Mortgage Securitisation Discussion Thread

[applecart]

At 16 HJ Purle states: ‘The White Rose Cottage case on appeal turned on a different point, namely that the transfer properly construed was a sale by the mortgagor with the concurrence of the mortgagee, and not a sale by the mortgagee in exercise of the power of sale. However, Lord Denning MR (with whom Salmon LJ agreed) said in terms that he agreed with Wilberforce J, had it been proper to construe the transfer as an exercise of the power of sale. The subject of the mortgage was the property itself – both the legal and equitable estate in it. Lord Denning could see no reason why an equitable mortgagee exercising a power of sale should not be able to convey the legal estate. He also held that the previous decision to the contrary in Re Hodson & Howes’ Contract (1887) 35 Ch 668 was a case on a differently worded section of a predecessor statute, namely, section 21 of the Conveyancing Act 1881, and was of no authority under the 1925 Act.’

 

In ‘white rose cottage’; The Judge had noted that s88 had not applied in that case because the mortgage had not been by deed but by a memorandum of deposit, which was a true equitable mortgage and not “a charge by way of legal mortgage”. – I interpret that both Lord Denning and Wilberforce J agreed that which ever way you look at it…. The ‘sale’ of a mortgage will involve the exercise of the power of sale and will transfer both legal and equitable interest.

 

Here, it is timely to point out that sub-prime lenders have a tendency to include in its ‘terms and conditions’ that a Borrower ‘‘appoints’ the lender to act as it’s attorney’…..which may cause a judge to be persuaded that the Borrower consented to the lenders sale of the mortgage…… this, on the surface could give the impression that the lender had not exercised its power of sale …..(but of course, as we all know, it is not the Borrower who negotiates or has any influence over the terms of the agreement, – most Borrowers do not even look at the terms – and additionally, sub-prime lenders have a tendency not to send the terms and conditions for signature in any case more preferring to get the signature on the mortgage deed only – the effect of this is that there will be a number of lenders ‘terms and conditions’ without a signature from both parties and accordingly this would be a breach of the Law of Property (Miscellaneous Provisions) Act 1989 – and would incur the consequences).

 

Apple

[applecart]

Property Law is complex as I have stated time and time before and it is possibly no wonder why many borrowers may well beg the question, HOW is it possible that the lender has sold the mortgage, yet, as a Borrower, you remain in the property? Normally, the understanding is that if the Lender takes possession, the property and the Borrower part company…………..

 

I researched: MORTGAGEE’s IN POSSESSION:

 

I found that: a mortgagee after having been in possession for 12 years, without making any acknowledgment of the mortgagor’s right to redeem, becomes the absolute owner of the property….

 

I found that: a mortgagee would only go into possession as an extreme step, as where the security is grossly insufficient, or the mortgagee has obsconded, and there is a chance of becoming absolute owner of the property under the statutes of limitation

 

I found that at Law: the mortgagee is entitled to the fee simple, and therefore he can enter into possession of land at any time after the execution of the mortgage.

 

I found that: the mortgagee can sue on the covenant in the mortgage deed where the mortgagor has agreed to pay money lent with interest – the lender can sue on this at any time after the first 6 months have expired…

 

I found that: it is unusual to leave the mortgagor in possession – (if lender enters into possession) and equity discouraged a mortgagee from entering into possession, hence the following rule:

 

“If the mortgagee takes possession, he must account very strictly, not only for the rents and profits of the land which he received, but also for all those which he might have received if he had exercised the greatest care.” (LPA 1925 s.105)

 

An account taken on this basis is called ‘an account on the footing of wilful default’ the mortgagee being liable for all money’s which ‘but for his wilful default’ he night have received

 

The mortgagee incurs the same liability if he appoints another person as his agent to take possession as his agent to take possession and collect rents and profits.

 

Apple

[wfspayback]

From the above post

 

'if the transfer of the mortgages is not completed by registration, the SPV acquires an equitable title to the mortgage but the transferor retains the legal title'

 

In addition to the above extract we also have to consider the judgement's of the Court of Appeal case of Paragon Finance Plc v Pender & Anor [2005] EWCA Civ 760 (27 June 2005).

 

We have to consider that as a Court of Appeal Judgement

 

 

 

 

 

The above judgement which is binding on every lower court confirms

 

1. As registered proprietor of the legal charge, the lender retains legal ownership
   
2. An incident of legal ownership is the right to possession
   
3. An uncompleted transfer does not operate at law to divest the lender of the right to possession.
   

 

Now we have to consider on what basis does an uncompleted transfer (one that has not been completed by registration) not operate at law, resulting in the lender retaining legal ownership including the right of possession.

