What is Mortgage Securitisation?

Mortgage Securitisation is a complex and intricate process, which even the most high-profile bankers and economics professors do not seem to fully understand. We, together with associated parties, have spent over 14 years carrying out extensive research into how, and why, banks across the globe carry out securitisation, with a focus on the UK Financial institutions and, the simple answer is as follows:

Bank regulations may impose limits on their lending or maintenance of their loan books, therefore, some will decide, from time to time, to remove existing assets from their books.

Selling existing residential and commercial mortgages can be a profitable option. Banks have as a result, bundled up hundreds, often thousands, of mortgages and sold them on to third party investors. As an integral part of the sale, when they have sold on the asset, they must remove the loans from their balance sheet, which allows them to meet regulatory requirements and lend more money.

What could this mean to you?

If your mortgage has been securitised, your financial obligation to your lender under your original loan contract will have been repaid in full, by the investors that they sold your mortgage debt to, possibly at a profit. It is our view, that once your lender removes your mortgage from their balance sheet, your contractual obligation to them, ceases, your contract with them ended. You have continued to pay your mortgage repayments, on what is essentially a non-existing contract, through your lender, who acts as a collection agent for the investors.

In the majority of cases, the new owner has the right to set interest rates, unbeknown to you.

This is why there is a definitive indication that your lender is in breach of the basic rules and regulations which must be applied to all regulated mortgage contracts under the Mortgage Code of Business (MCOB) rules. The reason is that the new owner(s) of your mortgage debt may have different rates of interest or have enforcement policies, more aggressive than your original lender and, they, in turn, may sell it on and so on. All without notification to you.

The major error which appears to occurs commences by them not completing the paperwork correctly and the new owner(s) of your original mortgage debt not amending the charge the original lender held on your property. The moment your mortgage liability has been paid, your lender does not hold any rights to the charge, as your obligation to them has been settled, it is up to the new owner(s) to register their interest, which during the research appears to have never taken place.

We believe there is no valid contract which binds a borrower to any new owner(s) when their mortgage debt was sold. One major lender sold in excess of 880,000 mortgages on a single day, the paperwork, if completed correctly, would have taken over three years to complete.

The Validation Process | 2 - 3 Months

The DSAR Validation Process will continue to be carried out at our expense, by Legal Quest plc, who are recognised as Part 35 Experts in this matter. It allows us to determine whether your mortgage was sold, transferred or assigned by your lender. Their previous fixed cost contribution of £260 including VAT, is agreed to be waived by Mortgage Securitisation Claims Ltd., by using the correct discount code which we will provide. As soon as an application by a new potential MSC Claimant is received, Legal Quest plc, will be instructed, by us, to carry out a Data Subject Access Request (DSAR) to your lender, acting as your Authorised Agent, requesting specific information and documents that relates to the securitisation of your mortgage account.

In our experience, an average DSAR will result in between 300 and 500 pages of data from your lender. Using the bespoke Legal Administration Review System (LARS) and the latest OCR technology, Legal Quest plc and Mortgage Securitisation Claims Ltd. are able to review the documents provided by your lender and determine whether they have sold your mortgage debt and, if so, whether the lender retained the equitable and legal title to the charge they hold on your property. Once we have received the preliminary DSAR report from Legal Quest plc, who will have carried out the review, we will issue a Legal Opinion to a panel law firm or Statement of Facts to you, based on the findings.

The DSAR Validation Process takes between 2 and 3 months to complete. This is due to the rules set out under the Data Protection Act 2018, which allows your lender 30 days to provide the information and, after receipt, allows the DSAR validation team sufficient time to review the data, request further information from the lender if needed and, enable them to provide a detailed report to us, allowing a professional legal opinion or statement of facts to be prepared, based on the results of the DSAR.

You can, of course, carry out a Data Subject Access Request yourself, by submitting your request to the lender, however, once you receive the documents, you will need to have a capable person carry out a review of the information provided in order to determine whether there is any evidence of securitisation. Until the launch of the Mortgage Securitisation Claim (MSC) process and the development of LARS, the cost of a legal review was prohibitive with quotes received in excess of £4000 to £5,000 being stated, followed by a further cost of around £6,000 for a full Part 35 Expert report.

Potential Benefits

Reduction in your Mortgage

In the event of a successful win, the current balance of your mortgage could be cleared and the charge on your property released. If this is the only result, you will, however, have a liability to your appointed panel law firm under the CFA agreement. If you are unable to settle this liability from your existing funds, a new mortgage or loan may need to be arranged during the settlement process and a new charge registered with HM Land Registry.

