Mortgage Securitisation Discussion Thread

[wfspayback]

Hight Court

 

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

 

Mr Justice Peter Smith:

 

The Claimant is and remains the registered proprietor of the registered charge, registered against the Property. This is in accordance with the terms of the AA, namely that until requested the Claimant remains the registered proprietor.

Notwithstanding that, the Defendants contend, that by virtue of the AA all rights to enforce the mortgage (whether by suing on the covenant or by taking possession) have passed to CMS3 and it ought to be the proper Claimant.*This argument is based on the effect of section 114 LPA 1925.

That section provides as follows:-

"114 Transfers of Mortgages

(1) A deed executed by a mortgagee purporting to transfer his mortgage or the benefit thereof shall, unless a contrary intention is expressed, (emphasis added) and subject to any provisions therein contained operate to transfer to the transferee

 

(a) the right to demand, sue for, recover, and give receipts for the mortgage money or the unpaid part thereof, and the interest then due, if any, and thenceforth due to become due; and

 

(b) the benefit of all securities for the same, and the benefit of and the right to sue on all covenants with the mortgagee, and the right to exercise all powers of the mortgagee; and

 

© all the estate and interest in the mortgaged property then vested in the mortgagee subject to redemption or cesser, but as to such estate and interest subject to the right of redemption then subsisting."

 

It is important to appreciate that under section 114 it does not have an absolute operative effect. It is subject to any contrary intention expressed and subject to any provisions therein contained. Further, the transfer of mortgage may be in the form contained in the third schedule to the Law of Property Act (section 114(3)) with such variations and additions as the circumstances might require. The form of transfer there is for a transfer of unregistered land.

The Defendants therefore contend under the AA CMS3 therefore became an equitable mortgagee and has all the powers and rights of the mortgagee, which it can exercise by virtue of section 37 Land Registration Act 1925 ("LRA"). The authority for this explanation is stated to be E S Schwab –v- McCarthy [1975] 31 P&CR 196 at 201. The decision is not authority for the proposition at all. The Judge there was referring to the powers of a registered proprietor being registered to dispose of the land or charge the land before becoming registered. As the judgment on page 201 shows, whilst that is possible the effect will be the same as a transfer or disposition under sections 21 and 22

"in other words, the interest of the transferee or disponee will require to be completed by registration and until registered will be equitable only.

So the general frame work of the Act demonstrates and indeed this is elementary that until registration the estate sought to be created by registered proprietors in favour of disponees or lessees or transferees will be equitable only and that applies equally whether the disposition is a transfer or a lease or a charge."

 

Section 114 as regards registered land therefore only tells a part of the story. The effect of the AA may be an assignment in equity of the benefit of the registered charge. It may also be a transfer in equity. That may give the transferee rights (a point which I will refer to later). However, in contrast to unregistered land the effect of the transfer operates in equity only. It cannot transfer the legal title. That would of course occur if the title was unregistered. The deed of transfer duly executed transfers the benefit of the charge and the rights to sue. It also has the effect of transferring the estate created in favour of the chargee under section 85-87 LPA 1925. In other words for section 114 to be fully operative, the transferee needs to become registered as chargee.

 

It is instructive to recall what the major purpose of the 1925 property legislation was. The primary object was to free real property from the fetters of the investigation of title that appertained before 1925. The legislation achieved this primarily by reducing as far as possible the need to investigate equitable titles as well as legal title. Generally speaking provided a party dealt with the holder of the legal estate there was no need to go beyond that title. Thus for example section 113 LPA 1925 provides protection for a person dealing in good faith with a mortgagee. Such person is not concerned with any trust at any time affecting the mortgage property, the mortgage money or the income there from.

 

Further support for this can be found from a number of decisions. First, Lever Finance Ltd. –v- Needleman's Trustee [1956] Ch 375 concerned the exercise of powers by a mortgagee of a registered title. The plaintiff took a transfer of the legal charge from the original mortgagees and purported to appoint a receiver before it itself had been registered as a proprietor of the charge. It was held that the plaintiff was not entitled to possession and that until registration as registered proprietor of the charge it had no power to exercise statutory powers under section 101 of the LPA 1925.*

 

Harman J at page 382 accepted that submission on behalf of the Defendant. His judgment was based under section 33 and 34 LPA 1925. His attention was not drawn to section 37 LRA 1925, to which I have already made reference.

I should refer to the provisions of sections 33 and 34 LRA 1925. Section 33 provides:-

"33 Transfer of Charges

(1) The proprietor of any registered charge may, in the prescribed manner, transfer the charge to another person as proprietor.

 

(2) The transfer shall be completed by the registrar entering on the register the transferee as proprietor of the charge transferred, but the transferor shall be deemed to remain proprietor of the charge until the name of the transferee is entered on the register in respect thereof.

 

(3) …

 

(4) On registration of any transfer of a charge the term or sub-term (if any) granted expressly or by implication by the charge or any deed of alteration shall without any conveyance or assignment and not withstanding anything to the contrary in the transfer or any other instrument vest in the proprietor for the time being of the charge.

 

(5) Subject to any entry to the contrary on the register the vesting of any term or sub-term in accordance with this section in the proprietor of a charge shall, subject to the right to redemption, have the same effect as if such proprietor had been registered as the transferee for valuable consideration of the term or sub-term."

 

Section 34 provides:-

"34 Powers of Proprietor of Charge

(1) Subject to any entry on the register to the contrary, the proprietor of a charge shall have and may exercise all the powers conferred by law on the owner of a legal mortgage."

 

It is instructive to remember what is the consequence of registration. Under section 25 LRA 1925 a proprietor is given a power to create charges. Under section 27 a registered charge, unless made or taken effect by demise or sub-demise and subject to any provisions to the contrary, shall take effect as a charge by way of legal mortgage.