 

The above Judgement is supported by legislation - being the Land Registration Act 2002

 

 

 

Both legislation and case law (being the judiciary interpretation of legislation) confirms that a transfer of a legal charge does not operate at law until it is completed by registration.

 

It is logical to conclude that a transfer that has not been completed by registration is by definition uncompleted.The judgement from Pender confirms that an uncompleted transfer does not operate at law to divest the lender of the right to possession.

 

Exactly. That is the one and only issue. The lender is and intended to be the registered proprietor of the legal charge. Nothing else is of any consequence. Until the lender is replaced as the registered proprietor by a transfer completed by registration, it has the right to possession

[wfspayback]

Now that we have established that an uncompleted transfer of the legal charge does not operate at law and does not serve to divest the right of possession from the lender, we can refer to the MORTGAGE SALE AGREEMENT between PREFERRED MORTGAGES LIMITED, SOUTHERN PACIFIC MORTGAGE LIMITED, EUROSAIL-UK 2007-6NC PLC and BNY CORPORATE TRUSTEE SERVICES LIMITED of 28 November 2007 (previously referred to in this thread as the 'A.N.OTHER Mortgage Sale Agreement 2007'.

 

The question that now needs to be asked, is if this document proves that the transfer of the legal charge has been completed by registration, so that the transfer operates at law and does divest the lender of its right to possession.

 

To ask this question we first must wrongly disregard the judgement of Paragon Finance Plc v Pender & Anor [2003] EWHC 2834 (Ch) (25 November 2003).

 

 

 

Note: Since the above judgement the TR3 form - being the prescribed form to effect a transfer of a Legal Charge, has been replaced by the Land Registry with the TR4 form (effective from 1 October 2009).

 

Page 13

 

 

 

Page 13

 

 

 

The above two extracts confirm that SPML and not Eurosail is or will become registered or recorded at the Land Registry as proprietor or owner of each Mortgage

 

Pages 13/14

 

 

 

Page 14

 

 

 

The Mortgage Sale Agreement confirms that registration will not take place until a perfection event has occured.

 

As the transfer will not be registered until such a time that a perfection event occurs the transfer is uncompleted - in otherwords it has not been completed by registration.

 

Pender tells us that

 

 

 

 

 

The Land Registration Act 2002 tells that

 

 

 

Confirming that the uncompleted transfer detailed in the Mortgage Sale Agreement does not operate in law.

 

To conclude

 

The A.N.OTHER Mortgage Sale Agreement 2007 - confirms that the transfer has not and will not, until a perfection event occurs be completed by registration.

 

Case Law (Pender and others) and Legislation (Land Registration Act 2002) - both confirm that an uncompleted transfer does not operate at law and does not serve to divest the lender of its right to possession.

 

The A.N.OTHER Mortgage Sale Agreement therefore confirms that the legal ownership of the legal charge is retained by the lender and as such the lender has the right to possession.

 

Your post removes any and all doubt. Thank you for you detailed post. This discussion for me has now been concluded in some style I have to say Nick.

 

The discussion will no doubt continue but the outcome has always been clear - The lender whilst being the registered proprietor of the legal charge has the right to possession.

 

'The lender whilst being the registered proprietor of the legal charge has the right to possession' Simples ;-)

[applecart]

Nick Nick - I forgot to welcome you and your more than valid input for this discussion, I extend that ‘welcome’ to you now - better late than never hey : )

 

I feel the need to input a wee disclaimer of my own right now….

 

Whilst I would have preferred to proceed without identifying any particular lender, and whilst I am not happy to put SPML or any other lender for that matter in the ‘frame’ in preference to keeping this discussion general….I am hopeful that what you say remains true in the case of SPML – but, it is to be understood that if the discussion should proceed to show that what you have said does not protect SPML’s interests, then be aware that this was never my intention and I in no way intentionally or otherwise mentioned SPML or any other lender in this discussion other than to acknowledge them by virtue of your posts…

 

Apple

[wfspayback]

I am bemused that anyone would care what is fair or unfair to the likes of REFERRED MORTGAGES LIMITED, SOUTHERN PACIFIC MORTGAGE LIMITED, EUROSAIL-UK 2007-6NC PLC and the other Eurosail's, given their track record and dire reputation on CAG and how they reportedly treat their borrowers.

