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

[patrickq1]

http://www.touchfinancial.co.uk/business-turnaround/business-administrator

[patrickq1]

their job is to look after the person or persons who employed them, but also they have a duty of care to you the mortgager, they can be held liable for negligence their are a few cases for this, i am on the other thread

http://www.consumeractiongroup.co.uk/forum/showthread.php?230253-Mortgage-Express-appoint-LPA-Recievers-Walker-Singleton-to-scare-tenants-off!&p=3096193#post3096193

that is running simmallar lines and they are destroying the landlords they are trying to take all the properties of the landlords but in a suttle and sneaky way without informing the landlord what they are doing, so it is difficult as i can see here, the LOP 1925 see this what ive written ,you have to apply for jurisdiction to suspend an order or warrant for possession to enable the mortgagor to seek an order for sale from the High Court under s.91 (see below). It was incumbent on the mortgagor to do that before a warrant took effect.

and to use the case known as Will the court postpone possession to enable the mortgagor to sell (see below as to court's power to order a sale by the mortgagor) on the basis that he would thereby be "likely to be able within a reasonable period to pay any sums due"?

 

The answer is yes if the facts support such a conclusion. (National and Provincial BS v. Lloyd [1996] 1 All ER 630 CA. See also Bristol & West BS v. Ellis (1996) 73 P. & C.R 158 CA).

 

Note also that the court has jurisdiction to order a sale under s.91 LPA in an action for foreclosure, redemption or sale. The mortgagor may make such an application. (For an unusual case where the house was worth less than the debt and the court ordered a sale (the mortgagee wanted to defer any sale) see Palk v. Mortgages Services Funding Plc. [1993] Ch 330. see also Polonski v

Lloyds

Bank Mortgages Ltd [1998] 1 F.L.R. 896.

[patrickq1]

the administrator must keep an audit trail so when asking for data you must ask for the full audit trail..

patrickq1

[patrickq1]

is their anyone with experiance of writing up a CPR 31.15 i really need one for the thread i am on..

thanks

patrickq1

[Suetonius]

Hello LD,

 

Sue thanks for reply its really helpful and clears up a lot of things as this is really difficult for me to understand so please bear with me.

 

To clarify my question

 

123 Suppression of information

(1) A person commits an offence if in the course of proceedings

relating to registration under this Act he suppresses information with the intention of—

(a) concealing a person’s right or claim.

The original lender such as spml/pml supresses the information that it has sold the mortgage loan to the spv.

The fact that it is a true sale has been supressed the spvs right to register and replace the original lender has been concealed.

The spv deliberately uses its absolute power not to perfect the true sale by instructing the lender from whom it has purchased the mortgage and collateral security not to notify the borrower as required by s136 meaning although a true sale has taken place the assignment is treated only as equitable. Surely this is supression of a right concealed by both the spv and the lender. .

 

As I remember this point was initially championed by SS and later by ITBG?. But I am still unable to see that as per s.123 (a) a person's right or claim has been concealed.

 

As I said in my previous post, a borrower rights and claims would be against the legal title holder as it has the legal rights, duties, liabilities and responsibilities.

 

I am not trying to be difficult with my answer or attempting to evade your question. As has been posted in this thread previously, the devil is in the detail and in this instance the detail is what legal right or claim has been concealed.

 

If the transfers take place of regulated mortgages under fsa regulation such as pml/spml and certain sppl would the contracts against the borrowers be unenforceable against the borrowers if the same spvs who are licenced are not regulated by the fsa?

 

There should not be any sppl fsa regulated agreements, as sppl was not a first charge lender.

 

With regard to your question, we would have to look at the primary legislation (being the FSMA 2000) and the FSA Handbook - being the implementation of this legislation, with regard to the actual meaning and definition of a "regulated mortgage contracts" and "regulated activities".

 

The FSA Handbook states that a Regulated Mortgage Contract is a contract which at the time it is entered into (quoted from the FSA Handbook) meets the following conditions:

 

 

• A lender provides credit to an individual or to trustees (the 'borrower'); and
  
• The obligation of the borrower to repay is secured by a first legal mortgage on land (other than timeshare accommodation) in the United Kingdom , at least 40% of which is used, or is intended to be used, as or in connection with a dwelling by the borrower or (in the case of credit provided to trustees) by an individual who is a beneficiary of the trust, or by a person who is in relation to the borrower or (in the case of credit provided to trustees) a beneficiary of the trust:
  

I) that person's spouse or civil partner; or

II) a person (whether or not of the opposite sex) whose relationship with that person has the characteristics of the relationship between husband and wife; or

III) that person's parent, brother, sister, child, grandparent or grandchild; and

 

(ii) is not a home purchase plan.

(b) (in relation to a specified investment) the investment, specified in article 88 of the Regulated Activities Order, which is rights under a regulated mortgage contract within (a).

 

Now with regard to a Mortgage Regulated Activity - being an activity regulated by the FSA, the FSA Handbook states that a Mortgage Regulated Activity is any of the following activities specified in Part II of the Regulated Activities Order (Specified Activities): (a) arranging (bringing about) regulated mortgage contracts (article 25A(1));

(b) making arrangements with a view to regulated mortgage contracts (article 25A(2));

© advising on regulated mortgage contracts (article 53A);

(d) entering into a regulated mortgage contract (article 61(1));

(e) administering a regulated mortgage contract (article 61(2));

(f) agreeing to carry on a regulated activity in (a) to (e) (article 64).

 

To conclude that a SPV to which a legal title is transferred (which none of the current notices state has or will happened with regard to SPML) has to be FSA regulated, it must perform a FSA regulated activity.

