Mortgage Contract 'Void' loophole???

kingstreet

LHZ wrote: »

He said that everyone was hushing it up and that people involved with taking legal action were told not to go to the press (none disclosure agreement).

Courts are open to the public and have reporters regularly attend the public gallery. If one of these cases had been heard and found in favour of the plaintiff, at least one of the court reporters would have picked up the story.

amnblog

If one of these cases had been heard and found in favour of the plaintiff there would be fighting in the streets.

ACG

What??!
Do you not think making payment for 12 months plus will be seen as acceptance of the contract?
Verbally agreed contracts are legally binding, there is nothing in writing let alone a signature with those. They are just harder to prove they existed.

I think your friend needs to get paying their mortgage.

Brock_and_Roll

Even in the (highly unlikely) event that the mortgage was deemed void, the court would seek to put both parties back in the positions that they had been in prior to entering the void contract - as if it have never existed.


So...


1) The borrower would get all the mortgage payments that they have made back


2) The borrower would be required to repay the original mortgage advance.


Separately, the borrower could potentially make a claim for compensation if their have been disadvantaged in some way by the void contract.

Brock_and_Roll

From the Financial Ombudsman:


“The information online, and in turn the enquiries that come to the Ombudsman, tend to quote obscure and sometimes bizarre legal reasons as to why a mortgage, or other debt, is not enforceable,”


“In the over a hundred cases we have seen, we are yet to find any of these arguments actually affect whether a mortgage is valid [or not]. Likewise, we are unaware of any court of law making a finding that these arguments have any validity or impact on a lenders right to reclaim the money it has lent.”

LHZ

I don't have a dog in this fight. Like I said, all too good to be true as far as I was concerned but his 'legal representative' is so confident that I wanted to check opinions in this forum. I think it's a landslide victory for 'too good to be true'.

If I get the chance I may point him towards the Hardwicke article but I'll tell you now, he won't thank me for this 'negativity'.

dunstonh

Hello all. I was chatting to a friend the other day and he is in the process of taking his mortgage provider to court because he has been told that the 'contract' was void since the mortgage was never signed by both parties. Apparently this is a very common situation for many UK mortgages and he is convinced that once people get wind of this, there will be a rush towards litigation and profound consequences for the industry.

This was something that the claims companies thought would create a massive amount of compensation some years back. However, it went to court and they lost. A number of claims companies went under as they were pinning their hopes on that. Most of them took an up front payment from the people as well (typically around £495) and that was lost with it.

On the advice of the Company who are taking his Mortgage Provider to court. Like I said before, they seem very confident he will win.

So were all the claims companies that went bust on the previous court rulings until they lost.

He said that everyone was hushing it up and that people involved with taking legal action were told not to go to the press (none disclosure agreement).

it doesnt work that way.

It sounds like he is being scammed by the claims company. No genuine solicitor would tell the person to stop paying their mortgage even if they thought they could be successful because of the consequences when the case is lost. It is a known scam with no known successes. A variation of advance fee fraud. The person is encouraged to pay a smaller up front fee with their greed being played on with some big payoff to come. The pay off is never going to happen and when it fails, the victim is out of pocket by the amount they paid up front and the company they paid it to goes into administration or closes before they have to pay any money back. There will be no assets in the company to pay the money back. The victim in this case, will also destroy their credit record as they will have mortgage arrears and could potentially end up on the blacklist register for mortgage fraud as they if effectively what they are trying to do by getting out of paying their mortgage.

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=73078

case in Preston County Court decided in July 2013 the borrower raised the
argument that the mortgage did not comply with the required legal formalities and was
therefore void. This is the argument Mr and Mrs T have raised here and so it is important to
look at what the judge said about this argument.

Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A) provides
that a contract for the disposition of an interest in land must be made in writing, incorporating
all the terms of the contract, and signed by each party to the contract. Section 27 of the Land
Registration Act 2002 (LRA) provides that if a disposition is required to be completed by
registration then it does not operate at law until the relevant registration requirements are
met; and that the grant of a legal charge (or, a mortgage) is a disposition which is required to
be completed by registration.

In the court case the borrower’s argument was that her mortgage was null and void for want
of statutory formality because it was signed by the borrower only and not the lender (as is
the case with the vast majority of mortgage deeds) and as such it did not comply with
LP(MP)A. Therefore the mortgage did not exist at law and so could not be completed by
registration as required by the LRA, and thus it was not binding on the borrower.
But the judge held that the borrower's argument was "illusory" and "false". He was
concerned that the arguments promoted on the internet were dangerous as they could
mislead borrowers into wrongly thinking that their mortgage was not binding upon them and
that in the event of default they would not be in danger of losing their homes.
The relevant statutory provision for a mortgage, section 53 of the Law of Property Act 1925,
does not require every term to be included in a document signed by both parties; rather the
document just needs to be signed by "the person creating or disposing of the interest" (i.e.
the mortgagor/borrower). The judge also explained that section 27 LRA does not go so far
as to say that a disposition required to be completed by registration (such as a mortgage) is
created by registration and that it does not therefore exist or operate in equity before
registration.

By signing a mortgage deed and by its registration at the Land Registry Mr and Mrs T
created a valid mortgage in favour of Barclays. So as far as the law is concerned, I am not
persuaded there is any merit to Mr and Mrs T’s argument that they do not have a valid
mortgage. I also do not agree that there is only a promissory note and that no bank is able to
lend any actual money.

These arguments seem to me to have no basis in law, logic or common sense. As far as I
am aware no claim in any UK court or tribunal has succeeded on the basis of the type of
arguments raised by Mr and Mrs T.


You also have Bank of Scotland PLC v Waugh & others [2014] EWHC 2117
Mr Waugh argued there was no binding contract arising from the relevant facility/offer letter and the preceding deed which purported to create an all monies charge was ineffective. He sought to avoid a claim based on a mortgage where only the borrower had signed the offer letter.

The bank applied for summary judgment. The court concluded the bank’s money claim on the basis of the facility letter was unaffected by the failure to comply with s2 of the 1989 Act. That claim was unrelated to the disposition of an interest in land it simply focused on the loan agreement for which no writing was required.

The court accepted that, although the deed was not validly executed and therefore did not itself create a legal mortgage, by virtue of s51 of the 2002 Act the trust’s interest was subject to a binding legal charge in accordance with the deed (pending rectification of the register). Accepting that rectification operated to change the position for the future the Court stated that since the register had not yet been rectified both parties remained entitled to rely on it.

Ultimately the Court concluded

There was no defence to the money claim.
The deed had not taken effect as a legal charge but it did give rise to an equitable charge.
Nevertheless pending the determination of the application to rectify the register at law the property was currently subject to a registered legal charge.

amnblog

LHZ wrote: »

I don't have a dog in this fight. Like I said, all too good to be true as far as I was concerned but his 'legal representative' is so confident that I wanted to check opinions in this forum. I think it's a landslide victory for 'too good to be true'.

If I get the chance I may point him towards the Hardwicke article but I'll tell you now, he won't thank me for this 'negativity'.

He might do, if you limit his losses to a couple of grand and his credit file being trashed

davidmcn

Is he usually this gullible?

Neutrinno

I feel sorry the guy, he's actually been told to stop paying his mortgage because they are that confident he will win; although in reality he's not going to win and just going to damage his credit file and face potentially repossession threats and arrears penalties.

Surely this is horrendous advice from the acting solicitors to put their customer at such risk? This could damage him for years to come and end up costing him a lot of money.