 

I am sure SPML, SPPL and Eurosail are grateful for your concerns about what is fair to them.

 

To refuse to post the Mortgage Sale Agreement because it would be unfair to them and only post certain edited extracts would appear to show the strength of your argument in a very bad light and made me wonder what could be in this Mortgage Sale Agreement that you might not want people to read themselves.

 

Your real reasons not to post the Mortgage Sale Agreement became very clear, once I read it.

 

Speaks volumes and explains much

[applecart]

These are the Perfection Events of which Nick Nick speaks of:

 

(a) the service of an Enforcement Notice by the Trustee under Condition 9(a) (Events of Default)

(b) a seller and/or the Issuer and/or the Trustee becoming obliged to effect or have effected any Perfection Act by an order of any court having jurisdiction or by law or by a mandatory requirement of any regulatory authority having jurisdiction

© the Trustee considers that the Security or any part thereof is in jeopardy (including due to the possible insolvency of a Seller) where title to any Loan or it Collateral Security is vested in such Seller, or

(d) the commencement of Insolvency Proceedings in respect of a Seller where title to any Loan or its Collateral Security is vested in such Seller

 

And...

 

When talking ‘perfection act’ in a securitization – you are talking about any ONE of the following occurrences:

 

(A) The delivery to the issuer (with consent of the Trustee) or to the Trustee all Property Deeds and Loan Files and up to date schedules for attachment to any Transfer, Assignment of Charges or Assignation of Charges

 

(B) The giving to the relevant Borrower, insurer or other person notice of the sale and transfer, assignment or assignation to the issuer of the relevant Loan and its Collateral Security in such form or forms as may be required by the Issuer (with the consent of the Trustee) or the Trustee

 

(c ) The execution by the relevant Mortgagee of a transfer or assignation

 

(i) in the case of the English Loan where the related Property comprises registered land (including land which is the subject of an application for first registration, of a Registered Land Transfer in the form set out in HM Land Registry Form TR4 or any replacement thereof

(ii) in the case of an English Loan where the related Property comprises unregistered land (excluding land which is the subject of an application for first registration), an Unregistered Land Transfer in the form set out in Part A of Schedule 2 of the Mortgage Sale Agreement

(iii) [relates to Scottish loans]

(iv) [relates to Scottish loans]

(v) relates to northern irish laons

(vi) relates to northern irish loans

(vii) in the case of any Loan where a Postponement document was entered into in favor of the Mortgagee under the related Mortgage, a collateral transfer and assignment in the form set out in Par F of Schedule 2 of the Mortgage Sale Agreement

 

(D) the submission of any notice, intimation, form, request or application, or payment of any fee for the registration and/or recording of any Transfer at the Land Registry, the Registers of Scotland or the Registers of Northern Ireland, as applicable

 

(E) the registration of any interest of the Issuer or the Trustee in the related Property at the Central Land Charges Registry or, as the case may be, the Registry of Deeds, Belfast; and

 

(F) any acts in respect of, or other actions or steps that are ancillary to and incidental to the steps described in paragraphs (a) to (e) above as the Issuer (with the prior written consent of the Trustee) or the Trustee reasonably requires the relevant Seller to do or procure that is done

 

I can't see that it would be too difficult to prove that 'perfection' has occurred without having given notice to a Borrower personally...

 

Apple

[applecart]

Mortgage securitisation is much more than its face value presented by some...it would be fool hearty to presume that the only documents involved to evidence whether the sale is 'complete' or not is solely down to the findings in a MSA document...

 

Take a look at the depth of documents that are truly involved:

 

Memorandum and Articles of Association of the Issuer;

Subscription Agreement;

 

The above are available prior to the Closing Date, drafts (subject to minor amendment), and after the Closing Date, copies, of the following legal documents:

 

(i) the Master Securitisation Agreement (incorporating the Master Definitions Schedule,

the Common Terms, the Paying Agency Agreement, the Cash/Bond Administration

Agreement, the Mortgage Administration Agreement, the Bank Agreement, the

Liquidity Facility Agreement, the GIC and the Post Enforcement Call Option

Agreement);

BBR Swap Guarantee;

Scottish Trusts;

Corporate Services Agreement; and

Investment Administration Agreement.

Mortgage Sale Agreement;

Collection Accounts Declarations of Trust;

Bullet Cap Agreement;

Bullet Cap Guarantee;

Trust Deed;

Deed of Charge

Currency Swap Agreements;

Currency Swap Guarantee;

Fixed/Floating Swap Agreement;

Fixed/Floating Swap Guarantee;

BBR Swap Agreement;

 

The Closing Date has to be factored in to the process, the simoultaneous execution of the documents and the Issuers registration of his ownership at Companies House - and much more...