 

Also from a previous post:

 

Hello again LD,

 

This makes interesting reading

 

http://archive.treasury.gov.uk/docs/2001/mortgage_response.html

 

In the light of these discussions, the construction of the RAO was changed. It no longer relies upon the exercise of rights by a rights holder as a regulated activity. Instead, the RAO focuses on administering the mortgage, and this will be a regulated activity, in addition to ‘entering into a regulated mortgage contract as lender’. The RAO defines administration as notifying the borrower of changes in interest rates or payments due under the contract, or of other matters of which the contract requires, and taking necessary steps to collect or recover payments....

 

The following is taken from the same treasury link as above

"The RAO also deals with the extreme circumstances where an administrator, working under contract to a SPV lost its authorisation or went into liquidation. In such circumstances, the SPV could not be authorised to carry on regulated mortgage business as it neither enters into regulated mortgage contracts, nor administers them, and to do either would be a criminal offence. It was also important to take account of the fact that a number of firms could be sub-contracted to do different administration activities and the Government wanted to ensure that only one person was responsible and had permission from FSA to carry on that regulated activity."

 

and....

 

"The Government therefore has put in two exclusions to take account of these circumstances. Firstly, arranging administration by an authorised person is not an authorisable activity, and secondly, a person who administers the mortgage contract under contract from an authorised person would not need to be an authorised."

Edited August 22, 2010 by Suetonius
typo

[Suetonius]

Hi Suetonius, good to see you're still around.

 

Can you clarify what you mean by the above? How exactly does one find out who the legal title holder to their mortgage is? Can the SPV be unregulated by the FSA while the Administrator is regulated and is this OK with the FSA?

 

Hello BTM,

 

Unless you have received an "express notice in writing" (as per s.136 of the LOP 1925) which confirms that your mortgage has been sold / purchased, it will still be the original lender and this should be documented with the Land Registry. You should be able to download a copy of the relevant documentation relating to your house from the Land Registery website.

[AnimalMagic]

The FSA Handbook states that a Regulated Mortgage Contract is a contract which at the time it is entered into (quoted from the FSA Handbook) meets the following conditions:

 

I've been trying to find out what a regulated mortgage is and I have someone claiming that s22 FSMA 2000 defines a regulated mortgage as the transaction relates to property. FSMA became part of the statutes in 2001.

 

However FSA only started regulating mortgages on 31 Oct 2004. I have traced article 61 (which defines regulated mortgages) to an SI in 2002 which states that article 61 will be implemented

Amendment of commencement of provisions relating to regulated mortgage contracts in S.I. 2001/544

2. — (1) Article 2 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 F1 (commencement) is amended as follows.

(2) In paragraph (2)(b), for “nine months after section 19 of the Act comes into force” substitute "on such a day as the Treasury may specify".

(3) After paragraph (2) insert—

"(3) Any day specified under paragraph (2)(b) must be caused to be notified in the London, Edinburgh and Belfast Gazettes published not later than one week before that day.".

I am assuming this is 31 Oct 2004, but I have been unable to find this defined anywhere.

 

So questions are:

1. Are there regulated mortgages before 31 Oct 2004?

2. Where can I officially verify M day - 31 Oct 2004?

3. Does county court have any jurisdiction over disputes related to mortgages, regulated or not? I believe it is an FSA/FOS matter. A reference to any legislation would be appreciated

 

Regards

Rick

[brassed-off-2]

http://www.investegate.co.uk/article.aspx?id=201008231719585042R

 

another interesting notice to noteholders issued today, for a meeting on the 23/09/10. can anyone put it's meaning into plain english please..?

[brassed-off-2]

http://www.bailii.org/ew/cases/EWHC/Ch/2010/2005.html

 

more interesting reading here regarding eurosail....appologies if it has already been posted, ive been off line for a month or so.

 

regards

bo2

[Suetonius]

Hello AM,

 

I've been trying to find out what a regulated mortgage is and I have someone claiming that s22 FSMA 2000 defines a regulated mortgage as the transaction relates to property. FSMA became part of the statutes in 2001.

 

However FSA only started regulating mortgages on 31 Oct 2004. I have traced article 61 (which defines regulated mortgages) to an SI in 2002 which states that article 61 will be implemented

I am assuming this is 31 Oct 2004, but I have been unable to find this defined anywhere.

 

So questions are:

1. Are there regulated mortgages before 31 Oct 2004?

 

The straight forward answer is no

 

2. Where can I officially verify M day - 31 Oct 2004?

 

This is straight from the horses mouth (so to speak)

 

www.fsa.gov.uk/pubs/final/Mortgageland.pdf

 

(you might have to copy and paste the above link)

 

This is from the bottom of page 4

 

"The FSA has regulated mortgage activities since 31 October 2004"

 

3. Does county court have any jurisdiction over disputes related to mortgages, regulated or not? I believe it is an FSA/FOS matter. A reference to any legislation would be appreciated

 

Regards

Rick

 

The answer would depend upon the nature of the dispute. Remember that the FOS is an Alternative Dispute Resolution service (a free alternative to the Court service)

Edited August 23, 2010 by Suetonius

[Suetonius]

Hello BO2,

 

http://www.bailii.org/ew/cases/EWHC/Ch/2010/2005.html

 

more interesting reading here regarding eurosail....appologies if it has already been posted, ive been off line for a month or so.

 

regards

bo2

 

The above case was heard in the High Court and is important for the following two reasons.

 

"The first step in the securitisation transaction was the acquisition of the benefit of those mortgage loans by the Issuer"

 

It confirms that it is only the benefit (equitable title / right to the money) that is aquired by the Issuer - with the Issuer being the SPV.

