A real mortgage loophole?

[YiamCross]

I have no idea how much substance there is in this but who wouldn't be tempted if they owed a few million? There doesn't seem to be much morality on either side and the consequences for banks might be sever. Then again, if they really are getting the loan paid off and receiving interest they're no longer entitled too they can't complain when they're found out.

Anyone with a better understanding of financial instruments got any layman level comments or have the nutjobs stumbled across a genuine fraud on the part of the banks?

http://news.acts.co.za/blog/2015/06/ost ... -in-taiwan

[Jeffrey]

I think the case law saying securitization doesn't affect your requirement to pay back the mortgage has been posted here previously.

[Hyrion]

Here's an interesting question: why is a South African Ostrich farmer quoting US Supreme Court Laws pertaining to his loan in South Africa?

That's not the only suspicious "fact" I find in the story. I doubt a real loophole has been found - more likely it's simply representing points that've already been reviewed and discounted.

[Hercule Parrot]

I do not know if South African law is different to UK, but the article describes 'mortgage denial fantasy" arguments which have failed in UK.

http://www.consumeractiongroup.co.uk/fo ... ing-signed

(A very long and tendentious discussion, the judgement is at post #6293)

[fat frank]

more freeman crap, 1 case and they say the mortgage industry is dead, they usually quote irish courts saying all mortgage are fraud

I actually had a freeman telling me all case laws ie xxx v bbbb (usa 1993) can be quoted as all cases apply every where, so can be quoted in a uk court

[Llwellyn]

While courts of other nations will REFERENCE other countries court cases, they do not 'enforce' or use them. This is because there are many different laws associated by nation. That does not mean they will not use / reference them, as long as they fall within the scope, and current laws of said nation.

IE : owning a Gun (firearm) in the USA is a whole different story as it is to owning a Gun (firearm) in the UK, or in Canada.

Many freeman sovcit try quoting the UCC (american law) in Canadian courts.. and they generally get laughed at.

[longdog]

As I understand UK law (and I'm not a lawyer) there's nothing to stop a creditor selling a debt to a third party while retaining the right / responsibility to collect the payments on the debt.

Even in the case in the OP's link you have to ask whether the third party who bought the debt could appoint anybody they liked, including the original lender, as their agent to collect the debt. If so then the original lender would simply be acting as a debt collector which I assume exist in SA and if not then the farmer still owes the money just to somebody else.

Real mortgage loophole...? I'm guessing not.

[Tml69]

Securitisation arguments only work (in theory) if you can show that the person suing you no longer has any standing or locus standi


http://www.bailii.org/cgi-bin/markup.cg ... 5/760.html

The title to sue issue

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.
It follows, in my judgment, that Paragon, so long as it remains the registered proprietor of the Legal Charge, is a necessary party to any claim to possession of the Property in right of the Legal Charge.
The only question then is whether the SPV should have been joined in the proceedings as an additional claimant. In my judgment, the answer to that question is plainly: No. On the assumption that the consideration for the transfer of the Legal Charge has been paid in full, Paragon has since retained its legal ownership of the Legal Charge as trustee for the SPV (see Whiteley v. Delaney [1914] AC 132 at 141 per Viscount Haldane LC). But it does not follow that in that situation the SPV, as the owner of the Legal Charge in equity, is a necessary party to the claim; and on the facts of the instant case joinder of the SPV is wholly unnecessary. There is, after all, no issue between the SPV and Paragon as to the exercise of the mortgagee's rights under the Legal Charge: indeed the SPV has, by virtue of the administration agreements, expressly authorised Paragon to exercise such rights on its behalf.
In my judgment, therefore, there is no substance in the contention that the SPV should have been joined as an additional claimant in the proceedings. Nor, in my judgment, can the fact that Paragon has failed to describe itself as suing in its capacity as trustee affect the validity of the proceedings or of the orders made in the proceedings (in particular, the possession order). In any event, even if that failure could be said to amount to a formal defect in the proceedings (and I do not regard it as such) the court has ample powers under the CPR to correct such defects (e.g. under CPR Pt 17).

The best case scenario would be that the new owner would then sue you and you would be back to square one.

[YiamCross]

It seemed unlikely to me that any vaguely competent financial institution would purchase debt on which they could neither receive interest payments or the principal at term. As unlikely as anyone with a loan paying the interest twice, which leads me to wonder what the hell is this "double dipping" the frementals on the land are frequently banging on about.

[longdog]

...which leads me to wonder what the hell is this "double dipping" the frementals on the land are frequently banging on about.

That's where they take payment in coin of the realm and then send the payment slip to the treasury to receive the payment a second time from the customer's birth (berth) bond.

[YiamCross]

Seriously? I'm at a complete loss to know exactly who's putting this cash into the berth bond and what they get from it. Madness doesn't go far enough.

[longdog]

Seriously? I'm at a complete loss to know exactly who's putting this cash into the berth bond and what they get from it. Madness doesn't go far enough.

You're making the fatal mistake of actually thinking about it. Obviously it's not going to make sense if you think about it... You have to just believe it.

[fat frank]

Seriously? I'm at a complete loss to know exactly who's putting this cash into the berth bond and what they get from it. Madness doesn't go far enough.

its easy, when you are born the gov create a bond in your name and float you on the stock exchange and if you don't claim it back before your 7, then they claim it, as you are lost at sea

as this is what your NI number is, as if you put that in to America sites it tells you how much you are worth, and also when social services take a kid or your claim dole it comes out of this bond

[fat frank]

but I forgot to tell you, you can claim your bond, if you get a judge to admit you are still alive

[noblepa]

In the US, it is common for a lender to sell a loan, but continue servicing it for the new owner. That is part of the agreement by which the note is sold. Many primary lenders make their money from the "points" the borrower pays at the signing of the mortgage note. They then sell the note, get their money back and do it all again, with a different customer. They also receive a fee from the new owner for collecting the payments, disbursing property tax payments, etc.

I'm not sure about mortgages, but when my brother was an Asst. Sales manager for a large Oldsmobile dealership in Ft. Lauderdale, they used to write GMAC loans for customers buying new cars. Since they were a very large dealership, they could afford to take advantage of a better rate (for themselves, not the customer), by agreeing to take back the loan, in the event the customer defaulted. Perhaps there is some such agreement when a primary lender sells a note on the secondary market.

I also wouldn't be at all surprised to find that such agreements specify that the original lender, being (usually) closer to the location of the borrower, will act as the owner's agent in any repossession action. In any case, no one I know of has ever defeated a foreclosure action, by arguing that the lender had sold the loan. A couple of years ago, there was a bit of a kerfuffle, in which lenders were "robo-signing" foreclosure papers, without doing due diligence as to who actually owned the loan. The courts ordered them to stop doing that, but this only delayed the inevitable for a couple of months. I think that there were a very few borrowers who were being foreclosed on who were not actually in arrears, but that's a different matter. No one ever argued that the loan was invalid or no longer binding.

[wserra]

I have no idea how much substance there is in this

At least in the U.S., not much.

There are two related foreclosure defenses which are sometimes confused. First, the party seeking to foreclose, if challenged, must be able to show that it is the current holder of both the mortgage (or deed of trust, for non-judicial jurisdictions) and the note. Securitization, or even just a chain of assignments to different banks, can make that difficult. Second, robosigning - the signing of multiple affidavits by some employee who has no idea if what they contain is true - has led to the tanking of many foreclosures and even criminal charges. The problem is, banks have by and large learned their lessons, and tend now to have their ducks in a row before beginning. If they do, securitization alone is not a defense.