 

The Pender issue and attempts to marry A.N.Other's issue as oneand the same is not that simple I'm afraid - not without MORE....

 

The Discussion Thread continues......(subject to the Site Teams Approval of course...)

 

Apple

[applecart]

Speaks volumes and explains much

 

It speaks Nothing.... the discussion continues...

 

Apple

[Casino Royale]

These are the Perfection Events of which Nick Nick speaks of:

 

(a) the service of an Enforcement Notice by the Trustee under Condition 9(a) (Events of Default)

(b) a seller and/or the Issuer and/or the Trustee becoming obliged to effect or have effected any Perfection Act by an order of any court having jurisdiction or by law or by a mandatory requirement of any regulatory authority having jurisdiction

© the Trustee considers that the Security or any part thereof is in jeopardy (including due to the possible insolvency of a Seller) where title to any Loan or it Collateral Security is vested in such Seller, or

(d) the commencement of Insolvency Proceedings in respect of a Seller where title to any Loan or its Collateral Security is vested in such Seller

 

And...

 

When talking ‘perfection act’ in a securitization – you are talking about any ONE of the following occurrences:

 

(A) The delivery to the issuer (with consent of the Trustee) or to the Trustee all Property Deeds and Loan Files and up to date schedules for attachment to any Transfer, Assignment of Charges or Assignation of Charges

 

(B) The giving to the relevant Borrower, insurer or other person notice of the sale and transfer, assignment or assignation to the issuer of the relevant Loan and its Collateral Security in such form or forms as may be required by the Issuer (with the consent of the Trustee) or the Trustee

 

(c ) The execution by the relevant Mortgagee of a transfer or assignation

 

(i) in the case of the English Loan where the related Property comprises registered land (including land which is the subject of an application for first registration, of a Registered Land Transfer in the form set out in HM Land Registry Form TR4 or any replacement thereof

(ii) in the case of an English Loan where the related Property comprises unregistered land (excluding land which is the subject of an application for first registration), an Unregistered Land Transfer in the form set out in Part A of Schedule 2 of the Mortgage Sale Agreement

(iii) [relates to Scottish loans]

(iv) [relates to Scottish loans]

(v) relates to northern irish laons

(vi) relates to northern irish loans

(vii) in the case of any Loan where a Postponement document was entered into in favor of the Mortgagee under the related Mortgage, a collateral transfer and assignment in the form set out in Par F of Schedule 2 of the Mortgage Sale Agreement

 

(D) the submission of any notice, intimation, form, request or application, or payment of any fee for the registration and/or recording of any Transfer at the Land Registry, the Registers of Scotland or the Registers of Northern Ireland, as applicable

 

(E) the registration of any interest of the Issuer or the Trustee in the related Property at the Central Land Charges Registry or, as the case may be, the Registry of Deeds, Belfast; and

 

(F) any acts in respect of, or other actions or steps that are ancillary to and incidental to the steps described in paragraphs (a) to (e) above as the Issuer (with the prior written consent of the Trustee) or the Trustee reasonably requires the relevant Seller to do or procure that is done

 

I can't see that it would be too difficult to prove that 'perfection' has occurred without having given notice to a Borrower personally...

 

Apple

 

Interesting....

 

You say

 

"I can't see that it would be too difficult to prove that 'perfection' has occurred without having given notice to a Borrower personally..."

 

Whilst I do not want to damage your confidence - You should research

 

BNY Corporate Trustee Services Ltd v Eurosail- UK 2007- 3BL Plc & Ors [2010] EWHC 2005 (Ch) (30 July 2010)

BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL Plc & Ors> [2011] EWCA Civ 227 (07 March 2011)

 

These two cases which by coincidence relate to a SPML SPV, confirm that a Perfection Event, does not automatically lead to a Perfection Act

 

If it is would not be too difficult to prove that 'perfection' has occurred, then please prove it.

Edited August 18, 2012 by Casino Royale

[Casino Royale]

Mortgage securitisation is much more than its face value presented by some...it would be fool hearty to presume that the only documents involved to evidence whether the sale is 'complete' or not is solely down to the findings in a MSA document...

 

Interesting...

 

The sale (disposition) of a legal charge is completed by registration. This has been established by common law and confirmed by legislation.