 

This should bring an end to the long running debates with regard equitable v legal, but I am sure that there will still be some that will not accept this to be the case.

 

"For all these reasons I will make a declaration that, whether or not the PECO formed part of the securitisation transaction, Eurosail is not unable to pay its debts within the meaning of section 123(2) of the Insolvency Act 1986 ("the Act") for the purposes of Condition 9(a)(iii) of the Conditions. I will hear counsel on any issues as to the form of my order and any other matters arising from it"

 

It is also important because in direct contradiction to what has been reported in some circles the SPV is not bankrupt

[AnimalMagic]

The answer would depend upon the nature of the dispute. Remember that the FOS is an Alternative Dispute Resolution service (a free alternative to the Court service)

 

It's already in court - repossession which is being defended by s140A CCA. The mortgage was taken out in June 2003, and the Claimant is claiming that it's a regulated mortgage as defined in s22 FSMA (in law 2001) Article 61 (I believe this is became law in oct 2004, but have been unable to substantiate this).

 

The dispute is at the time of application in June 2003, the defendant was being repossessed by previous lender (disclosed on form), had large CC debt (disclosed on form) (which was rolled up into the mortgage) and had a sizable CCJ outstanding (not disclosed on form). The CCJ was not disclosed on the app form, but it is believed it was discovered in a credit check at the time - there is a mark against it on the claimant's copy of the form. Claimant claims they had no knowledge of repossession or CCJ. The defendant alleges irresponsible lending. The mortgage is self certified and the amount of the broker's commission does not appear to have been disclosed. There is a reference to the broker receiving a commission, but no specific amount.

 

The unfairness is that the position of the defendant is recoverable - he is self employed and there was illness in the family. The nature of his work took him away from home, so he was unable to work, as he was needed at home. He has been attempting to start a new business from home. The mortgage has very strict conditions, late payment means the mortgage becomes due in full immediately. No payment holidays or anything like that. Payment holiday was rejected and claimant made no other attempt to find an alternative to repossession.

 

Anything you or anyone else can add to help? Time is short

 

Also add that I'm trying to find the specific bit of legislation that make the agreement unenforceable due to irresponsible lending.

Edited August 24, 2010 by AnimalMagic

[patrickq1]

[PDF] Irresponsible lending – OFT guidance for creditors

 

File Format: PDF/Adobe Acrobat - Quick View

30 Jul 2009 ... following the publication of our irresponsible lending guidance, for the OFT to initiate such a compliance review. Next steps ...

www.oft.gov.uk/shared_oft/consultations/oft1107con.pdf - Similar

[AnimalMagic]

Thanks Patrick,

 

Seen that, it still doesn't mention where in the legislation the agreement is unenforceable, just says the OFT might take action to remove lenders licence.

[Suetonius]

Hello AM,

 

Sorry I am away from home until the weekend so I will reply then.

 

I don't recall any legislation that states that irresponsible lending will result in the agreement being unenforceable, but I am unable to do my usual checks on my phone, so I could well be wrong.

 

I will check once I am home again.

[bustthematrix]

Hi LD et al

 

I was sent this recently and thought it might prove to be some useful light entertainment , for these troubled times . More seriously, it certainly suggests that the writing is on the wall and there is certainly 'trouble ahead'. Enjoy!

 

Homeowners' Rebellion: Recent Rulings Could Shield 62 Million Homes From Foreclosure Thursday 19 August 2010 by: Ellen Brown, t r u t h o u t | News Analysis

 

Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut breaks the chain of title, voiding foreclosure. The logical result could be 62 million homes that are foreclosure proof.

In a Newsweek article a year ago called "Too Big to Jail: Why Prosecutors Won't Hit Wall Street Hard in the Subprime Scandal," Michael Hirsch wrote that we were unlikely to see trials and convictions like those in the savings and loan scandals of the 1980s, because fraud and blame have been so widespread that there is no one to single out and jail. Said Hirsch:

"The sad irony is that in pleading collective guilt, most of Wall Street will escape whipping for a scheme that makes Bernie Madoff's shenanigans look like pickpocketing. At the crest of the real-estate bubble, fraud was systemic and Wall Street had essentially gone into the loan-sharking business."

"Unfortunately," he added, "prosecution of fraud is the only way you're going to get reform on Wall Street."

Sure enough, a year later we got a banking reform bill that was so watered down that Wall Street got nearly everything it wanted. The too-big-to-fails, rather than being whittled down to size, have grown even bigger, circumventing antitrust laws; and they are being allowed to carry on pretty much as before. The Federal Reserve, rather than being called on the carpet, has been given even more power; and the Consumer Protection Agency - the main part of the bill with teeth - has been put under the Fed's watchful eye. Congress and the Justice Department seem to have bowed out, leaving no one to hold the finance industry to account.

But the best laid plans even of Wall Street can sometimes go awry. In an ironic twist, the industry may wind up tripping over its own Achilles heel, the Mortgage Electronic Registration Systems or MERS. An online computer software program for tracking mortgage ownership and rights, MERS is, according to its web site, "an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans." Or as Karl Denninger puts it, "MERS own website claims that it exists for the purpose of circumventing assignments and documenting ownership!"