 

This relates back to section 87 LPA 1925, which creates the estate where there is a charge by way of legal mortgage. It is that estate in unregistered land, which creates the deemed term of years, which enables a mortgagee to have a legal right to immediate possession. However, section 27 only confers that right on the registered chargee. Under section 33 the proprietor who registered chargee therefore has the following rights. First, he has a right to take possession by virtue of the term of years deemed to be vested in him. Second, he has the power of transfer under section 33 in the prescribed form. I note in passing that the AA is not a transfer in the prescribed form. Third, he has the powers of the owner of the legal mortgagee under section 34.

It is important to note that under section 33 (2) the transferor shall be deemed to remain proprietor of the charge until the name of the transferee is entered into the register in respect thereof.

 

Thus this accords with the scheme of land registration. Whilst the legislation has been described as "the Cinderella" of the 1925 legislation, the purpose behind the system of registration was to ensure that persons primarily need only deal with the registered proprietor. The conveyancing documents i.e. a transfer (subject to exceptions not relevant) do not transfer the legal estate. It is the act of registration by the land registry pursuant to an appropriate application, which transfers the legal estate. This has a consequence (sometimes called "statutory magic") of enabling the act of registration to confer a legal title on a person who would not ordinarily be entitled to that legal estate, see for example Norwich and Peterborough Building Society –v- Steed [1993] Ch 116. The differing effect in the case of registered land and unregistered land in this regard is adverted to expressly in Fisher & Lightwood "Mortgages" (11th Edition) paragraph 14.21. Section 34 is the converse, namely that where a person is registered proprietor he is deemed to be registered proprietor unless and until he is removed. As long as he is the registered proprietor he is entitled to exercise all the rights and powers as such registered proprietor to which I have made reference.

 

Thus in registered land, section 114 LPA 1925 does not have the immediate effect which it would have in the case of unregistered land. This point was referred to in Fisher & Lightwood paragraph 4.19, note 7, where the authors say this:-

"Contrast section 33 with the Law of Property Act section 114 in relation to unregistered land where the position is that the transferee steps into the shoes of the transferor. Because in the registered land context, on registration of the transfer, the transferee is in the same position as a transferee for valuable consideration of the term or sub-term it follows that by virtue of the Land Registration Act 1925 section 24 the transferee may take free of encumbrances and other matters not protected on the register which bound the transferor e.g. by estoppel and thereby be in a better position than the transferor. Quaere whether the sections of s.114 apply to the transfer of registered charges insofar as that section is not inconsistent with ss. 23 and 3. "

 

In my opinion, section 114 LPA 1925, either has no impact in the case of a transfer of a registered charge under registered land or its effects are subject to the need for the transferee to become registered proprietor under the LRA regime.

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.

In my judgment although s. 114 LPA does not say so it is not intended to apply to transfers of registered charges under the LRA 1925. The regime for transferring those charges is the statutory regime to which I have made reference above.

That does not mean that section 114 will have no effect. Any document, (such as the AA), which purports to assign a charge or transfer a charge in unregistered land operates in equity only. The E S Schwab case referred to above established that and further support is found for that proposition in Barclays Bank –v- Zaroovabli [1997] 2 WLR 729 at page 734. Sir Richard Scott V-C (as he then was) said this:-

"The legal charge executed on 25 May 1988 did not vest a legal estate in the bank. If title to the property had been unregistered, the legal charge would have done so; but 136, Kings Drive was registered land. It is fundamental to registered land conveyancing that whereas in unregistered conveyancing a deed takes effect from execution, a registrable disposition must be completed by registration … Pending registration, the estates and rights created by a registrable deed may be enforceable as between the parties to the deed and can take effect as minor interests, but they will not take effect in rem. They will take effect in rem only upon registration. Minor interests can be protected by suitable entries on the register but "take effect only in equity"."

 

Now there is an interesting academic argument about whether or not a transfer of registered land actually transfers any interest at all as opposed to a right merely to seek registration see generally Barnsley "Conveyancing Law and Practice" 4th Edition page 478. It clearly passed no legal estate and if for example it is preceded by a contract for sale or and agreement for charge it is difficult to see how it can transfer an equitable interest.*

 

Whatever the position it is quite clear that until registration a registered proprietor who has effected an absolute disposition of his interests by a transfer still holds the legal estate until it is divested from him by registration of the new transferee. Although such a proprietor ought not to create interests adverse to the rights that he has given up by transfer he can do so. As the dictum of Scott V-C shows a transferees rights subsist only in equity until completed by registration. They are thus precarious. Thus a transferor can transfer property to A and execute a transfer in favour of B of the same property. If B is successful in becoming registered first, B obtains the legal title although in equity his interests were subsequent to that of A. This cannot of course happen in unregistered land, because the transfer to B in unregistered land would be of no effect, because the transfer to A would have transferred all the equitable interest.

This is the question I posed to Mr Page QC in argument. Even if the AA creates an equitable chargee, the registered chargee i.e. the Claimant, by section 33 is deemed to be the registered chargee until it is deregistered. It still retains all the powers of enforcement disposition and taking possession, even if as between it and CMS3 it ought not to exercise those powers. This is a result of the statutory magic of retaining in its favour the legal estate pending divesting by subsequent registration of a transferee. No such transferee has yet been registered as substituted proprietor.*

 

It follows that the Claimant remains entitled to all the rights attendant upon the legal charge. It has the right to take possession. It has the right to exercise the powers of registered proprietor and that includes the right to sell the property conferred on it by virtue of section 101 LPA 1925.

I am only concerned of course with the taking of possession, because there was no monetary judgment. I do not see that either section 114 LPA 1925 nor the provisions of the LRA 1925 have impact on the enforcement of the mortgage debt. For there to be a legal assignment of that it seems to me self evident that it must be completed by notice under section 136 LPA 1925 and until so done, even by virtue of section 114, it will remain an equitable assignment only.