Mortgage Repayment Refunds

In addition to the possible reduction or clearance of your mortgage, your panel law firm will negotiate with your lender for a refund of the mortgage interest repayments (and may negotiate with your lender for a refund of mortgage capital repayments) you have made from:

a) The point when your mortgage was securitised.

b) Inception, if the MCOB’s breach deems the contract void.

c) With the statutory interest surcharge calculated at 8% on the interest portion paid

If any payments are refunded, the amount would be classed as a benefit to you.

Compensatory Damages

In addition to all the above, should the matter go to court and the case is won, the court may award both actual and compensatory damages, together with legal costs and related matters against the lender. It is important to understand that any award of costs, is outside the terms of the CFA. In other words, please be aware that if the panel law firm’s costs/expenses, plus your third party disbursements, are recovered from the other side, you will still be liable for the 25% + VAT CFA payment, however, the value will only be based on the net benefit to you. This is due to the costly risk that the law firm takes, should the matter be unsuccessful, which is normally covered by an After the Event (ATE) insurance policy. 

Potential Risks

The proposed MSC is the first of its kind in the UK and therefore has not yet been tested in court. While we are confident that, with our experience and expertise of mortgage securitisation matters, you may have a very strong case, there are no guarantees that the lender will negotiate a settlement or, that the Courts will find in your favour.

You should consider whether you wish to take your Mortgage Securitisation Claim (MSC) to its final conclusion, or not. If not, your only benefit from the Validation Process may be the knowledge that your lender has sold your mortgage and that the new owner may be in a position to impose new terms and conditions and determine interest rates in the future, or not.

What happens if you lose in court?

Prior to any Court action, your solicitors would be required arrange a special Insurance Policy called After the Event Legal Expenses cover.. This provides full indemnity for your own disbursements and the oppositions legal fees, court fees etc. There is no possibility that you will be asked to contribute anything, should you lose the case.

What happens if the third party investor your mortgage was sold to tries to claim against you in the future?

This is highly unlikely as, in the event of a win, it would have already been proven that no paperwork exists that links you to any third party. However, in order to reduce any financial risk of any dispute or court action, if the basis of settlement requires it, a 'Before the Event' Legal Expenses insurance policy, may be taken out at your or your law firm’s expense. This policy will be in your name, which ensures that, if at any time in the future, the party to whom your lender had sold, transferred or assigned your mortgage to, claims ownership of the debt, then sufficient funds will be available under the six year BTE policy, to pay your legal defence costs incurred in defending the action. You will NOT have to contribute any money.

Warning!

We would advise that you MUST continue to pay your mortgage until such time as you are advised by your panel law firm to stop payments or, your MSC has a successful outcome, otherwise, you may find that your lender places you into default prior to any action, which could jeopardise your MSC.

 

About Mortgage Securitisation Claims Ltd

Following a 5 year, in-house business relationship with Legal Quest plc, Camellus Law LLP was reformed in April 2019, and in September 2019 acquired all interests in Mortgage Securitisation Claims Ltd., in order for it to act as the independent legal case management firm, authorised by the Solicitors Regulation Authority (SRA), to be able to act for the existing and new MSC claimants as the direct legal liaison, with the proposed panel law firms, who are intended to be appointed during 2019/2020 to deal with the individual MSC’s.

Mortgage Securitisation Claims Ltd., with Legal Quest plc acting as the SRA authorised Commerce & Industry body, will continue to promote their in-depth knowledge regarding MSC’s and, intend during the coming months, to source as many new potential MSC clients as possible, to determine if they have a valid MSC or not.

Mortgage Securitisation Claims Ltd. will continue to have a close business relationship with Legal Quest plc, who will carry out the initial DSAR validation review for any new MSC applicants, with Camellus Law LLP crediting the previous contribution of £260.00 which was charged by Legal Quest plc, thus making the entire MSC, a truly ‘no cost’ item to the potential MSC claimant(s), until the matter is successful.

Legal Quest will, in addition, continue to prepare the Part 35 Expert report(s), which must be issued by an unrelated party, who have no interest in the ultimate outcome of any particular MSC, in order to be fair, unbiased and factual.

The approved costs for the preparation of the Part 35 report, in the amount of £5,500.00 + VAT (against which the previous contribution of £260.00 from the claimant was credited) being covered by the panel law firm and only recovered from the MSC claimant in the event of a successful claim, at settlement/award point.

 

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