MERS was developed in the early 1990s by a number of financial entities, including Bank of America, Countrywide, Fannie Mae, and Freddie Mac, allegedly to allow consumers to pay less for mortgage loans. That did not actually happen, but what MERS did allow was the securitization and shuffling around of mortgages behind a veil of anonymity. The result was not only to cheat local governments out of their recording fees, but to defeat the purpose of the recording laws, which was to guarantee purchasers clean title. Worse, MERS facilitated an explosion of predatory lending in which lenders could not be held to account because they could not be identified, either by the preyed-upon borrowers or by the investors seduced into buying bundles of worthless mortgages. As alleged in a Nevada class action called Lopez v. Executive Trustee Services, et al.:

"Before MERS, it would not have been possible for mortgages with no market value ... to be sold at a profit or collateralized and sold as mortgage-backed securities. Before MERS, it would not have been possible for the Defendant banks and AIG to conceal from government regulators the extent of risk of financial losses those entities faced from the predatory origination of residential loans and the fraudulent re-sale and securitization of those otherwise non-marketable loans. Before MERS, the actual beneficiary of every Deed of Trust on every parcel in the United States and the State of Nevada could be readily ascertained by merely reviewing the public records at the local recorder's office where documents reflecting any ownership interest in real property are kept.…

"After MERS, ... the servicing rights were transferred after the origination of the loan to an entity so large that communication with the servicer became difficult if not impossible... . The servicer was interested in only one thing - making a profit from the foreclosure of the borrower's residence - so that the entire predatory cycle of fraudulent origination, resale and securitization of yet another predatory loan could occur again. This is the legacy of MERS and the entire scheme was predicated upon the fraudulent designation of MERS as the 'beneficiary' under millions of deeds of trust in Nevada and other states."

MERS now holds over 62 million mortgages in its name, including over half of all new US residential mortgage loans. But courts are increasingly ruling that MERS is merely a nominee, without standing to foreclose on the collateral that makes up a major portion of the portfolios of some very large banks. It seems the banks claiming to be the real parties in interest may have short circuited themselves out of the chain of title entitling them to the collateral.

Many of our contributors have become unemployed or are struggling. Please help keep Truthout afloat if you can - click here to donate what you can afford.

Technicality or Fatal Flaw?

To foreclose on real property, the plaintiff must be able to produce a promissory note or assignment establishing title. Early cases focused on MERS' inability to produce such a note, but most courts continued to consider the note a mere technicality and ignored it. Landmark newer opinions, however, stress that this defect is not just a procedural. but a substantive failure, one that is fatal to the plaintiff's case.

The latest of these decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E-11. The court held that MERS could not foreclose because it was a mere nominee and that as a result plaintiff Citibank could not collect on its claim. The judge opined:

"Since no evidence of MERS' ownership of the underlying note has been offered and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law."

In support, the judge cited In re Vargas (California Bankruptcy Court), Landmark v. Kesler (Kansas Supreme Court), LaSalle Bank v. Lamy (a New York case) and In re Foreclosure Cases (the "Boyko" decision from Ohio Federal Court). (For more on these earlier cases, see here, here and here.) The court concluded:

"Since the claimant, Citibank, has not established that it is the owner of the promissory note secured by the trust deed, Citibank is unable to assert a claim for payment in this case."

The broad impact the case could have on California foreclosures is suggested by attorney Jeff Barnes, who writes:

"This opinion ... serves as a legal basis to challenge any foreclosure in California based on a MERS assignment; to seek to void any MERS assignment of the Deed of Trust or the note to a third party for purposes of foreclosure; and should be sufficient for a borrower to not only obtain a TRO [temporary restraining order] against a Trustee's Sale, but also a Preliminary Injunction barring any sale pending any litigation filed by the borrower challenging a foreclosure based on a MERS assignment."

While not binding on courts in other jurisdictions, the ruling could serve as persuasive precedent there as well, because the court cited nonbankruptcy cases related to the lack of authority of MERS, and because the opinion is consistent with prior rulings in Idaho and Nevada Bankruptcy courts on the same issue.

RICO and Fraud Charges

Other suits go beyond merely challenging title to alleging criminal activity. On July 26, 2010, a class action was filed in Florida seeking relief against MERS and an associated legal firm for racketeering and mail fraud. It alleges that the defendants used "the artifice of MERS to sabotage the judicial process to the detriment of borrowers"; that "to perpetuate the scheme, MERS was and is used in a way so that the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments"; that the scheme depended on "the MERS artifice and the ability to generate any necessary 'assignment' which flowed from it"; and that "by engaging in a pattern of racketeering activity, specifically 'mail or wire fraud,' the Defendants ... participated in a criminal enterprise affecting interstate commerce."

Local governments deprived of filing fees may also be getting into the act, at least through representatives suing on their behalf. Qui tam actions allow for a private party or "whistle blower" to bring suit on behalf of the government for a past or present fraud on it. In State of California ex rel. Barrett R. Bates, filed May 10, 2010, the plaintiff qui tam sued on behalf of a long list of local governments in California against MERS and a number of lenders, including Bank of America, JPMorgan Chase and Wells Fargo, for "wrongfully bypass[ing] the counties' recording requirements; divest[ing] the borrowers of the right to know who owned the promissory note ...; and record[ing] false documents to initiate and pursue non-judicial foreclosures and to otherwise decrease or avoid payment of fees to the Counties and the Cities where the real estate is located." The complaint notes that "MERS claims to have 'saved' at least $2.4 billion dollars in recording costs," meaning it has helped avoid billions of dollars in fees otherwise accruing to local governments. The plaintiff sues for treble damages for all recording fees not paid during the past ten years and for civil penalties of between $5,000 and $10,000 for each unpaid or underpaid recording fee and each false document recorded during that period, potentially a hefty sum. Similar suits have been filed by the same plaintiff qui tam in Nevada and Tennessee.

Axing the Bankers' Money Tree

Most courts continue to look the other way on MERS' lack of standing to sue, but the argument has picked up enough steam to consider the rather stunning implications. If MERS is not the title holder of properties held in its name, the chain of title has been broken and no one may have standing to sue. In MERS v. Nebraska Department of Banking and Finance, MERS insisted that it had no actionable interest in title, and the court agreed.