 

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.

 

That does not mean that the AA (or for that matter an unregistered transfer) is of no effect. Such transfers have an operation in equity. If the transfer documents are by deed, it would confer on the transferees the powers of equitable chargees under section 101 of the Law of Property Act 1925. This was referred to in Fisher & Lightwood again (paragraph 4.6).

It must be appreciated however, that whilst an equitable chargee can be regarded as being good for all purposes as a legal chargee, it is not absolutely so. An equitable chargee in my opinion has no right to take immediate possession, see for example the observations of Harman J in Barclays Bank –v- Bird [1954] 1 Ch 274 at page 280. A legal mortgagee is entitled to possession as soon as the ink is dry on the mortgage. That right has not been taken away by the statutory restrictions imposed by, for example, the Administration of Justice Act 1970 for dwelling houses. That right can be exercised peaceably by taking physical possession or by bringing an action for possession, subject to the statutory restrictions in respect of dwelling houses.

 

An equitable mortgagee has no legal estate and no legal right to the mortgaged land. As such he has no inherent right to possession, although that can be varied by the deeds or by permission of the mortgagor or the appointed receiver or by court order; see generally Fisher & Lightwood paragraph 19.6.

Equally, as Fisher & Lightwood shows again in relation to the mortgage debt, an equitable assignee of the covenant to sue needs to give notice under section 136, otherwise he needs to sue in the name of the original mortgagee or join him; see paragraph 17.3.

 

Finally, in this context, an equitable mortgagee, even if it has the powers of sale under section 101, cannot in my opinion deliver a legal estate by virtue of the exercise of those powers alone. In order for a sale by an equitable mortgagee to be effective he must execute the charge either in the mortgagors name pursuant to a power of attorney or he must procure the mortgagor to execute a legal charge. Otherwise the dealings are regarded only as dealing in the equity of redemption; see Megarry & Wade "Law of Real Property" paragraph 19-086 and Re White Rose Cottage [1965] Ch 940. Thus a sale by an equitable mortgagee unless those conveyancing devices are resorted to are of little value.

 

Finally, as I have set out above section 114 is subject to any terms to the contrary. It is quite clear under the terms of the AA that the Claimant is intended to retain the power to enforce the charges and control them. It follows that the AA has modified the effect of section 114 LPA 1925 even if it has the effect contended for by Mr Page QC.

 

For all of those reasons, it seems to me to be quite clear that the enforcement of the charge remains in the Claimant as registered proprietor by virtue of it remaining as registered proprietor and by virtue of the provisions of the AA itself which intended the same to happen.

 

Accordingly, even if the AA confers an equitable interest on CMS3, or constitutes it an equitable chargee it does not matter. They intended, and the LRA provisions confirm, that the Claimant remains the registered proprietor for all purposes.

 

Accordingly, there is nothing in the Defendants claim based on Title to Sue. I now go on to deal with the next head Misrepresentation/Collateral Contract.

[wfspayback]

Court of Appeal

 

GMAC RFC Ltd v Grant-Sinclair & Anor [2001] EWCA Civ 1793 (19 November 2001)

 

Lord Justice Clarke

 

The third point, which was the main point which was advanced before the judge as indeed it has been advanced before me today by Mr Butt, who has assisted the applicants on their application, relates to what is called securitisation. I permitted Mr Butt to address the court, and I must say that he has done so with admirable courtesy, clarity and succinctness.

 

The point which Mr Grant-Sinclair has been concerned about throughout is this. The transfer of the charge was plainly part of a much larger transaction, which may well involve entities other than the respondent having a beneficial interest in the respondent's rights under the charge. The applicants have been trying to obtain the documents evidencing those underlying transactions and to rely upon them as a defence to the claim.*

 

The judge held, however, that such documents were irrelevant and that the respondent was entitled to exercise its rights under the charge of the registered transferee of the charge. In short, the judge held that the respondent was the legal owner of the charge and entitled to enforce it by statute.

 

The judge explained that the applicants are protected because any payment to the registered transferee of the charge, that is to the registered owner of the charge, would be a good payment in law under the charge and would afford the applicants a defence if anyone else were to seek to enforce the charge. The judge explained this with painstaking care over several pages of his judgment.

 

The applicants submit that the judge was wrong in that regard and that they should have been entitled to investigate the beneficial interests of those concerned. But the judge was to my mind plainly right, and I can see no arguable basis upon which the applicants could advance an appeal to this court on this ground.

During the course of the argument my attention has been drawn to an interesting case, namely City Mortgage Corporation Ltd v Reilly and Reilly, which was an unreported decision of Judge Rubery in the Stroke-on-Trent County Court, dated 28th November 1997. On analysis that decision does not, in my judgment, assist the applicant for this reason. There the claimant was City Mortgage Corporation Ltd, which was the original lender and mortgagee. The original mortgage was dated 15th March 1996. On I think the same day a transfer of what Judge Rubery held to be the legal and beneficial interest in the charge was transferred to another company called Greenwich International Ltd. The transfer was not dated and it was submitted on behalf of the claimant, which was City Mortgage Corporation Ltd, that it took effect only in equity and not in law. I should add that notice to the defendants of the transfer was given on the same day, 15th March 1996.

 

The judge rejected the claimant's submission and held that the transfer operated as a transfer of the legal interest and that notice of that transfer had been given to the defendant, so that the transferor or assignor, City Mortgage Corporation Ltd, no longer had any rights under the charge. Those rights were vested in the transferee or assignee, namely Greenwich International Ltd. Accordingly, the claim failed.

 

I can see nothing in the reasoning of Judge Rubery which in any way contradicts any of the reasoning of His Honour Judge Cowell.

[wfspayback]

All these cases have two things in common:

 

1) The Borrower argued mortgage securitisation impacted upon the rights of the lender.

