Is My Mortgage Agreement Unenforceable

Angry_Cat

Comments not really helping and mssing the point of this thread. I accept the status quo is at the moment the lender will repossess, with no questions asked.

However, again... what about tort and the locus standi of the lender ?

MoneySaverLog

Angry_Cat wrote: »

The lender sold the debt to a third party. In simple terms the debt I owed to the lender has been paid for by a third party and if anything I now owe that debt to the third party and as it is the third party that I owe it should be the party (if any) to bring a claim.

I would have thought this to be the case too, as you say the third party bought the debt and therefore now you owe them the money instead under the same terms and conditions as the original lender I would have thought.

If they bought it for pence in the pound, I suspect you'd still get charged 100p/£ plus interest and the third party is hoping to make money back out of you.

DVardysShadow

Angry_Cat wrote: »

Comments not really helping and mssing the point of this thread. I accept the status quo is at the moment the lender will repossess, with no questions asked.

However, again... what about tort and the locus standi of the lender ?

Well, if you don't pay, that amounts to tort [civil wrong]. The only question is to whom.

And by definition, the lender being the lender, they will have locus standi. It is a Freudian slip on your part to phrase your question that way. You should be asking about the locus standi of Eurosale and not conceding that they are the lender.

http://en.wikipedia.org/wiki/Standing_%28law%29#United_Kingdom is useful: This sufficient interest requirement has been construed liberally by the courts.

Overall, if you get any success in proving that you owe Eurosale nothing, it will be a Pyrrhic victory. A judge would only rule in your favour very reluctantly, because the judgement would fly in the face of common sense. And in making the judgement, he would almost certainly lay the framework for SPMS to claim against you instead on behalf of Eurosale.

Your approach to this is complete fairyland. Even if you win the first round, you will lose sooner or later and you will have wasted loads of effort which could be better put to fighting your way out of the hole.

ILW

Bottom line is - don't pay your mortgage and you will lose your house.

Cannot see why you think it should be any other way.

Angry_Cat

DVardysShadow wrote: »

Well, if you don't pay, that amounts to tort [civil wrong]. The only question is to whom.

And by definition, the lender being the lender, they will have locus standi. It is a Freudian slip on your part to phrase your question that way. You should be asking about the locus standi of Eurosale and not conceding that they are the lender.

http://en.wikipedia.org/wiki/Standing_%28law%29#United_Kingdom is useful: This sufficient interest requirement has been construed liberally by the courts.

Overall, if you get any success in proving that you owe Eurosale nothing, it will be a Pyrrhic victory. A judge would only rule in your favour very reluctantly, because the judgement would fly in the face of common sense. And in making the judgement, he would almost certainly lay the framework for SPMS to claim against you instead on behalf of Eurosale.

Your approach to this is complete fairyland. Even if you win the first round, you will lose sooner or later and you will have wasted loads of effort which could be better put to fighting your way out of the hole.

Sorry my post was not clear. My reference to the locus standi of the lender was in regard to the original lender. Eurosale has started action in regard to SPPL second charge loans but never in regard to first charge SPML loans.

Furthermore, the SPV's for the SPPL loans all have consumer credit licences whereas none of the SPV's for the SPML first charge loans are authorised by the FSA.

I feel that as the debt has been brought by the SPV, my debt is now owed to the SPV, which questions the locus standi of the lender to be able to commence proceedings in its name. Tort dictated that it is the SPV that has locus standi. However, they are not authorised by the FSA, as such this brings into question the SPV being classed as a lender.

It is far more complex than I feel some of the posters to this thread realise.

opinions4u

Angry_Cat wrote: »

It is far more complex than I feel some of the posters to this thread realise.

No. I can see the complexities ahead. So did the post you just replied to.

Take this next paragraph on board:

Your approach to this is complete fairyland. Even if you win the first round, you will lose sooner or later and you will have wasted loads of effort which could be better put to fighting your way out of the hole.

BristolBob

DVardysShadow wrote: »

Well, if you don't pay, that amounts to tort [civil wrong]. The only question is to whom.

And by definition, the lender being the lender, they will have locus standi. It is a Freudian slip on your part to phrase your question that way. You should be asking about the locus standi of Eurosale and not conceding that they are the lender.

http://en.wikipedia.org/wiki/Standing_%28law%29#United_Kingdom is useful: This sufficient interest requirement has been construed liberally by the courts.

The "standing" article you quote belongs in the realms of administrative law.
Secondly, it is not a matter of "tort", but of contract...

antrobus

bigadaj wrote: »

.. The law is totally different in the US, in relation to mortgages specifically the lender can't pursue the homeowner for any negative equity which is why so many people simply handed back the keys, whereas the debt stays with you in the UK for 12 years....

It would be more accurate to say that the law is totally different in each of the fifty states that make up the USA. In some US states mortgages are made on a non-recourse basis, in some states they are made on a recourse basis just like the UK.

Indeed, it's worth bearing in mind, regarding the OP's interest in "what is happening on the other side of the pond" that when you're talking about the USA, you are talking about 50 different legal jurisdictions, and that just because the 'securitization defense' against 'foreclosure' (as they call it) might work for somebody in Idaho, doesn't mean that it would work for somebody in North Carolina. (Let alone a different country altogether.)

antrobus

Angry_Cat wrote: »

....I feel that as the debt has been brought by the SPV, my debt is now owed to the SPV, which questions the locus standi of the lender to be able to commence proceedings in its name.

GMAC v Countrywide (2012?)
"a defence to the effect that the loan was securitised and therefore the lender could not claim was roundly rejected".
http://www.wrighthassall.co.uk/resources/articles/article_commercial_litigation_gmac_v_countrywide.aspx

It's a case concerning the valuation of a property, but it gives some indication of how an English court might view that argument.