An August 2010 article in Mother Jones titled "Fannie and Freddie's Foreclosure Barons" exposes a widespread practice of "foreclosure mills" in backdating assignments after foreclosures have been filed. Not only is this perjury, a prosecutable offense, but if MERS was never the title holder, there is nothing to assign. The defaulting homeowners could wind up with free and clear title.

In Florida, Jacksonville Area Legal Aid attorney April Charney has been using the missing-note argument ever since she first identified that weakness in the lenders' case in 2004. Five years later, she says, some of those homeowners are still in their homes. According to a Huffington Post article titled "'Produce the Note' Movement Helps Stall Foreclosures":

"Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get her homeowner clients full title to their homes (a quiet title action 'quiets' all other claims). Charney says she's helped thousands of homeowners delay or prevent foreclosure and trained thousands of lawyers across the country on how to protect homeowners and battle in court."

If courts overwhelmed with foreclosures decide to take up the cause, the result could be millions of struggling homeowners with the banks off their backs and millions of homes no longer on the books of some too-big-to-fail banks. Without those assets, the banks could again be looking at bankruptcy, as was pointed out in a San Francisco Chronicle article by attorney Sean Olender following the October 2007 Boyko decision:

"The ticking time bomb in the US banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

"... The loans at issue dwarf the capital available at the largest US banks combined and investor lawsuits would raise stunning liability sufficient to cause even the largest US banks to fail...."

Nationalization of these giant banks might be the next logical step - a step that some commentators said should have been taken in the first place. When the banking system of Sweden collapsed following a housing bubble in the 1990s, nationalization of the banks worked out very well for that country.

The Swedish banks were largely privatized again when they got back on their feet, but it might be a good idea to keep some banks as publicly-owned entities, on the model of the Commonwealth Bank of Australia. For most of the 20th century, it served as a "people's bank," making low interest loans to consumers and businesses through branches all over the country.

With the strengthened position of Wall Street following the 2008 bailout and the tepid 2010 banking reform bill, the US is far from nationalizing its mega-banks now. But a committed homeowner movement to tear off the predatory mask called MERS could yet turn the tide. While courts are not likely to let 62 million homeowners off scot-free, the defect in title created by MERS could give them significant new leverage at the bargaining table.

[Suetonius]

Hello AM, sorry for the delay in getting back to you, I have been on a training course for the last few days but back home now..

 

It's already in court - repossession which is being defended by s140A CCA. The mortgage was taken out in June 2003, and the Claimant is claiming that it's a regulated mortgage as defined in s22 FSMA (in law 2001) Article 61 (I believe this is became law in oct 2004, but have been unable to substantiate this).

 

You have said that the claimant is claiming that it is a regulated mortgage as defined by s.22 of the FSMA.

 

The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 is the applicable secondary legislation (with the FSMA 2000 being the primary). As you have already correctly identified the applicable article is 61.

 

The following is taken directly from a press release issued by the FSA:

 

"From Sunday (31 October M Day) consumers making one of the most important financial decisions of their lives will enjoy additional protection, as the Financial Services Authority takes over responsibility for regulating mortgage lending, administration, advice and arranging.....

 

.....The new rules cover mortgages that are entered into after 31 October. Customers who have applications in train when regulation starts should not experience any delay as a result of the changes, provided that their broker has been authorised by the FSA or is an appointed representative of an authorised firm"

 

The above confirms that mortgage taken out in 2003 was not and is not regulated. However, as with most things in life there are and can be exceptions. If the agreement was modified (this could include further borrowing) after 31 October 2004, this could result in mortgage falling within regulation. If anything has happened to modify this particular mortgage post regulation, please let me know and I will investigate further for you.

 

I don't normally like to speculate but based on the information you have provided, I presume that the Claimant is arguing that the agreement is regulated to avoid the implications of s.140 of the CCA.

 

The above from the FSA should be enough to convince the judge that the legal representatives of the claimaint are intentionally (as they are legally qualified) attempting to mislead the Court and that their assertions with regard to the FSMA 2000 and subsequent secondary legislation is flawed.

 

The dispute is at the time of application in June 2003, the defendant was being repossessed by previous lender (disclosed on form), had large CC debt (disclosed on form) (which was rolled up into the mortgage) and had a sizable CCJ outstanding (not disclosed on form). The CCJ was not disclosed on the app form, but it is believed it was discovered in a credit check at the time - there is a mark against it on the claimant's copy of the form. Claimant claims they had no knowledge of repossession or CCJ. The defendant alleges irresponsible lending. The mortgage is self certified and the amount of the broker's commission does not appear to have been disclosed. There is a reference to the broker receiving a commission, but no specific amount.

 

1) "The CCJ was not disclosed on the app form, but it is believed it was discovered in a credit check at the time"

 

Does the defendant have a copy of his/her credit file at that time or from shortly after the mortgage application - This would show the details of the CCJ and the search by the lender.

 

It might also be advisable to SAR the lender (if this has not been done already) to see if there is any reference to the checks performed by the lender and to any adverse discoveries made. It may also be beneficial to consider applying for an order for disclosure of the lenders lending policy at that time. This would help to establish under what circumstances the lender was prepared to lend at that time. However, with any order for disclosure, I would suggest that consideration be given to costs as in a number of county court (thus unrecorded cases) it has been known for costs to be awarded for disclosure orders.

 

2) "The mortgage is self certified and the amount of the broker's commission does not appear to have been disclosed. There is a reference to the broker receiving a commission, but no specific amount"

 

The defendent may want to look at and consider the following case with regard to "secret commission" being the payment of commission that was not disclosed.