2) The Borrowers arguments were not held.

[wfspayback]

Duplicate post

[wfspayback]

Mxpaul could I be as bold as to suggest some recommended reading.

 

 

http://books.google.co.uk/books?id=Vy00CVy5SS8C&pg=PA611&lpg=PA611&dq=securitisation+%22equitable+assignment%22&source=bl&ots=69EeqDymSz&sig=Xpy-9MCq1HQBsyHDW43y_oSDpvc&hl=en&sa=X&ei=J94zUMXpFca00QWdiIGgBg&ved=0CDMQ6AEwAA

 

http://books.google.co.uk/books?id=2ZMQ1CUshp0C&pg=PA22&lpg=PA22&dq=securitisation+%22equitable+assignment%22&source=bl&ots=Eod_00Ghhf&sig=_iKlCuIu1dwEwnAQ8OC2ilyik5w&hl=en&sa=X&ei=J94zUMXpFca00QWdiIGgBg&ved=0CDgQ6AEwAQ

 

http://books.google.co.uk/books?id=3_XEDza4fuIC&pg=PA253&lpg=PA253&dq=securitisation+%22equitable+assignment%22&source=bl&ots=s6K_wOrA78&sig=bbboRJ1WsG0kWQFrpijinMl2wH4&hl=en&sa=X&ei=J94zUMXpFca00QWdiIGgBg&ved=0CEgQ6AEwBA

 

http://books.google.co.uk/books?id=pVD1DPD3rqQC&pg=PA400&lpg=PA400&dq=securitisation+%22equitable+assignment%22&source=bl&ots=GpJB367vpj&sig=AayBQIXe7I36UB-vUuyLL5UTfgc&hl=en&sa=X&ei=J94zUMXpFca00QWdiIGgBg&ved=0CE4Q6AEwBQ

 

http://books.google.co.uk/books?id=GodCsRmu0EgC&pg=PA106&lpg=PA106&dq=securitisation+%22equitable+assignment%22&source=bl&ots=ZPEb3k64he&sig=wO5b9aZRWK4dpPuL_cwQ83gCbdg&hl=en&sa=X&ei=J94zUMXpFca00QWdiIGgBg&ved=0CFMQ6AEwBg

 

http://books.google.co.uk/books?id=5IZGgXK2yfMC&pg=PA126&lpg=PA126&dq=securitisation+%22equitable+assignment%22&source=bl&ots=u8FZnR_Xf8&sig=i2kE4_yd2t_8RWlC1oZvJ2e257k&hl=en&sa=X&ei=J94zUMXpFca00QWdiIGgBg&ved=0CFgQ6AEwBw

 

 

There are many many more books, I could recommend. I can only guess that Applecart missed them all during her extensive research on mortgage securitisation.

[applecart]

Apple: Any overriding interest, if addressed in any defence, would be considered by a judge in a possession hearing.

 

Much appreciated - Thank you : )

 

mxpaulg: If you wish to 'exit' your mortgages, you will need to sell or remortgage. What is discussed in this thread will not, as the law stands, fly in a court of law.

 

Apple

[applecart]

A quick glance at the first 'google book' posted revealed:.....

 

"Beneficial Interest v Equitable Interest

 

In legal parlance, the true nature of the investors in the assets held by the SPV is not a beneficial interest but an equitable interest.

 

This is true in case of securities of the SPV being beneficial interest certificates.

 

There is often a wrong interchange of the terms "beneficial interests" and "equitable interests" and in common parlance, we tend to equate the two.

 

Beneficial Interest arises when one person holds a property on behalf of another.e.g: A holds property on behalf of B, B is the beneficial owner of the property and A is the Legal or nominee owner.

 

A's interest in the property is merely that of a NOMINEE; A does not have ANY RIGHTS OF HIS OWN but merely proxies for B...."

 

Sound familiar?..............

 

"Equitable interest arises when A holds the property on behalf of B, but for the benefit of B.

 

That is A is NOT a nominee for B; he holds the property in his own right, BUT he DOES NOT have a RIGHT to derive a personal benefit out of the property AS HE HOLDS IT FOR THE BENEFIT OF B.

 

In the first case A is the AGENT or NOMINEE.

 

In the second case A is a trustee for B

 

In the first case B has a beneficial interest in the property; B is the 'shadow' owner and can compel A's discretion on the property

 

In the second case B is merely a cestui que trust' and can only compel A to ensure that A does not derive any personal benefit from the property, but the beneficiary of an equitable estate cannot control the discretion of the trustee"

 

*****************************************************************************************************************

The Originator is 'A' for the purpose of this discussion thread (Borrowers lender)...

 

When A's sale is evidenced - he either holds the property on behalf of the SPV or holds it for the benefit of the SPV.

 

In either event, A's rights to possession are restricted 1) because if he holds the property on behalf of the SPV (B) he is a NOMINEE as one holding the legal title in his name and therefore is a mere PROXY for B with NO RIGHTS OF HIS OWN.... OR

 

2) he holds on behalf of B - HE CANNOT DERIVE A PERSONAL BENEFIT...

 

This, as provided by 'google books', may give rise to further concerns of Borrowers as to the legitimate purpose of an Original Lender who seeks possession without declaring it's true capacity.....

 

The question begs - if 'A' is granted a right to possession in such circumstances - what message are the courts sending to Borrowers? - is it upholding Human rights - and if so, of Who? Is it conducting legitimate Justice - and if so, for Who?

 

Apple

[wfspayback]

Now would appear an ideal moment to reflect upon and consider all the points made.

 

In this thread we have the SPML Mortgage Sale Agreement and in the other securitisation thread there is a Mortgage Sale Agreement for Accord (I will copy and paste here later).

 

Both Mortgage Sale Agreements confirm that the transfer of the legal charge is left uncompleted.

