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.
It would appear that the main piece of legislation which applies to the entire matter was overlooked and a general prohibition should have applied, unless one of two specific qualifications were able to be confirmed, during our research it would appear that neither of these two specific legal requirements are able to be confirmed, and as such it is therefore highly probable that the original mortgage contract was rendered unenforceable.
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.