Mortgage Securitization - Research In Progress

Further links relating to this thread : Re: It's official:Banks Don't Lend Money

https://goodf.forumotion.com/t115-it-s-officialbanks-don-t-lend-money#2909

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http://www.weatherxchange.com/en/Joining/ProtectionSellers
https://www.structuredcreditinvestor.com/pdfs/SCI%20CRT%20Report%202015_Promo%20Brochure.pdf
https://www.true-sale-international.de/fileadmin/tsi_downloads/TSI_kompakt/Synthetische_Verbriefungen_english__Final_17.09.2015_.pdf
https://www.tsi-kompakt.de/2015/10/why-synthetic-securitisations-are-important-for-the-european-capital-markets-union-synthetische-verbriefungen-sind-wichtig-fuer-die-kapitalmarktunion-fehlen-aber-im-sts-verbriefungsentwurf-der-eu/
https://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000436817/Synthetic_securitisation%3A_Making_a_silent_comeback.pdf
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb070304.pdf
https://www.publications.parliament.uk/pa/cm200708/cmselect/cmtreasy/56/5605.htm
http://www.legislation.gov.uk/ukpga/Geo5/15-16/20/contents
http://www.independent.co.uk/money/mortgages/the-mortgage-is-over-whys-your-bank-hanging-around-398088.html
https://en.wikipedia.org/wiki/Residential_mortgage-backed_security#References
https://core.ac.uk/download/pdf/6917488.pdf
https://www.justice.gov/opa/pr/united-states-sues-barclays-bank-recover-civil-penalties-fraud-sale-residential-mortgage
https://poseidon01.ssrn.com/delivery.php?ID=443120004027031093008027000124072010019034072064048062031086095088085121011005029065035021040118024059039026108125089075027004039034047048077002103064068116122029057039033092109117119067030067080119012089119027006067120006072090031108122018083086126&EXT=pdf
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf
http://www.master272.com/finance/iaf/bloomberg/api/bloombergwizard.pdf

'Global Securitisation and Structured Finance 2008 - Securitisation in Thailand' : http://www.globalsecuritisation.com/08_GBP/GBP_GSSF08_127_134_Thailand.pdf

'Implementation of the EU Mortgage Credit Directive' : https://www.gov.uk/government/consultations/implementation-of-the-eu-mortgage-credit-directive/implementation-of-the-eu-mortgage-credit-directive

'Financial Services and Markets Act 2000' : http://www.legislation.gov.uk/ukpga/2000/8/contents

'FCA Handbook' : https://www.handbook.fca.org.uk/handbook/MCOB/

'Neutral Citation No. [2013] NICh 14' - 'SANTANDER (UK) plc and THOMAS ANTHONY CARLIN & MAXINE KARON HUGHES' : %20NICh%2014/j_j_DEE8994Final.htm]http://www.courtsni.gov.uk/en-GB/Judicial%20Decisions/PublishedByYear/Documents/2013/%5B2013%5D%20NICh%2014/j_j_DEE8994Final.htm

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To read,

'Credit is Trust' : http://www.bankofengland.co.uk/archive/Documents/historicpubs/speeches/2009/speech400.pdf
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Banks don't lend money, we lend the money, they open an account and transfer the currency into your general account, its a customer deposit, because it is a customer deposit, you lend the money, you mortgage the property to the bank, your the mortgagor they are the mortgagee. You are the legal owner in a debtor creditor relationship, the mortgage(charge) and the receivables are sold to an investor and held in a trust, the investor is a privater banker and the beneficiary of the assets you have provided the bank, the bank/judge forecloses on the legal owner, the beneficiary has absolute title and has the bank bring in a court of equity without even letting anyone know the beneficiary exists. The legal owner is the trustee thats not performing on default, the beneficiary wins by default. Legally own nothing, beneficially own it all.

Yes, but you are getting hung up on the bit that is easily neutralized in court. The information is in the docs, this one is definately worth a read,

https://www.true-sale-international.de/fileadmin/tsi_downloads/TSI_kompakt/Synthetische_Verbriefungen_english__Final_17.09.2015_.pdf

In true sale securitisations, in addition to the credit risk of the securitised receivables
portfolio, all further legal, economic and operational risks which result from the purchase and
administration of the portfolio lie, in the first place, with the SPV (and thus indirectly with the
investor).