 

It is the Land Registry Charges Register that will evidence, if the sale (disposition) of the legal charge is complete and not any of the documents you have listed.

[Casino Royale]

I am conscious that not all lenders sell or intend to sell anymore than the beneficial interest of the debt, but to be fair to those borrowers where this is simply not the case, their civil rights must be taken into account. (i.e protection from A.N.OTHER)

 

ANY/ALL sales are governed by the provisions of the Sales of Goods Act 1979. So that if you have executed a contract to sell (MSA) it's implications are to be viewed in relation to the sale of a mortgage debt that will have been created by means of deed and it's likely effect upon the borrowers loan and the relationship between the original lender and the borrower is to be taken from there.....

 

To quote 'Pegasus': "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."

 

I am more than aware that the borrower grants the lender a mortgage - I am also aware that the borrower has the right to do so being the 'absolute owner'.

 

It is a sad realisation that modern mortgages are not the same as back in the day - lenders are no longer 'loyal' to a borrowers interest - it would seem the allure of the money markets present much larger returns.......

 

The power of sale confers far more than the sale of the property or enforcement of the property by way of seeking possession via a court of law... we are in an age, where the powers of sale lead many lenders to effect a sale and enter possession as party to taking the 'self help' statutory right to the extreme....

 

The power by virtue of LPA 101 (6) is the norm

The power to enter into possession to effect the sale also appear to be the norm

 

These are rights that the lender has always had, Some whizz kid on wall street showed lenders how to use them to great advantage no doubt....

 

Notwithstanding having entered into possession and effected a sale (divesting both legal and equitable interests) the Lender then comes for what 'Pegasus' kindly advises..... "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"......

 

Borrowers may view this as some kind of contradiction on the basis that once you have sold your 'legal charge' how is it that a lender still believes it can legally seek possession of a borrowers property on a 'legal charge' that no longer belongs to it? when LPA s.88 (staute-applicable law) advises borrowers that the right is supposed to have been extinguished....???

 

Apple

 

Interesting.....

 

You say

 

"Borrowers may view this as some kind of contradiction on the basis that once you have sold your 'legal charge' how is it that a lender still believes it can legally seek possession of a borrowers property on a 'legal charge' that no longer belongs to it? when LPA s.88 (staute-applicable law) advises borrowers that the right is supposed to have been extinguished....???"

 

88 Realisation of freehold mortgages.

 

(1)Where an estate in fee simple has been mortgaged by the creation of a term of years absolute limited thereout or by a charge by way of legal mortgage and the mortgagee sells under his statutory or express power of sale—

 

(a)the conveyance by him shall operate to vest in the purchaser the fee simple in the land conveyed subject to any legal mortgage having priority to the mortgage in right of which the sale is made and to any money thereby secured, and thereupon;

(b)the mortgage term or the charge by way of legal mortgage and any subsequent mortgage term or charges shall merge or be extinguished as respects the land conveyed;

 

 

When the lender sells the mortgaged property (for want of a better description) following possession, that the mortgage is extinguished, not when the mortgage debt is sold/assigned in equity or at law.

 

When sold at law, the legal charge is transferred. It is not extinguished and replaced.

 

It is nonsense to interpret legislation that applies to one action, to also apply to another action.

[Casino Royale]

To conclude

 

The A.N.OTHER Mortgage Sale Agreement 2007 - confirms that the transfer has not and will not, until a perfection event occurs be completed by registration.

 

Case Law (Pender and others) and Legislation (Land Registration Act 2002) - both confirm that an uncompleted transfer does not operate at law and does not serve to divest the lender of its right to possession.

 

The A.N.OTHER Mortgage Sale Agreement therefore confirms that the legal ownership of the legal charge is retained by the lender and as such the lender has the right to possession.

 

Interesting....

 

Why is this even being discussed let alone being disagreed with ?

 

This has been clearly legally established for near nine years

 

Paragon Finance Plc v Pender & Anor [2003] EWHC 2834 (Ch) (25 November 2003)

 

138. Now this all makes sense. It means that the Defendants need only deal with the registered chargee and no one else. Anything else would be a nonsense.

 

To claim anything else would not only be nonsense but complete nonsense

[Casino Royale]

Apologies Lea_HTH

 

I did not see your post until now.

 

I take for granted that case law can be pleaded during proceedings and can either be relied upon or ignored by a judge. Essentially when you plead 'case law' - a judge will apply 'discretion in his application and reliance upon it and advise accordingly how and where he has applied it (normally)....