 

In the first post of this thread Applecart has kindly quoted an extract from the Pender case about Dr Ellis Ferran and her opinion that as a result of an uncompleted transfer, the lender retains the Legal Title.

 

Applecart also quotes one of the Judgements from Pender being -

 

"…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….."

 

Now who is Dr Ellis Ferran and should any weight be placed upon her opinion or should we disregard her view.

 

The following was posted by Suetonious in the other thread and demonstrates that Dr Eilis Ferran could in fact be considered an Expert.

 

Originally Posted by Suetonius:

"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). Dr Ferran goes on to point out that, for reasons essentially of administrative convenience and cost, transfers by way of securitisation are usually left uncompleted, but with provision being made for completion in certain specified circumstances, e.g. if the transferor persistently defaults on its obligations under the securitisation arrangements. Typically, such obligations will be contained in an 'administration agreement' between the transferor and the SPV. These general observations about securitisation (for which I am indebted principally to Dr Ferran's book) are not the subject of dispute in the instant case."

 

 

To place the above extract into context, Dr Eilis Ferran is a Professor of Company and Securities Law at the University of Cambridge:

As you would anticipate with someone with her credentials, she is published:

 

'The Place for Creditor Protection on the Agenda for Modernisaiton of Company law in the European Union' (2006) 3 European Company and Financial Law Review 178

'Transatlantic Financial Services Regulatory Dialogue' (with K Alexander, HE Jackson and N Moloney) (forthcoming European Business Organization Law Review Building an EU Securities Market (CUP, 2004)

'Financial Assistance: Changing Policy Perceptions but Static Law' [2004] Cambridge Law Journal 225 - 243

'The Role of the Shareholder in Internal Corporate Governance: Enabling Shareholders to Make Better-informed Decisions' [2003] European Business Organization Law Review 491 - 516

'Examining the UK Experience in Adopting the Single Financial Regulator Model' (2003) 28 Brooklyn Journal of International Law 257-307

'Dispute Resolution Mechanisms in the UK Financial Sector' [2002] Civil Justice Quarterly 135-155 (also published in a report to the Korean Stock Exchange, Self-Regulation in the Korean Securities Market Korean Securities Law Association, 2002)

'Corporate Law Codes and Social Norms - Finding the Right Regulatory Combination and Institutional Structure' [2001] Journal of Corporate Law Studies 381-409

Ferran and Goodhart (eds) The Challenges Facing Financial Regulation (Hart Publishing, 2001)

'Company Law Reform in the UK' (2001) 5 Singapore Journal of International and Comparative Law 516-568

Boyle and Birds Company Law (Jordans, 2000) (with Boyle, Birds and Villiers)

Company Law and Corporate Finance (OUP, 1999)

 

Employment History:

 

Reader in Corporate Law and Financial Regulation (2000 – 2005)

University Lecturer, (1991 – 2000)

University Assistant Lecturer, (1988–1991)

Director of the Centre for Corporate and Commercial Law, (April 1999 – September 2003)

Assistant Director, Centre for Corporate and Commercial Law, (1997–1999)

College Lecturer, St Catharine’s College, Cambridge (1986–1988 )

Trainee Solicitor, Clifford Chance, solicitors (1984–1986)

 

Qualifications

 

PhD, University of Cambridge, 1992, (by special regulations)

BA, University of Cambridge 1983 (Law Tripos First Class with Distinction)

 

 

 

 

Therefore, I feel the view of Dr Ferran far out weighs that of google researchers

Edited August 22, 2012 by wfspayback

[wfspayback]

As per the above this is the Deed of Charge and Mortgage Sale Agreement for Accord

 

 

For Accord this is the Mortgage Sale Agreement

 

http://www.ybs.co.uk/your_society/treasury/documents/transaction-documents/Mortgage-Sale_Agreem.PDF

 

And the Deed of Charge

 

http://www.ybs.co.uk/your_society/treasury/documents/transaction-documents/Deed-of-Charge.PDF

 

Wasn't hard to find, just googled Accord "mortgage sale agreement" and then Accord "Deed of Charge"

 

Hope these are of interest to you ITM?

 

Suggest you download a copy before they go missing

[wfspayback]

Similar to the SPML Mortgage Sale Agreement, this one also confirms as stated by Dr Ferran that the transfer will not be completed by registration

 

 

I have indeed read it...

 

6.2 For the avoidance of doubt, prior to the completion of the assignment, assignation, or transfer (as appropriate) of any Loan and its Related Security to the Issuer pursuant to Clause 6.1 , with effect from the Closing Date relating to that Loan and its Related Security legal title to each Loan and its Related Security in the Portfolio shall be vested in the Seller and sole beneficial title and interest shall be vested in the Issuer. Prior to perfection of the transfer of the legal title to Loans and their Related Security pursuant to this Clause 6, the Seller undertakes (to the extent that any of the following is vested in it) to hold all right, title, interest and benefit (both present and future) in and under (a) the Loans and their Related Security, following the acquisition of such Loans and their Related Security by the Issuer and (b) any sums that are or may become due in respect thereof, on trust for the Issuer (excluding from such trust any Loans which have been repurchased by the Seller).

 

6.3 Perfection of the transfer, assignation and assignment in accordance with Clause 6.1 of:

(a) the English Mortgages in the Portfolio shall be effected by means of a transfer in the form of

the relevant Land Registry Transfer set out in Schedule 2 (Register of Transfers);

(b) an SLR Transfer in the case of Mortgages over Properties title to which is registered in the

Land Register of Scotland (substantially in the form set out in Part 1 of Schedule 3);

© a Sasine Transfer, in the case of Mortgages over Properties title to which is recorded in the

General Register of Sasines (substantially in the form set out in Part 3 of Schedule 3);and

(d) the Loans and relevant Related Security shall be effected through notification to the relevant Borrowers and/or guarantors and/or insurers or other relevant third parties of the sale and transfer or assignment or assignation of the relevant Loans and their Related Security,

and, in each case, notice shall be given to each Borrower or any other relevant person of the sale and transfer of that Borrower's Loan and its Related Security to the Issuer and the charge by the Issuer of the Issuer's interest in that Borrower's Loan and its Related Security to the Security Trustee pursuant to the Deed of Charge.