These risks include the risk that (1) the securitised receivables are invalid or not enforceable (validity risk),

(2) the purchase of the receivables is invalid or not insolvency proof (transfer and clawback risk),

(3) the receivables are extinguished by set-off against a claim of the debtor against the originator

(4) monies collected by the servicer are not paid on to the SPV (commingling risk),

(5) losses resulting from the improper servicing of the receivables (servicing risk),

(6) in an insolvency of the originator, where the originator is acting as servicer, the servicing is interrupted or deteriorates (servicer
replacement risk),

(7) in an insolvency of the originator, where the originator is acting as swap counterparty, there is no substitute hedge for the mismatch between interest income and liabilities (swap counterparty replacement risk)

While the contracts between the SPV and its various counterparties provide for an indemnification of the SPV if these risks materialize, the recoverability of such indemnification is subject to legal, litigation and insolvency risks. The complexity and diversity of these risks, in addition to the
abovementioned complexity of the legal structure and documentation, have an adverse effect on the transparency of true sale securitisations.

Thanks, I will go through this information there is a bit for me to learn here at a glance it appears there is no true sale in a risk securitisation, which to me appears as an unsecure loan for example.

For me this could work two ways if there is no transparency of a true sale then the proceeds I was supposed to acquire from an unsecure loan may not be apparent. Which is a direction I was moving towards as its scripted in the agreement. If there is proof of a sale and the proceeds have not been delivered then they are in breach. The other avenue is the who is the originator of the funds. The banks account the loan as a customer deposit not an accounts payable liability, therefore if the day sales books are acquired showings a customer deposit, its a customer deposit, but you would still have to deal with the fact that there is a contract stating the surety is going to make payments....

The equitable route is paying into trust with the prom notes, there is no stipulation as to what specie of cash must be paid and if its the sureties title on the accounts it should be his choice the bank is the intermediary.

This is where i am with this, but I'm not sure if Im up to speed with you on the pathways you are pointing to. Are you in a position to elaborate or spell a little out for me to get a better understanding of where you are at?

Not sure what you mean by 'risk securitisation'. Are you referring to 'risk transfer'?.

https://www.true-sale-international.de/fileadmin/tsi_downloads/TSI_kompakt/Synthetische_Verbriefungen_english__Final_17.09.2015_.pdf

True sale securitisations carried out by banks are based on the sale of a receivables
portfolio. Even the simplest true sale securitisation typically requires (1) the establishment of
a special purpose vehicle (SPV) together with the related corporate administration
agreements, (2) the sale and the insolvency proof transfer of the receivables and any
collateral to the SPV, (3) the financing of the purchase of the receivables through the issue of
several classes of securities (ABS) by the SPV, under which payments are to be made from
the income of the SPV pursuant to a priority of payments (4) an interest rate swap entered
into by the SPV to hedge its interest rate risk resulting from fixed rate interest income from
the portfolio and floating rate interest liabilities under the ABS, (5) the appointment by the
SPV of a servicer who administers, collects and enforces the receivables and forwards the
collected monies to the SPV, (6) the opening and maintenance of bank accounts by the SPV,
(7) the appointment by the SPV of a cash administrator who applies the income of the SPV
towards its payment obligations, ( the appointment of a paying agent by the SPV in respect
of the ABS, (9) the appointment by the SPV of a security trustee to whom the portfolio and all
other assets of the SPV are charged or transferred for collateral purposes to secure the
obligations of the SPV under the ABS and all other transaction documents, as well as (in
many cases) (10) the provision of a liquidity facility to the SPV and (11) the appointment of a
data protection trustee who is entrusted with encrypted personal data regarding the
securitised receivables.

It was just my terminology, all portfolios will have risks, I guess I'm relating it to personal circumstances where the unsecure loan I have would be securitised and classed as junk debt which is more difficult to sell than a portfolio of legal mortgage loans, hence risk securitisation.

(7) the appointment by the SPV of a cash administrator who applies the income of the SPV towards its payment obligations, (Cool the appointment of a paying agent by the SPV in respect of the ABS)

Im going to have to mull over all this, there are two incomes, the receivables and then that from the sale of the portfolio, both transfer through the SPV in two directions, but where are the proceeds from the sale of the portfolio going. We are not receiving them and there is no way an investor is paying the equivalent to the loan (funds the bank create) and the interest is kept by the bank for maintenance and tax, possibly a % of the receivables too.