 

Apple

 

You say that case law can either be relied upon or ignored by a judge and the judge will apply his/her discretion

 

 

Interesting....

 

What about the principle of precedent and Stare decisis

[Casino Royale]

Paragon v Pender 2003

 

Whilst I am loath to continually refer back to equitable v legal assignments in ‘pender’ when I am looking to deal specifically with the sale of a debt with regard to A.N.OTHER… perhaps it is best to bring the ‘pender’ issue to close thus..

 

Interesting....

 

You may want to consider that what you want to look to deal with is not the only thing you should look to deal with.

 

Assignment

 

I wonder if you understand and appreciate the significance of assignment. You have dismissed it, as if it is in some way irrelevant.

 

I don’t believe that you have given consideration too, or really understand the importance and significance of assignment of a thing in action. A thing in action is the right to enforce payment of a debt. In reference to this particular thread, the right to enforce the mortgage debt (right to possession is not the right to enforce the mortgage debt). It is complete nonsense to dismiss the relevance of assignment.

 

A chose in action – can be assigned in two ways, either by an equitable assignment or by a legal assignment. Equitable assignment of the mortgage debt is a right of lender permissible by common law. Whereas a Legal Assignment of the mortgage debt is defined by s.136 of the Law of Property Act 1925.

 

If we take a moment to read s.136 of the Law of Property Act 1925, we will find that it confirms that:

 

136 Legal assignments of things in action.

 

(1)Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice—

 

(a)the legal right to such debt or thing in action;

(b)all legal and other remedies for the same; and

©the power to give a good discharge for the same without the concurrence of the assignor:

 

From the date the borrower receives notice of the legal assignment – the legal right to the mortgage debt and all legal/other remedies to that mortgage debt pass and transfer from the assignor (the lender) to the assignee (the SPV) and not before.

An assignment that does meet the statutory requirements of a legal assignment is an equitable assignment. The only significant difference between a legal assignment and an equitable assignment is that an equitable assignee cannot bring an action in its own name against the borrower, but must fall back on the rules governing equitable assignments and join the assignor as party to the action.

 

It is extremely foolish to not consider assignment, when discussing the sale of debt. The terms assignment and sale are almost interchangeable. The only significant difference is that a sale implies that a price has been paid whereas with assignment, this is not always the case.

 

If not for assignment, please ask yourself, how else the legal rights to the debt are transferred from the assignor (the seller) to the assignee (the buyer)

[Casino Royale]

Interestingly, the judge confirmed at ‘139’ that if the transfer is by way of deed it confers on the SPV the powers of an equitable chargee under LPA s.101

 

Interesting...

 

You appreciate that this in no way impacts upon the rights of the lender as legal chargee

 

Paragon Finance Plc v Pender & Anor [2005] EWCA Civ 760 (27 June 2005)

 

In my judgment as a matter of principle the right to possession conferred by the Legal Charge remains exercisable by Paragon as the legal owner of the Legal Charge (i.e. as the registered proprietor of it), notwithstanding that Paragon may have transferred the beneficial ownership of the Legal Charge to the SPV.

[Casino Royale]

A ‘sale’ is by virtue of a separate contract the Mortgage Sale Agreement – for securitization purposes, the contract is between the original lender and the SPV. It is also a statutory right of the lender under the provision of LPA 101 (6) NOT LPA 101 (1) . The Borrowers mortgage contract 9 times out of 10 will state that the borrower accepts that they will not be informed when a ‘sale’ occurs.

 

Interesting....

 

101 Powers incident to estate or interest of mortgagee.

 

(6)The power of sale conferred by this section includes such power of selling the estate in fee simple or any leasehold reversion as is conferred by the provisions of this Act relating to the realisation of mortgages.

 

The power of sale conferred by s.101 (6) is the power to sell the freehold property (estate in fee simple) or the leasehold property - both being a mortgaged property and not the mortgage debt.

 

It is nonsense to interpret legislation that applies to one action, to a different action

[Casino Royale]

“You could change the above AA to MSA, rendering the repeated points made about the MSA totally and completely irrelevant. The MSA is a contract, a contract is not a transfer in the prescribed form.”

 

No, you cannot change the AA to MSA, they are completely different and their individual implications on the borrower are altogether different.

 

Sales are governed by the Sale of Goods Act 1979.

 

The MSA comes first – the loans are sold – evidence of a MSA brings into the equation the Sale of Goods Act 1979 - it is only after this time that any AA may become party to the equation.

