Consumers spooked by securitisation

According to The Guardian, Richard Turner, who is a customer of Future Mortgages, has reportedly surveyed other borrowers to ask them to sign a witness statement to state that they are unhappy with their loans being transferred.

Turner has reportedly contacted other borrowers to ask them if they are unhappy, obtaining their addresses through a Land Registry public document which was filed by Future Mortgages as a legal requirement when the loan was transferred from Southern Pacific Mortgages Ltd.

Turner has claimed that the transfer does not comply with his contract as he was not sent a written statement on interest rate and arrears policies.

The case is currently going to court and if a court finds in his favour he will be able to claim that his contract is null and void and that he is not obliged to pay his debt. However the Financial Ombudsman Service has rejected his objection.

This is the latest case of borrowers being ‘spooked by securitisation’. With the market currently at a standstill, and the credit markets coming to the attention of the general public, borrowers are becoming familiar with the concept of their mortgage being sold from one lender to another.

Jonathan Barnett, director of All Mortgage Matters, said: “If the client is party to the possibility on the offer, then I believe that the lender has to make sure that they are aware that the loan can be moved.

"This is certainly the case when I advise my customers and I believe that lenders should be forced to put this information into a Key Facts Illustration. That way they can see what the possibilities are before they go to another lender.

"It is not good enough to be party to an offer – in times of transparent business this should be highlighted.”

A spokesperson for Lehman Brothers, said: “We do not require consent from the borrower to sell mortgages on – borrowers are always advised in offer letters and terms and conditions that this could happen.

“When it does, we write to the borrower saying that the mortgage has transferred and give them details of their new lender, who will then get in touch to welcome them.”

Bob Sturges, director of communications at Money Partners, commented: “We are a securitising lender and in the mortgage documentation that the customer receives it is made clear that the loan will be sold on in a very clear and precise manner. We tell them who it will be sold on to; sometimes is it is contained in lots of wordage, but it is made very clear.

“The mortgage customer signs up to terms and conditions that remain in place for the life of the mortgage and the only changes that come into affect are when all parties are advised.

"The customer is not disadvantaged at any point to the terms and conditions that they agree and because we sell it on we outsource the completion to a third party, and the borrower will receive a welcome pack and be advised who the new mortgage lender is. We try to make that relationship very explicit to the borrower.”