Wilson & Anor v Hurstanger Ltd [2007] EWCA Civ 299 (04 April 2007)

 

“39. Obviously if there has been no disclosure the agent will have received a secret commission. This is a blatant breach of his fiduciary duty but additionally the payment or receipt of a secret commission is considered to be a form of bribe and is treated in the authorities as a special category of fraud in which it is unnecessary to prove motive, inducement or loss up to the amount of the bribe.

 

The principal has alternative remedies against both the briber and the agent for money had and received where he can recover the amount of the bribe or for damages for fraud where he can recover the amount of any actual loss sustained by entering into the transaction in respect of which the bribe was given. (Mahesan v Malaya's Housing Society [1979] AC374, 383).

 

Furthermore the transaction is voidable at the election of the principal who can rescind it provided counter-restitution can be made. (Panama & South Pacific Telegraph Co. v India Rubber, Gutta Percha, and Telegraph Co. [1875] 9 Ch App 515, 527, 532-3).”

The unfairness is that the position of the defendant is recoverable - he is self employed and there was illness in the family. The nature of his work took him away from home, so he was unable to work, as he was needed at home. He has been attempting to start a new business from home. The mortgage has very strict conditions, late payment means the mortgage becomes due in full immediately. No payment holidays or anything like that. Payment holiday was rejected and claimant made no other attempt to find an alternative to repossession.

 

Anything you or anyone else can add to help? Time is short

 

I will come back to you re: the above

 

 

Also add that I'm trying to find the specific bit of legislation that make the agreement unenforceable due to irresponsible lending.

 

I have not been able to find any legisilation that specifically states this, sorry.

[Suetonius]

Technicality or Fatal Flaw?

To foreclose on real property, the plaintiff must be able to produce a promissory note or assignment establishing title.

 

Unlike our american cousins, it is usually the original lender in the UK that commences proceedings.

 

The general accounting principles, legislation and to a degree the actual securitisation structure (with specific reference to ownership) within the UK is fundamentally different to that in the US.

Edited August 27, 2010 by Suetonius

[Suetonius]

It's already in court - repossession which is being defended by s140A CCA. The mortgage was taken out in June 2003, and the Claimant is claiming that it's a regulated mortgage as defined in s22 FSMA (in law 2001) Article 61 (I believe this is became law in oct 2004, but have been unable to substantiate this).

 

This may also be useful reading:

 

http://www.cml.org.uk/cml/policy/issues/271

 

his page contains information on -

• A summary of the background to mortgage regulation
  
• The Mortgage Code
  
• The Treasury review of 1998
  
• Financial Services Authority consultations on the new regime
  
• Further Orders setting out the statutory framework
  
• Further consultation by the FSA
  
• Structure of the regime
  
• Definition of "regulated mortgage contract"
  
• Authorisation under the FSA regime
  
• Extension of FSA scope to include home reversion and home purchase plans
  
• Extended definitions
  

Summary

The Treasury announced in January 2000 that it was going to bring in a statutory regime for regulating mortgages. The initial proposal was that regulation would be confined to mortgage lenders (not mortgage intermediaries) and would not cover mortgage advice. The Financial Services Authority (FSA) was to put in place the detailed regime, and it started consulting on how it proposed to do this. In December 2001, the Treasury announced that it had decided to extend the FSA's regulatory remit, so that mortgage intermediaries and mortgage advice would, after all, come within scope of the new regime. This had the effect of delaying the introduction of the new regime for another two years. The Mortgage Conduct of Business (MCOB) rules finally came into effect on 31 October 2004, signalling the end of the voluntary Mortgage Code, which had been in effect since July 1997 for lenders (and April 1998 for mortgage intermediaries).

With effect from 6 April 2007, the FSA has also been responsible for regulating the sale of home purchase plans (arrangements for home finance which are compliant with Islamic law) and home reversion plans. To reflect this extension to its powers, the FSA has re-named MCOB as the Mortgages and Home Finance: Conduct of Business Sourcebook, though it will still be commonly known as "MCOB".

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The Mortgage Code

In 1995 and 1996 we started work on developing a Mortgage Code to complement the Banking Code, which had been introduced in 1994. A General Election was due to be called during 1997 and it was generally expected that the Labour Party would win. We were aware that Labour had expressed an intention to review the way in which mortgages were sold, and believed that the Mortgage Code would send out important signals that the industry was taking steps to regulate itself.

Labour came to power as expected on 1 May 1997 and the Mortgage Code was introduced for lenders on 1 July that year. Almost immediately, discussions began on how to extend the Code to mortgage intermediaries. The Mortgage Code remained in force until 31 October 2004, when it was superseded by the Financial Services Authority's Mortgage Conduct of Business rulebook.

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The Treasury review of 1998

In line with its pre-Election Manifesto commitments, the new Government announced that it would review the sale of mortgages and a Treasury review was launched in 1998. We submitted robust evidence defending the lending industry, emphasising the Code's achievements and arguing that statutory intervention in the mortgage market was neither necessary nor justified.

A second Treasury consultation – Regulating Mortgages - followed in 1999. This proposed partial regulation, in the form of statutory authorisation of lenders and a prescribed sales process. The Treasury acknowledged that the mortgage market was highly competitive and that it was relatively easy for consumers to exit uncompetitive or unsuitable products and to re-mortgage elsewhere. It considered that such consumer detriment as existed was caused not by poor advice, but by the fact that the information received from lenders made comparing prices and products very difficult. The quantity and quality of the information given to consumers pre-sale would therefore be prescribed, and the Financial Services Authority (FSA) would be responsible for developing rules to give this effect.