I think your focusing on the right area, where are the proceeds, both incomes of the SPV going??

If you read some of Professor Richard Werners work and watch a few of his YT videos I'm pretty sure he states they don't and should give the proceeds from the sale....

The originator (MFI/bank) that creates the SPV creates an IOU to pass to the SPV, the SPV then uses this to buy the receivables (portfolio) from the originator (MFI/bank).

Page 9 of this pdf explains it a bit better than me : http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb070304.pdf

Hey,

For those interested in 'Mortgage Securitization', sometimes referred to (broadly speaking) as 'Mortgage Fraud' this may help answer some questions.

It was originally started in the mod section and we poked it with a stick a couple of times but came to no resolute conclusion, perhaps it will assist some in their research.

Hi actinglikeabanker + Waffle

i'm yet to find joy in math, but this is how i understand mortgages:

(Mr) John James Doe finds a house, applies for loan from bank. Bank agrees to accept/back his promise to pay if he will agree/sign to stand as surety for the loan and abide by the terms and conditions..

Here is a (very) simple example of the finances as i see it:

Loan terms are £100,000 to be repaid over 25 years

£4,000 = 4% p.a. Principal repayment

£1,000 = 1% p.a. Service charges

£5,000 = 5% p.a. 'Interest'

= £10,000 p.a.

Bank now offers Mr Doe's prom note to the market at, say, £120,000 with security. The note is bought and the bank uses the proceeds to credit the bank of the vendor and pockets the quick £20k having at no time risked the banks money. It also pockets the Service Charges and offers for sale access to the lien they hold on Mr Doe, and holds the deeds to the house as collateral (which makes enforcing the lien REALLY easy!).

Am i close?

Cheers!

Hey iamani,

Yes, I would agree you are going in the right direction.

When a person/persons (generally speaking) applies for a mortgage and are successful then the bank creates an IOU in said person/persons name.

Leaving the interest, principle, and service charges aside then the monies created by the IOU (this is how 'new' money is created) are put into the selling parties account.

The bank argues that as they are holding a liability for you (IOU) and this is where the interest and service charges come into play but, whilst relevant and of use to build part of an argument around, for simplification I will focus on the IOU.

Whilst claiming they are holding the liability they are actually securitizing (sometimes by creating another IOU as the SPV is a legal entity and passing this to the SPV to then buy the securities from themselves ) these instruments in a number of different ways, from above,

'Page 9 of this pdf explains it a bit better than me : http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb070304.pdf'

So, the bank no longer holds the liability, the special purpose vehicle (SPV) does, at this point the IOU was settled and the monies received for it would then be removed from the money supply (this is how 'new' money is removed). However bonds and shares are then sold in the SPV to investors, the person/persons mortgage payments then go to service the SPV and its investors.

There are other ways they securitize and this is really an oversimplification of the process as a whole and, they constantly tweak the process to try to avoid legal issues, see above 3rd post.

From a proactive perspective it appears to me that one of the more common approaches being used is against  SPV 'true sale' (this isn't to say other approaches are not valid or being used) the one briefly summarized above, in the form of a 'mortgage review' where a person pays for another to look at their mortgage documents and suggest an approach to 'possibly' counter, negate or get a discount on their mortgage.  

I presume these suggestions are along the lines of contacting the bank under a subject access and asking the relevant questions e.g. 'Has x liability been securitized and sold as part of an SPV' etc.

I think, as a best case scenario that a reduction of the total mortgage cost is theoretically feasible based upon the information I have read so far. There is also a case I posted a while back where someone effectively got a foreclosure set aside because they proved the other party (bank) were not the rightful owners of the debt (they didn't need to prove it was the SPV just prove the bank had no case to bring) so had no case to bring, if I can find it I will post it here.

None of this has been tested by me as I have had no need to use it (yet) and I strongly recommended anyone who is going to start poking their mortgage with a stick to read up as much as they can prior to any action, take advantage of free hours with solicitors, go to meetings, ask questions etc etc.

it was above, I made a mistake above, they got it 'struck out' not set aside,

'Neutral Citation No. [2013] NICh 14' - 'SANTANDER (UK) plc and THOMAS ANTHONY CARLIN & MAXINE KARON HUGHES'

http://www.courtsni.gov.uk/en-GB/Judicial%20Decisions/PublishedByYear/Documents/2013/%5B2013%5D%20NICh%2014/j_j_DEE8994Final.htm

Nice to see this thread rolling out here.