 

At which point we should remember one of the Court of Appeal Judgements in Pender.

 

"…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….."

 

Considering the Mortgage Sale Agreements posted on this thread, it would also be true to say

 

… It is common ground that SPML, 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…..

 

…It is common ground that Accord, 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…..

 

Pender was of course a Court of Appeal case and such the above judgement is binding upon High and County Courts.

Edited August 22, 2012 by wfspayback

[wfspayback]

Ok the Mortgage Sale Agreement is very clear. However what does the deed of charge have to say -

 

22.1

 

(g) The Issuer represents and warrants to the Security Trustee that it is the beneficial owner of the Charged Assets and the Charged Assets are free of any Security Interests (except for those created by or under this Deed) and any other rights or interests (including any licences) in favour of third parties.

 

The issuer confirms it is the beneficial owner (equitable title)

[wfspayback]

Thinking more about this,

 

From Pender -

 

"…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….."

 

In regard to this thread could this read

 

"…In my judgment Applecart's case on this issue is misconceived. It is common ground that the lender, 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….."

[wfspayback]

I think to make any progress in this discussion we have to return to Lea_HTH's question, what is the objective of this discussion.

 

Apple why do you want it to be proven that the lender has no title to sue ?

 

Do you hope this will mean that the legal charge is held to be unenforceable ?

 

What is it you want to achieve ?

 

I think this discussion urgently needs some direction otherwise it will not go anywhere.

[wfspayback]

Ultimately only a Court can decide which arguments are right and which are wrong. To date the Courts have found that the lender retains the legal title, as it remains the registered proprietor of the legal charge. As it retains the legal title, it also retains the right to possession.

 

The question that naturally comes to mind is can/will anything posted in this thread change this conclusion repeatedly made by the Judiciary.

 

Can the answer really be anything other than No.

[applecart]

I think to make any progress in this discussion we have to return to Lea_HTH's question, what is the objective of this discussion.

 

I agree, for whilst there will be some that will interpret the content correctly, there may be others that don't truly understand what this is all about - therefore, it is timely to answer that question.....

 

Apple why do you want it to be proven that the lender has no title to sue ?

 

You may have noticed that there are a number of borrowers who hold sub-prime mortgages - these Lenders tend to be the first to ignore FSA guidance on treating customers fairly and as a consequence Borrowers are losing their homes and long before they do so, the Borrower will have been subjected to hefty charges whilst in default - you need only look to the posts on the forum to see what some Borrowers are going through.

 

In All such instances Lenders hold title in its name as displayed on the Borrowers Title at HMLR.

 

Borrowers are not fooled and as you will know, a number of posts, threads, some of which have since been deleted - give evidence of the Borrowers and their concerns.

 

Title to Sue - is not the same as having a right to possession in all instances - and this thread has already started to make in-roads as to Why and How this is the case - the information in this thread aims to enlighten Borrowers - all the information is based as found within the applicable Law.

 

Discussion based on arguments for both sides is fair - Discussion based on that which has been posted so far provides a balanced view. Borrowers, will begin to see that - whilst it has taken 9 years - that it is not all one sided in favor of lenders and Borrowers will begin to see that in certain circumstances they can extend their arguments outside the authority that is Pender.

 

rips with the fact that this is not in all instances the same as a Lender having a right to possession..... where Borrowers can begin to understand the rights of different lenders, understand the differences between different types of MSA's, POA's, etc etc and factor in the relevant protections as provided within the provisions of the applicable law - then - a fairer, level playing field exists - there are far too many possessions happening - especially in a time of recession - it is in the public interest that justice prevails as and where it is possible to do so -

 

Do you hope this will mean that the legal charge is held to be unenforceable ?

 

Let me share with you - if I had a credit agreement, and I found that it was unenforceable, then I would defend my right to do so, this would not matter whether it was a car loan, a credit card, a bank overdraft or indeed a mortgage - I believe I do not for a moment believe that I am alone in this belief - Just look at the size of the CAG for confirmation.....You yourself, had a agreement with Welcome - did you yourself not look to the CAG for help?? - Did you not get that help? - of course you did! - and there are 100's and 1000's that want the same help - but in this instance - when they come here - it is to do with their wish to understand about 'mortgage securitisation' - and then to see, if there is anything they may be able to do to create a balance with their lenders.

 

What is it you want to achieve ?

 

I'm an old timer....back in the day, you could nip in, see the bank/building society manager - let him know of any financial difficulty and he would talk back to you in a civil manner and understand that finances can peak and fall....Back in the day, if you went to court....their would be a wealth of solicitors all looking to truly assist you get to the bottom of the issue to defend you..... today, you find solicitors are chasing the corporate sterling, more concerned with being on a corporate panel.... loyalties that cannot be compromised do not side with the man in the street anymore - small firms of solicitors - don't even bother try to go up against them these days - In such a market place - Borrowers are having to rely on their own knowledge, their own confidence to defend themselves - If the knowledge from within this thread assists Borrowers empower themselves to take on the challenge ahead, then that's all good...

 

For me, I would be happy for Channel 4 or any Newspaper group to pick up on this thread as it stands today, because, whether you want to admit it or not, we are beginning to see the move away from 'Pender'

 

I think this discussion urgently needs some direction otherwise it will not go anywhere.

 

With respect - You are welcome to your opinion. so long as this thread is allowed to remain 'live' - it's contents will meet it's objective.

 

I think you'll find that it's purpose is more important than it's direction at this point - it's purpose is in the public interest

 

Apple

[applecart]

Back to the main objective and purpose then.....