 

“The prescribed form is a TR4 form and only a TR4 form. Only a TR4 form registered with the land registry can divest the right of possession from the lender.”

 

Again, an assignment has no legal effect until registration of the disposition. When done, the SPV can then step into the shoes of the original lender ‘officially’ and be seen by the world at large as the entity with ‘title to sue’. In an’ assignment’, until this happens – the ‘assignment’ is equitable. This is quite a separate instance from where a ‘sale’ of the debt has occurred.

 

Interesting...

 

Paragon Finance Plc v Pender & Anor [2003] EWHC 2834 (Ch) (25 November 2003)

 

132. The prescribed form is TR3. The operative part of the transfer (paragraph 8) is commendably succinct "the transferor transfers the charge mentioned to the transferee". The AA is clearly not a transfer in the prescribed form.

 

The TR4 form is now the operative part of the transfer. The Contract of Sale is clearly not a transfer in the prescribed form.

 

The Contact of Sale does not transfer the charge, only a completed TR4 form registered with the Land Registry can transfer a charge. A sale (disposition) of a legal charge is completed by registration and not by contract.

[Casino Royale]

109. In my judgment Mr and Mrs Pender's case on this issue is misconceived. It is common ground that Paragon, as registered proprietor of the Legal Charge, retains legal ownership of it. One incident of its legal ownership – and an essential one at that – is the right to possession of the mortgaged property. I can see no basis upon which it can be contended that an uncompleted agreement to transfer the Legal Charge to the SPV (that is to say an agreement under which, pending completion, the SPV has no more than an equitable interest in the mortgage) can operate in law to divest Paragon of an essential incident of its legal ownership. In my judgment as a matter of principle the right to possession conferred by the Legal Charge remains exercisable by Paragon as the legal owner of the Legal Charge (i.e. as the registered proprietor of it), notwithstanding that Paragon may have transferred the beneficial ownership of the Legal Charge to the SPV.

 

Again, the court at ‘109’ is dealing with what it has been led to understand is an ‘assignment’ of the debt. NOT a ‘sale’ of the debt.

 

Interesting...

 

The court is dealing with the lender being the registered proprietor of the legal charge

 

However in your initial post

 

Lord Justice Jonathan Parker :

 

“…..As Dr Eilis Ferran MA (presently Reader in Corporate Law and Financial Regulation at Cambridge University) points out in a book entitled 'mortgage Securitisation – Legal Aspects' (Butterworths, 1992) to which we were helpfully referred by Mr Ali Malek QC (for Paragon) in the course of argument, if the transfer of the mortgages is not completed by registration, the SPV acquires an equitable title to the mortgage but the transferor retains the legal title, albeit as trustee for the SPV (assuming, as will usually be the case, that the full consideration has been paid)….[my emphasis

 

The Court is aware that it it usually the case that full consideration has been paid, indicating that a sale (in equity) has taken place. In my view, you too quickly and easily dismiss assignment and what it relates too and involves

[Casino Royale]

If you 'sell' your rights without notice to the Borrower - you sell both legal and equitable title - s.88 LPA 1925 tells Borrowers that without notice, the fee simple (freehold) and the debt merge to extinguish the mortgage with a duty to divest title

 

Interesting...

 

The legal title of the debt - encompasses the legal rights and remedies. These only pass and transfer from the assignor (the seller) to the assignee (the buyer) from the date notice is received by the borrower.

 

If notice is not given to the borrower the transfer is not effectual at law and operates in equity - with only the equitable title being transferred to the buyer and the legal title to the debt being retained by the seller.

[Casino Royale]

In giving consideration to s.88 LPA 1925 (as just 1 factor for consideration) - this provision provides that once the Lender has sold his interest a 'domino' effect occurs - The LAW clearly states that - when an Originator exercises his express power of sale under s.101 LPA 192 - the effect of s.88 LPA 1925 is supposed to be recognised by law to 'merge' and 'extinguish' the original agreement between the Originator and the Borrower AND provides that the 'title to sue' is vested in the SPV (purchaser)

 

Apple

 

Interesting...

 

Again it is the power to sell the mortgaged property either via an auction or the open market and not the charge or debt via securitisation.

 

It is utter nonsense to interpret the legislation to apply to one action, when it clearly applies to another action

[Casino Royale]

It is common knowledge that LRA 2002 s.58 (1).. is 'conclusive' and grants a right to possession.