Angry_Cat wrote: »

....Tort dictated that it is the SPV that has locus standi.

Tort doesn't 'dicate' anything of the sort. A tort is a wrongful act that causes an injury or loss to someone else, which is actionable by that someone else. It has nothing to do with 'locus standi' in a dispute involving the law of contract.

Angry_Cat wrote: »

...However, they are not authorised by the FSA, as such this brings into question the SPV being classed as a lender.

That would be a different argument wouldn't it? As in, my mortgage is unenforeceable because the company I owe the money to isn't authorised by the FSA. Not sure that would work either.

Pegasus_Galaxy

The short answer is, yes your mortgage is enforceable and your lender has the legal right of possession.

The long answer on the other hand is-

There is no real merit in the often repeated and misunderstood argument that in some way securitisation of a mortgage debt impacts upon the possession right of the original lender.

There are two elements to what you would appear to refer to as a mortgage:

Firstly, there is the loan, given to you the borrower by the lender. This loan creates a debt with the lender. In common law the lender is allowed to sell this debt to a third party, unless there is an express term within the agreement that prevents such a sale. This sale would take place as an equitable assignment, meaning that the legal title to the debt remains with the lender and the beneficial interest, which is the repayment of the debt is passed to the third party, in this case a Special Purpose Vehicle (SPV).

Statute – s.136 of the Law of Property Act confirms that an assignment can be legal (absolute). However, to be a legal assignment, the borrower must receive notice of that assignment and the legal assignment is only effective at law from the date upon which the borrower received such a notice.

The effect of an equitable assignment is that any legal enforcement of that debt must be done so in the name of the original lender. If the SPV wanted to enforce the debt, if could only do so by joining the original lender in proceedings. However, once a borrower receives notice of the assignment – the assignment is a legal assignment and as the assignee the SPV can start proceedings in its name.

To be clear, the above only relates to the actual debt. You should also bear in mind that possession proceedings is not classed as the enforcement of the mortgage debt, rather it is in regard to the possession right of the lender as a result of a ‘mortgage by way of legal charge’.

Secondly, it is a common misconception that a borrower applies for a mortgage and that a lender gives a mortgage to a borrower. In fact the lender gives the borrower a loan and in return, it is the borrower that gives the lender a mortgage. This is a very important point and goes to the root of your argument. For the avoidance of doubt the borrower is the mortgagor and the lender is the mortgagee.

Remember, possession is enforcement of the ‘mortgage by way of legal charge’ given to the lender by the borrower and is not enforcement of the mortgage debt itself. This significant point was confirmed in Paragon Finance Plc v Pender & Anor [2005] EWCA Civ 760 (27 June 2005). Lord Justice Jonathan Parker at 116 said-

“As to Mr Page's reliance on section 136 of the Law of Property Act 1925, that too is in my judgment misplaced. He fails to distinguish between the right to sue at law for the mortgage debt and the proprietary interest created as security for its repayment. Section 136 applies only to the former.”

Returning to the right of possession of the lender – When you applied for the loan to buy your home, as security you gave a legal charge to your Lender. This legal charge encompasses a number of rights granted to the lender by you the borrower, in exchange for money. These rights can be found and are detailed in part III of the Law of Property Act 1925.

Once granted by the borrower to the lender, the charge itself becomes an item of property that is owned by the lender. The lender is free to sell (dispose) of the legal charge as it sees fit. In the case of securitisation the charge is sold in equity to a Special Purpose Vehicle (SPV). As the sale takes place in equity and not at law, the legal title to the charge is retained by the lender and any possession proceedings would have to take place in the name of your lender. For the sale to be effectual at law rather than in equity, the disposition of the charge must be completed by registration. This is confirmed by s.27 of the Land Registration Act 2002.

In this Country we have the Land Registry. In addition to keeping records of the owners of property (land/buildings), it also maintains records of the charges registered against each property and who owns each charge. The register itself is conclusive evidence of the legal title of both property and of the legal title of the legal charges.

The registered owner of the legal charge – being the named owner of the charges register has the right to possession of your property. This is a right you granted to the lender when you applied for a loan and gave a ‘mortgage by way of legal charge’ to your lender.

In the case of securitisation, until the sale to the SPV is completed by registration, so that it take effect at law rather than in equity, the Lender will correctly be recorded as the legal owner of the legal charge. Therefore, any and all possession proceedings must by law be in the name of the lender. If the Special Purpose Vehicle wanted to exercise the right of possession, it must do so in either the name of the lender or jointly with the lender. It has no legal right to exercise the right of possession in its own name.

Once the sale (disposition of the charge) has been completed by registration, it takes effect at law and the Special Purpose Vehicle will become the registered owner of the legal charge and it is then and only then able to exercise the right of possession in its own name.

I understand and appreciate that the arguments in regard to the effect of securitisation can be attractive to anyone in financial difficulties. However, they are based upon a complete lack of understanding of the legalities involved. By way of an example, any reliance of events in the USA is misplaced. In the states the borrower signs a ‘note’, this note is then passed between companies each time the mortgage is sold. It is only the financial institution that holds that note and can demonstrate ownership that can seek possession. In the UK, we have the Land Registry and the Charges Register which acts as conclusive proof of ownership of the legal charge.

There have been a number of cases at virtually all levels within our judiciary in regard to the arguments of mortgage securitisation and its effect upon the possession rights of lenders. On each and every occasion it is confirmed that the lender as the registered owner of the legal charge, retains the right of possession, granted by the borrower to the lender.

To enforce the mortgage debt and seek a monetary judgement, until a notice of assignment has been given to the borrower – any proceedings must be in the name of the lender.

To enforce the legal charge and seek a possession order, until the sale has been completed by registration – any proceedings must be in the name of the lender.