 

I do not set out to discuss individual Lender’s MSA’s – however as the discussion ensues and for those that have yet to grasp the difference between ‘a sale by way of assignment’ and a ‘sale’ – I compare the text of A.N.OTHER (that we have been led to understand is the same as SPML’s MSA (as provided by Nick Nick) and ACCORD’s MSA (provided by wfspayback):

 

ACCORD’s

 

“The Seller has agreed to sell to the Issuer on the date hereof by way of assignment or in respect of the Scottish Loans by declaration of trust from the date hereof certain of the above mentioned residential mortgage loans together with the benefit of their related security on the terms and subject to the conditions set out in this Agreement.”

 

A.N.OTHER’s

 

“Each Seller has agreed to sell and the Issuer has agreed to purchase certain loans, together with the benefit of the collateral security for the same, for the consideration and upon the terms hereinafter set out.”

 

A.N.OTHER’s is clearly void of the words ‘by way of assignment’ – Be advised that it’s forms of transfer are not by way of TR4 - they are by ‘Deed’ …..this is not ‘a sale by way of assignment’ – it is an outright sale..

 

Accord’s agreement is similar to that of Paragon & Pender with references clearly made to a sale by ‘assignment’ and in the event that the Seller defaults the Trustees being allowed by way of POA to step in, and accordingly, authority is available for that….

 

A.N.OTHER’s does not speak of ‘a sale by way of assignment’ in any way shape or form – therefore I fail to see where the authority in Pender would or should relate to it….

 

For the benefit of doubt ……. Paragon’s MSA is to do with ‘a sale by way of assignment’.

 

Another key difference is that a sale by way of assignment means that the Originating Lender retains Legal Title – it is only the ‘benefit’ of the underlying loans that are transferred – in these agreements, the Originating Lender retains a right to possession.

 

A true sale, transfers both the legal and equitable rights which would include the right to possession.

 

In Pender, there was no need to include the Purchasers in the proceedings for they were only the beneficiaries – the title to sue remained with Paragon.

 

Apple

[applecart]

Moving forward - It might be useful if we all keep our posts as small as possible - break them into sections if need be - in the old mortgage securitisation thread a lot of Suetonius's points were ignored - they simply said the same thing over and over - wfspayback, be mindful that this does not happen to your valid posts : )

 

Apple

[applecart]

Thinking more about this,

 

From Pender -

 

"…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….."

 

In regard to this thread could this read

 

"…In my judgment Applecart's case on this issue is misconceived. It is common ground that the lender, 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….."

 

Paragons was a sale by way of assignment - so in answer to your question - No.... Applecart's case on this issue is not 'misconceived' : )

 

Apple

[Lea_HTH]

There are methods to deal with issues arising out of unfair charges - it has nothing to do with securitisation (both prime and sub-prime mortgagees levy charges for default) - and realistically, if people didn't fall into arrears, no charges would be levied. I am not saying 'alls fair in mortgages and securities' (nor negating job losses/falling wages etc in the recession), but what I am saying is that administering an account in arrears does cost more than administering an account that is not. The question as to the charges is whether they accurately reflect that additional work, or whether they are in themselves penalty charges. But as stated, there are methods to deal with that separately - charges cannot be stated as 'arrears' in a possession hearing.

 

Regarding 'title to sue' and the reference that 'all the information here is found within the applicable law' - the problem with this is that the applicable law isn't being applied properly, and therefore the end result is incorrect.

 

'Extending arguments beyond Pender': anyone is free to raise whatever they wish in a court of law once they are before the court - whether or not it will be entertained is a completely different matter. Given that the vast majority of people looking for help here are in the county courts, they're simply not going to have enough knowledge to persuade a judge that there is an arguable defence within what they are attempting to claim because the law as it stands, the applicable law, doesn't allow for it. It will take a legal team to crack that nut, if it were available for cracking, which it currently doesn't appear to be.

 

'Right to possession': ultimately, the arguments being put forward here appear to be in favour of making the loan 'unenforceable'. The difficulty people will have with that 'argument' is that when the law (i.e. judges) can find no solution in applicable law to a given situation, it looks to the law of equity.

 

"Back in the day, if you went to court....their would be a wealth of solicitors all looking to truly assist you get to the bottom of the issue to defend you..... today, you find solicitors are chasing the corporate sterling, more concerned with being on a corporate panel.... loyalties that cannot be compromised do not side with the man in the street anymore - small firms of solicitors - don't even bother try to go up against them these days "

 

The above is simply not true. Solicitors will take a case if it is within their ability to deal with it, and if the person looking to employ them has the means to pay. Solicitors don't pay their mortgages with buttons either - so the bottom line is, if there's no money in the market, then they can't take on the work - can't, not won't, they still need to pay their own bills.

 

There's no money in defending possession proceedings - the very nature of it means that the people needing the help almost certainly won't be able to pay, and with the hefty cuts to legal aid may not be entitled to any assistance via that route either. Does that mean that people don't get representation? No, because there are people who work pro bono and who undertake duty advice simply so that people can get assistance at a time when they most need it.

 

It's not perfect, but there are lawyers out there who do assist - and what's more, we do it for free and in our own time, and often at our own cost. So kindly leave the sweeping generalisations of lawyers as a whole at the entrance to any thread, because it doesn't bode well for future discussion or assistance.

[wfspayback]

Hello Lea_HTH, I am sure that no offence was intended by the generalisations and were nothing more than an emotional outburst, as a result of this discussion which is very close to Apple's heart.

 

It is very obvious by your contributions to CAG as a whole that you do genuinely use your knowledge and expertise to help consumers as and where you can. It is equally obvious you give your time to help freely with no payment for your time.