 

Against this, I posted a Power of Attroney of A.N.OTHER to confirm that 'for good, and valuable consideration...' - so as to provide interested parties with detail as to the difference between Paragon's transaction document leading the court to conclude that the sale was yet to be completed and A.N.OTHER's that confers that a sale has actually taken place.

 

Against this, I posted information as to trusts, nominees, and bare trusts etc etc....

 

Whilst the difference may appear 'subtle'............... as 'subtle' as it may appear.....after a sale is evidenced..... the rights to possession can and do change.

 

Apple

 

Interesting....

 

Your above conclusion is contradicted by your first post in this thread.

 

Looking at what Lord Justice Jonathan Parker actually says in more detail below......

 

Lord Justice Jonathan Parker :

 

“…..As Dr Eilis Ferran MA (presently Reader in Corporate Law and Financial Regulation at Cambridge University) points out in a book entitled 'mortgage Securitisation – Legal Aspects' (Butterworths, 1992) to which we were helpfully referred by Mr Ali Malek QC (for Paragon) in the course of argument, if the transfer of the mortgages is not completed by registration, the SPV acquires an equitable title to the mortgage but the transferor retains the legal title, albeit as trustee for the SPV (assuming, as will usually be the case, that the full consideration has been paid)…

 

(assuming, as will usually be the case, that the full consideration has been paid)

[Casino Royale]

…In my judgment Mr and Mrs Pender's case on this issue is misconceived. It is common ground that Paragon, as registered proprietor of the Legal Charge, retains legal ownership of it. One incident of its legal ownership – and an essential one at that – is the right to possession of the mortgaged property…..

 

The Judge establishes that it was Paragon that registered the charge, sold the debt, but retained legal rights to possession because their admin agreement, secured this important right for them by evidencing that they were 'appointed trustees' after the sale

 

Interesting....

 

Rather than the Judge establishing that Paragon retained the legal rights to possession because of the admin agreement.

 

He actually said

 

" It is common ground that Paragon, as registered proprietor of the Legal Charge, retains legal ownership of it."

 

As registered proprietor, it retained legal ownership. It retained legal ownership because it was the registered proprietor of the legal charge and not as you have implied because of the admin agreement.

[applecart]

Casino Royale and others have taken us back to 'Pender'....

 

Over the next few posts I look to address the points raised - given that the points are many and lengthy - it means that the replies will spread over a lot of space on the thread - for which I apologise... I have tried to keep it as short as possible though...

 

Apple

[applecart]

“BNY Corporate Trustee Services Ltd v Eurosail- UK 2007- 3BL Plc & Ors [2010] EWHC 2005 (Ch) (30 July 2010)

BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL Plc & Ors> [2011] EWCA Civ 227 (07 March 2011)

 

These two cases which by coincidence relate to a SPML SPV, confirm that a Perfection Event, does not automatically lead to a Perfection Act

 

If it is would not be too difficult to prove that 'perfection' has occurred, then please prove it.”

 

Thanks for this... and welcome…

 

My confidence is not ‘damaged’ at all - This is a discussion and I appreciate your input as much as I do the input of all those that contribute to the thread : )

 

I have taken time out to view the case of 2010 – and didn’t bother with the 2nd case because I believe you when you say both confirm the same thing..

 

The first thing that needs to be pointed out is that ‘Perfection Events’ and ‘Perfection Acts’ in relation to a securitization transaction is not the same as that of an ordinary conveyance between the Original Lender and the Borrower.

 

I’m conscious that you are familiar with Pender, but I’m not sure just how deep your knowledge of Mortgage Securitisation goes?

 

Depending on your depth of knowledge the following may or may not make sense to you……

 

The ‘perfection’ needs to be by way of registration as you say… the Original Lenders transaction with the Issuer and others is separate to the one initiated with the Borrower, and is a financial collateral agreement….. therefore, ‘registration/perfection’ will not as I understand it, be made at HMLR – it would instead be registered within 21 days at Companies House.

 

Again, depending on your depth of knowledge, you may or may not be aware that the registration at Companies House is in accordance with stock market regulation and the Companies Acts.

 

Essentially what a Borrower is left with is a registration at HMLR that is between himself and the Original Lenders and un-be known to him…. The Borrowers property is subjected to a ‘dual’ registration at Companies House…. Of which,…. he is ‘not directly’ party to –

 

However – his Property becomes a ‘collateral security’ and the registration at HMLR provides a means of securing the property by the Original Lender – holding on trust for the benefit of beneficiaries - and to the stock market objective - a means of recourse in the event of bankruptcy/insolvency….

 

Apple