I'd also like to add to what you guys have stated so we can all try and nail this stuff down.

Firstly I received my SAR back today they have stated "under a subject access request I am not entitled to any data/informaton that may have been transferred to an SPV"

So we need a solution for this under what legislation/regulations are we entitled to this information. If they are fobbing me then I'm going to the commissioners which I might do anyways because of the poor performance of their data protection agents.

With any loan it is the benefits from the covenant that are the assets, as pointed out earlier the receivables.

When a loan is created, we are in essence promising to pay over a period with the receivables, this PN is converted into a customer deposit and the said currency (carriage goods by sea (see the act)) is deposited into our current account. They then open another account, like an overdraft facility, but one we do not have access to withdraw from, as the liability account. They now have two assets a customer deposit and a liability (this should be an accounts payable liability and their should not be a customer deposit if they are lending), these are both assets to the bank, the loan has just doubled. They then open a new "branch" which has no association to the bank called an SPV (special purpose vehicle) which is always a trust unit in the UK, create an IOU in the form of commercial paper (different to more common debt instruments) and purchase the receivables, thats triple the original loan. As ALAB said at this stage the account should be settled and closed, but its not, the portfolio of receivables are bought by an investor, maybe 50% of the worth of the receivables, 3 1/2 times the original loan. Then we pay the receivables + interest to the bank who then transfer the receivables to the SPV, but move the receivables into different accounts to keep the assets in the bank (accountancy is the black magic), so it is at least 4 - 5 times the original loan that is generated from a covenant. The interest is retained by the bank and used for servicing and tax as you say Lamani.

The part of the interest is for taxation interests me, one of my next questions to the bank are; how much tax has been paid, on who's behalf and how much is due? the courts are also revenue collectors for the crown and/or sovereign, which is the tax. Deal with this and you may be in a better position going forwards, in fact some people have started paying tax upfront to prevent foreclosures. So, who's income is it and why are we paying their tax!

ALAB is right this lot needs nailing down, the account should be settled and closed and theoretically no one knows who they owe the currency to....

Words of advice common law tracing does not allow use to trace into commingled stuff, however, there is one other form of tracing that does, but you'd have to be able to invoke it and you probably need a bloody good reason.  You need to try and put the "lender" a better way to put it is, the other party to the agreement, into a position where they are not doing something they should be doing to invoke it (all work in progress).

Im going in with questions as they have failed to trace even the loan agreement from a SAR request, it sounds to me like they are not doing something they are supposed to be doing, you have to take all relevant steps to resolve this before it goes to court or they will not assist you.

What would be good is if between us we can create a substantive letter requesting data from any securitisation processes and find out what laws are relevant to this as from what I have been told a SAR doesn't suffice......

I'll hit up the "statutes" regulations for us all to mull over.

Great thread guys keep it rolling.

Hi actinglikeabanker

Well, that was thorough - thanks! And 'yay! ' carling + Hughes.

Waffle - sounds like an admission of guilt. Surely if there was no transfer of SPV on record they could have just said that.

Cheers!

Sounds like your right Lamani, coverup the covenant

They actually listed what they do not have on record and the SPV was identified in a separate list of items I am not eligible for under a SAR......

Hi Waffle

Maybe you can point to that disparity as proof of transfer - posit it in a notice of clarification and understanding. If they can't/won't answer, that's your admissable evidence.....?

Cheers!

Taken on board Lamani

Cheers

As promised the "regs"

The uncertificated securities regulations 1992 (Title)

http://www.legislation.gov.uk/uksi/1992/225/contents/made



The uncertificated securities regulations 1995 (Registers)

http://www.legislation.gov.uk/uksi/1995/3272/contents/made



The Uncertificated Securities Regulations 2001 (records)

http://www.legislation.gov.uk/uksi/2001/3755/contents/made




Criminal Justice Act 1993 Schedule 2 Securities

http://www.legislation.gov.uk/ukpga/1993/36/schedule/2


The Financial Services and Markets Act 2000 (Official Listing of Securities) Regulations 2001

http://www.legislation.gov.uk/uksi/2001/2956/contents/made

FINANCIAL SERVICES AND MARKETS
The Financial Services and Markets Act 2000 (Regulated
Activities) Order 2001