 

Please accept my assurances that all of your contributions that either prove or disprove arguments are very much appreciated by everyone. Afterall, it would be better for us to be proved wrong on a consumer forum, with nothing at risk than in a Court of Law with homes and cost orders etc.

[wfspayback]

A very well known and respected Cagger (PT2537) posted the following extract from Halsbury's Laws of England.

 

"Originally Posted by :

586. Securitisation of mortgages.

 

 

 

Securitisation is the sale of a package of mortgage debts to a corporate vehicle (the 'issuer') established for the purpose of issuing securities usually in bearer form such as bonds1. One or more mortgagees (the 'originator') may agree to sell debts and related security to the issuer. This effects an equitable assignment of the mortgages which is not perfected by notice to the mortgagors or by registration. The issuer is entitled to call for a legal transfer of legal title to the mortgages in certain circumstances such as the persistent default or insolvency of the originator. The issuer is given an irrevocable power of attorney to effect the transfer and for certain other purposes2. The originator retains the powers of the mortgagee, including the right to possession3 but agrees to act in accordance with the instructions of the issuer in relation to matters such as interest rates and enforcement. The undertaking and assets of the issuer, including the mortgages, are in turn charged in favour of a security trustee for the benefit of the holders of notes or bonds issued by the issuer4. The security trustee is given custody of the charge certificates or, in the case of unregistered land, mortgages and title deeds, and is given an irrevocable power of attorney to effect a legal transfer of the mortgages.

 

 

1 See companies; financial services and institutions.

2 See the Powers of Attorney Act 1971 s 4; and agency vol 1 (2008) para 175.

3 See Paragon Finance plc v Pender [2005] EWCA Civ 760, [2005] All ER (D) 307 (Jun).

4 The charge takes effect as an equitable sub-charge.

 

 

 

Ok this is what halsburys says on securitisation"

 

This raises the question what is Halbury's Law of England. To answer that question, I have copied the following from Wikipedia -

 

Halsbury's Laws of England is a uniquely comprehensive and authoritative encyclopaedia of law, and provides the only complete narrative statement of law in England and Wales.[3] It has an alphabetised title scheme covering all areas of law, drawing on authorities including Acts of the United Kingdom, Measures of the Welsh Assembly, UK case law and European law. It is written by or in consultation with experts in the relevant field.[3]

 

The following is from LexisNexis

 

Halsbury's Laws of England covers the whole spectrum of English law and is designed to enable practitioners to answer the full range of questions likely to arise in the course of their work, especially those which fall outside their own fields of expertise. It provides the only comprehensive narrative statement of the law of England and Wales, containing law derived from every source, written by or in consultation with leading lawyers, both practitioners and academics, to ensure readers benefit from a wealth of knowledge and experience.

 

Taking into consideration the above extract and what is Halsbury's Laws of England, are you saying that in addition to the Judges of the cases I have previously posted Halsbury's has got it wrong and that no one understands securitisation in the way you do, after your extensive research ?

 

Halsbury's confirms that The originator retains the powers of the mortgagee, including the right to possession

Edited August 22, 2012 by wfspayback

[Lea_HTH]

Hello Lea_HTH, I am sure that no offence was intended by the generalisations and were nothing more than an emotional outburst, as a result of this discussion which is very close to Apple's heart.

 

It is very obvious by your contributions to CAG as a whole that you do genuinely use your knowledge and expertise to help consumers as and where you can. It is equally obvious you give your time to help freely with no payment for your time.

 

Please accept my assurances that all of your contributions that either prove or disprove arguments are very much appreciated by everyone. Afterall, it would be better for us to be proved wrong on a consumer forum, with nothing at risk than in a Court of Law with homes and cost orders etc.

 

Thank you for your kind words. However, I was just pointing out the sweeping generalisation about lawyers because of its inaccuracy, which I, of course, object to. As you'll notice, it didn't stop me commenting on the rest of the post.

[wfspayback]

Ok Apple

 

You have said

 

"A.N.OTHER’s is clearly void of the words ‘by way of assignment’ – Be advised that it’s forms of transfer are not by way of TR4 - they are by ‘Deed’ …..this is not ‘a sale by way of assignment’ – it is an outright sale.."

 

Pender 2003, (yes Pender again) confirms at 139

 

"If the transfer documents are by deed, it would confer on the transferees the powers of the equitable chargees under section 101 of the Law of Property Act 1925.

 

So Pender confirms if as you state the transfer is by deed, it will only transfer the powers of the equitable chargee

 

Now you might respond by saying but that was Pender being an assignment and not an outright sale (I will return to that flawed distinction later). To preempt your reply, I refer you to the Land Registration Rules 2003.

 

116. A transfer of a registered charge must be in the prescribed Form TR3, TR4 or AS2, as appropriate.

 

The key word here of course being MUST

 

You will note that a deed is not one of the prescribed forms. Therefore, a deed will not serve to transfer a registered charge.

Edited August 23, 2012 by wfspayback

[wfspayback]

Could you please clarify in simple terms how the legal right to the mortgage debt is transferred other than by assignment.

 

Could you please also clarify in equally simple terms how a transfer of a legal charge - being a disposition that is required to be completed by registration to operate at law, can when left uncompleted serve to legally divest a lender of its right to possession as the registered proprietor of the legal charge.

 

Could you please be as specific as possible - instead of the reference to a piece of legislation, could you please state the specific section.

 

 

 

 

 

Thank you.

[wfspayback]

The Government Department for Business, Innovation and Skills (BIS), states:

 

http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part9/part6/Part%206.htm

 

"In basic terms, the assignment of a right of action simply means the sale of a right of action."

 

Combined with Halsbury's

 

"One or more mortgagees (the 'originator') may agree to sell debts and related security to the issuer. This effects an equitable assignment of the mortgages which is not perfected by notice to the mortgagors or by registration. "

 

You must consider the weight you have placed on a distinction between sale v assignment may be misplaced.