unauthorised overdraft charges are not imposed upon a breach of contract, but rather they are a fee charged in respect of a service provided by the banks (and so exempt from an assessment for fairness under the UTCCRs). The House of Lords is currently considering the issue, but both the High Court and the Court of Appeal have already ruled that even though there is no technical breach of contract, the charges are not protected from a fairness assessment. Given the charges are imposed in circumstances similar to a default situation, the expectation is that the OFT will in due course find that to be fair, the charges must relate to the direct costs associated with that customer moving into unauthorised overdraft. We would expect such a ruling to be applicable outside the bank charges arena.

 

14. If the mortgage arrears charges do exceed the reasonable administrative cost then they could be unenforceable. There is already evidence that some lenders have been using these charges to recover unreasonable costs. A senior FSA executive stated in a speech that one lender had used arrears charges to recoup advertising costs.[13] Which? submitted a Freedom of Information request to the FSA, asking for the name of this lender. This request was refused.

 

15. Levying excessive charges on consumers in mortgage arrears worsens their financial difficulty and does not help them resolve their situation. We believe the following action is necessary:

 

 

 

— The Committee should ask lenders to provide an itemised breakdown of the additional costs their arrears charges are supposed to cover.

 

 

— The FSA/OFT should review all arrears charges made by mortgage providers and secured lenders to determine whether they are reasonable. Any excessive charges should be automatically refunded to the consumer.

 

 

— All arrears charges should be suspended if a consumer has made an agreement to pay off the arrears.

 

 

— Consumers in discussions with an independent debt advice agency should be given a 90 day charge free window in which to negotiate an arrangement for the repayment of arrears.

 

 

— Consumers should be allowed to change their payment date without charge to help minimise the possibility of missing payments or getting into arrears.[14]

 

 

— Double dipping of fees (levying a fee for the missed payment on both the current account and the mortgage) where a consumer has a current account and a mortgage with the same bank should be stopped. Requests for Direct Debits should not be automatically re-presented later in the same month unless requested by the customer.

Adherence to, and the effectiveness of, Financial Services Authority (FSA) rules and guidance for mortgage lenders on repossession policy and treatment of consumers in arrears as well as the FSA's regulatory approach in this area

[Crapstone]

Why haven't more people here gone through the FOS first?

 

Yes, it's an annoying process but it is free and lets the beggars know you are serious and it's the first step of many. If nothing else the responses SPML give are worth it. Ad-hoc statements and personal comments that are worthy of an Oscar.

[ryde]

Crapstone

Think most people who come to these forums are desperate and are looking for help and don't know where to turn (like me originally ! still pretty desperate now but just technicalities) as I have said I got an excellent service although it took 18 months! beauty of it was litigation was suspended pending fos findings then they did a deal for me for no cost so fully endorse your recommendation 100%

[Crapstone]

Crapstone

Think most people who come to these forums are desperate and are looking for help and don't know where to turn (like me originally ! still pretty desperate now but just technicalities) as I have said I got an excellent service although it took 18 months! beauty of it was litigation was suspended pending fos findings then they did a deal for me for no cost so fully endorse your recommendation 100%

 

I was thinking more along the lines of seasoned posters, not just those that are dropping by.

 

Perhaps I've become hardened to it as I've been fighting them for so long and forgotton what it was like initially. They don't scare me anymore....I've gone past the crying, sleepless nights and family split they caused.

 

Enough of the soppy bits..Yes, the beauty is the litigation suspension...They daren't breathe whilst the FOS are looking into the case.