(Futures s 84)

http://www.legislation.gov.uk/uksi/2001/544/pdfs/uksi_20010544_en.pdf

Full list of MFI (all banks and building societies) owned SPV's

there is only one on the list for personal loans from the bank I'm dealing with. Maybe I'll go direct to them to see if they hold any of my personal data.....

http://www.bankofengland.co.uk/statistics/Pages/reporters/institutions/spv/default.aspx

ATTLEE PERSONAL LOANS PLC
DIRECTORS’ REPORT
067851 80
The directors of Altlee Personal Loans Plc (“the Company”) present the Company’s report, together
with audited financial statements for the year ended 31 December 2010.
PRINCIPAL ACTIVITY AND BUSJNESS REVIEW

Principal activity
The principal activity of the Company continues to be the issuance of floating rate notes secured on an interest in a pool of loans and other credit facilities to personal borrowers purchased from The Royal Bank of Scotland plc (“RBS plc) and National Westminster Bank (“NWB plc”). Senior notes have been issued to RBS plc and Churchill Loan Asset Securitisation Programme, LLC, which has
then issued asset backed commercial paper to RBS plc, which is considered eligible collateral under the Bank of England‘s Discount Window Facility.

The directors do not anticipate any material change in either the type or level of activities of the Company.

The Company is a wholly owned subsidiary of Attlee Holdings Limited
Attiee Holdings Limited holds 49,998 partly paid ordinary shares of f l each and one fl ordinary share which is fully paid. SFM Nominees Limited holds one El ordinary share which is fully paid in trust for and on behalf of Attlee Holdings Limited. These shares comprise the entire issued share capital of the Company.

The personal loan portfolios are administered on behalf of the companies by RBS plc and NWB pic.

The Company has no employees.




These are the assets held by the SPV just from personal loans on behalf of RBS and NWB in 2009, its not millions....... its billions

At the end of the year, the financial position showed total assets of £5,822,893,000 (2009:
£8,216,604,000), including income-generating assets, being the interest in personal loans of
£5,794,547,000 (2009: £8,164,562,000), and equity of £113,OOO (2009: f1,335,000).

This is only one of over 1000 MFI owned SPV's in the UK and I'll repeat its personal loans, imagine the size of the asset pools for mortgages.

I really have little or no knowledge on this subject .But maybe 3 years ago there was a talk at warick uni where amongst the speakers was Anthony Carlin from Ulster ( is this the case mentioned ?) and also Ben Gilroy unfortunately
it was not recorded .But what I recall being mentioned as very important in this was something called "the bankers book"
which shows every single movement of anything going in & out of your account ,even if only for a few seconds .

If any other members attended perhaps they can shed more light on it.

Hi,

We all know about the "mortgage fraud" securitisation is, but to actually prove your mortgage was securitised is another matter.

Doing a DSAR and asking for  documents related to securitisation - the lender replies that they do not need to provide any answers about securitisation under s DSAR.

What other ways are left - stop paying your mortgage until they provide all information about the
securitisation - this will lead to going to court with costs and with the system against us we are likely not to get the information we need to prove the mortgage was securitised. -Very risky and expensive approach.

We need to find a way to find to obtain all the information we need to prove that the mortgage was securitised and the mortgage is a fraud. Not sure what or how to do this.

We need someone who is an insider who knows how to obtain this information.

Not sure if any one has heard about LegalQuest- they are trying to get a class action against lenders for mortgage fraud - securitization, the catch is they aim to write off your mortgage  but keep 30%.  Not sure how successful they have been but they would need to have access to all documents about securitisation to win any case - their method is to obtain a DSAR and from this they can find out all information they need to. So what are they doing that we are missing?

I don't think legalquest are doing anything yet except charging people who sign up £260 but advertise as no win no fee service.

http://www.veoh.com/watch/v37088999EJyNe8wF
This is a good watch mortgage securitisation is mentioned

yes, with reference to legalquest, but what information are they obtaining that can be used to show the mortgage was securitised to rove the mortgage fraud.

is it Impossible to get disclosure from lenders but your mortgage securitisation. There has to be some way of getting this information from lenders.

My mortgage was sold to another company many years ago without my consent and when I complained they said so long as the terms and conditions stayed the same there wasn't much I could do about it. The thing is they didn't hide the fact it was sold so Why would securitising a mortgage be fraud.