Since it was clear that the Treasury was intent on going down the statutory route, we re-considered our position. We argued that the industry had become familiar with voluntary regulation under the Mortgage Code and that this had brought benefits to consumers because it was proportionate, effective and cost-effective. We believed, however, that if statutory legislation were to be introduced, then there should be just one regulator for secured loans, and that should be the FSA. The Consumer Credit Act (CCA) had not been designed to regulate domestic mortgages and many of its provisions were unwieldy and inconvenient both for consumers and lenders. The decision to legislate offered an opportunity to have a streamlined and unified regime, with all secured lending under one regulator – the FSA.

In January 2000 the Treasury announced the outcome of its consultations. It confirmed the proposals set out in the 1999 consultation. A dual system of regulation – under the new Financial Services and Markets Act 2000 (FSMA) - and the CCA – would therefore continue. Furthermore, the regulatory regime would not include mortgage intermediaries and would focus on pre-sale information, but not advice. It looked as if the Mortgage Code would need to continue in existence to cover these areas – in addition to the dual statutory regime. We were disappointed with this policy decision by the Treasury, and described it as a missed opportunity.

Following lengthy consultations, a Regulated Activities Order was laid in Parliament in February 2001. It was intended to take effect – and thereby bring the FSA's mortgage rules into force – on 31 August 2002.

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Financial Services Authority consultations on the new regime

In November 2000 the FSA published Consultation Paper 70 (CP70) setting out its high-level proposals for mortgage regulation. This was followed in June 2001 by CP98, which set out more detailed proposals and included draft rules. Probably the most contentious proposal was that the FSA would make lenders responsible for ensuring that mortgage intermediaries complied with some aspects of the statutory regime. This drew heavy criticism and resistance from lenders and intermediaries, as it was felt the FSA was exceeding the remit given to it by Treasury.

As the industry awaited final rules from the FSA, it was taken by surprise by a Treasury announcement, on 12 December 2001, of a significant policy change. The FSA's remit was to be extended, so that mortgage intermediaries would need to be authorised (or exempt from authorisation, by virtue of being Appointed Representatives of authorised persons). Mortgage advice was also to be brought within scope: in fact, the whole FSA regime would adopt a "cradle to grave" approach, touching on all aspects of consumers’ relationships with lenders and intermediaries throughout the life of their loans.

The reason for the policy change was the Treasury's realisation that, in order to give effect to the recently-adopted European Directive on Insurance Intermediation, it would have to give the FSA power to regulate general insurance intermediaries. Since there was a considerable overlap in terms of intermediaries who sold both mortgage and general insurance products, and the Treasury was aware of the industry support for regulating mortgage intermediaries, it decided to extend the FSA's remit. The immediate impact of this was that the timetable would be set back by about two years: the new target date for mortgage rules to come into effect was 31 October 2004. A two-year implementation period for general insurance rules would begin as soon as the final text of the Intermediation Directive was published. Publication was slightly delayed and finally took place on 15 January 2003. This meant that the general insurance rules did not come into effect until 14 January 2005.

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Further Orders setting out the statutory framework

The Treasury started consulting on revisions to the Regulated Activities Order which would define the additional activities to be regulated by the FSA. The activities of "arranging" and "advising on" a regulated mortgage contract joined the existing activities of "lending" and "administering". In all, five Orders were laid on 5 June 2003, as follows:

 

• The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No 1) Order 2003 (SI 2003 No 1475). This Order amends the Regulated Activities Order made in 2001 (SI 2001 No 544) which provided the definition of “regulated mortgage contract”. The new Order adds the activities of “arranging” and “advising on” a regulated mortgage contract to the list of regulated mortgage activities.
  
• The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No 2) Order 2003 (SI 2003 No1476). This Order implements in part the European Parliament and Council Directive 2002/92/EC on insurance mediation. It amends the Regulated Activities Order made in 2001 (SI 2001 No 544) by adding insurance mediation activities to the list of regulated activities.
  
• The Financial Services and Markets Act 2000 (Exemption) (Amendment) (No 2) Order 2003 (SI 2003 No 1675). This Order makes local authorities and certain bodies involved with the provision of social housing exempt from the FSA’s mortgage rules in relation to advising on and arranging regulated mortgage contracts and activities relating to certain insurance contracts.
  
• The Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2003 (SI 2003 No1676). This Order amends the Financial Services and Markets Act 2002 (Financial Promotions) Order 2001 (SI 2001 No 1335)by specifying two new controlled activities and providing a further exemption from the financial promotion restriction in that section.
  
• The Financial Services and Markets Act 2000 (Misleading Statements and Practices) (Amendment) Order 2003 (SI 2003 No 1474).
  

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Further consultation by the FSA

The FSA published a further consultation paper - CP 146 - in August 2002. This set out feedback to issues raised in CP 98, many of which were still relevant to the new, extended, regime. It also consulted on the new areas which were to come under the FSA's remit, in particular, its proposals for regulating mortgage advice. Feedback to CP 146, together with draft rules for the new regime, appeared in CP 186, which was published in May 2003.

The final Mortgage Conduct of Business rules (MCOB) were published on 16 October 2003, giving the industry the clear 12 months it had asked for to implement the new regime.

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Structure of the regime

The MCOB regime came into effect on 31 October 2004. It adopts a “cradle to grave” approach throughout the relationship between consumers, intermediaries and lenders:

 

• It starts with a Financial Promotions regime on advertising.
  
• It then lays great emphasis on providing consumers with intelligible information, provided in a consistent format, that will enable consumers to shop around, compare different products, and make informed choices.
  
• Every consumer MUST be given pre-contractual information, in a highly prescribed format - the Key Facts Illustration - before they can apply for a particular loan.
  
• Lenders are under a duty to lend responsibly: that is, they must be able to show that they have given proper consideration to a prospective borrower’s ability to repay the loan being applied for.
  
• Information must continue to be given to consumers in prescribed format. At mortgage offer stage, and throughout the life of the loan.
  
• Consumers who fall into arrears must be given prescribed information, including an official FSA leaflet.
  
• The Rules set out how firms must deal with arrears and possessions cases.
  
• Separate rules govern how “lifetime mortgages” are to be promoted and sold. The FSA regards these products as high risk and has specified a separate regime accordingly.
  

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Definition of "regulated mortgage contract"

The RAO as amended now prescribes four regulated activities, of lending, administering, advising on and arranging regulated mortgage contracts. A regulated mortgage contract is defined as being a contract under which:

 

• A person (“the lender”) provides credit to an individual or to trustees (“the borrower”); and
  
• The obligation of the borrower to repay is secured by a first legal mortgage on land (other than timeshare accommodation) in the United Kingdom, at least 40% of which is used, or is intended to be used, as or in connection with a dwelling by the borrower or (in the case of credit provided to trustees) by an individual who is a beneficiary of the trust, or by a related person.
  

"Related person” is defined as meaning the borrower’s “spouse, parent, brother, sister, child, grandparent or grandchild” or “a person (whether or not of the opposite sex) whose relationship with the borrower has the characteristics of the relationship between husband and wife.”

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Authorisation under the new regime

Under Section 19 of the FSMA, no person may carry on a regulated activity without permission. Any person who does so will be guilty of an offence and may be liable to imprisonment for a term of up to two years, or a fine, or both. Further, any agreement made by a person carrying on a regulated activity without permission is unenforceable against the other party. For more information see the separate web page on authorisation and appointed representatives.

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Extension of FSA scope to include home reversion and home purchase plans

As referred to in the opening summary, the FSA's rules were extended with effect from 6 April 2007 to include home purchase and home reversion plans, neither of which had fitted the original definition of "regulated mortgage activity". The FSA issued a press release explaining the amendments. FSMA had been amended in December 2005 to enable extension of the FSA's powers, and the relevant secondary legislation (SI 2006 No 2383) had received Parliamentary approval in October 2006.

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Extended definitions

The revised rules now refer collectively to "home finance activity", which is defined in the Glossary in the FSA's Handbook as "any home finance mediation activity, home finance providing activity or administering a home finance transaction". A "home finance providing activity" is, in turn, defined as "any of the regulated activities of -

(a) entering into a regulated mortgage contract

(b) entering into a home purchase plan

© entering into a home reversion plan; or

agreeing to carry on a regulated activity in (a) to ©.

[frettful38]

Hi SUE I was hoping if I could pick your brains for a minute as you really seem to know a lot about mortgages e.t.c.

 

Just a quick question please. My Lender Blemain state that they are an introducer to Cheshire Mortgage Company. My loan is with Blemain Finance Ltd and they have their name as a second charge on my house, now I would have thought that as Cheshire Mortgage Company were the original Lender then they would be the one who had a charge on my house and not Blemain Finance Ltd.

 

Am I right to think that? or is alright that even if Blemain are an introducer they still have a right to place a charge on my house?

 

Love to hear any views or comments SUE.

[patrickq1]

Cheshire Mortgage Corporation is part of the Blemain Group

[Gallahad]

Cheshire Mortgage Corporation is part of the Blemain Group

Does that mean they are both FSA licenced?

G

[eagleforms]

I have been charged £2400 for fees (Litigation, unpaid direct debit fees, arrears management fees etc) since 2003. I have also been charged £1200 in legal costs. How do I go about getting the fees back?

 

I have an arrangement to pay £100 a month off the arrears which I have been doing since 2007 when the arrears were £3200. They are now £2400, despite paying £3000 against the arrears.

 

For 4 of the 5 months until May this year, they have charged me £115 litigation management fees, despite the fact that I have not missed a month's payment or arrears payment. I have complained and asked them to justify the charges and to give me the breakdown of the £115. They have simply said I was a few days late paying the monthly mortgage and therefore was charged. No attempt to give the breakdown of the £115 fee.

 

Is the next step the FOS or the OFT or both?

[DanDesperate]

Before it gets anymore complicated I have had a SAR and added up the charges.... what is the "contractual interest" and how do I work it out..... do I ask for it or not ?

[Suetonius]

Good Morning Fretful

 

Hi SUE I was hoping if I could pick your brains for a minute as you really seem to know a lot about mortgages e.t.c.

 

Just a quick question please. My Lender Blemain state that they are an introducer to Cheshire Mortgage Company. My loan is with Blemain Finance Ltd and they have their name as a second charge on my house, now I would have thought that as Cheshire Mortgage Company were the original Lender then they would be the one who had a charge on my house and not Blemain Finance Ltd.

 

Am I right to think that? or is alright that even if Blemain are an introducer they still have a right to place a charge on my house?

 

Love to hear any views or comments SUE.

 

Is Blemain or Cheshire named as the lender on your agreement ?

 

Blemain Finance, Cheshire Mortgage Corporation and Lancashire Mortgage Corporation are all part of the Blemain Group.

 

Blemain is a second charge (secured loan) and a bridging finance lender

Cheshire is a First charge (residential) and a bridging finance lender

Lancashire is a First charge (commerical) and a bridging finance lender

 

As you have a second charge, the lender and the registered charge holder should be Blemain

Edited August 28, 2010 by Suetonius