Mortgages essay plan

Mortgagees enjoy more rights than mortgagors

Introduction/ Roadmap

• Mortgagees have tradintionally had more rights than mortgagors

• this imbalance has been addressed a few times

  • AJA 1970

  • CCA 1974

  • MCOB’s

• However there is still an imbalance so more reforms are needed

• essentially mortgagees rights make many of the mortgagors rights illusory

• this essay will

  • outline the rights of mortgagees

  • outline the rights of mortgagors

  • examine how mortgagees can undermine mortgagors rights

  • discuss potential reforms to address this imbalance

Rights of mortagees [bullet pointed not in detail]

• Right to repossession

• Power to sell the mortgaged premises

• Right to sue

• right to appoint a receiver

• right to foreclosure

  • not really used anymore

• Right to consolidate

Mortgagees right to repossession

LPA 1925 s87(1)

Four-Maids ltd v Dudley Marshall (properties)

• right to obtain possession from the moment the mortgage is created should the mortgagor fault

this property may then be leased out or treated whatever way they want

Mortgagees Power to sell the mortgaged premises

LPA 1925 S.101(1)

• this right only arises when money is due and

  • notice has been served - and for three months following this nothing has happened

  • Some interest is two months in arrears

  • there has been a breach of covenant in the mortgage deed

Horsham Properties

• Mortgagees may sell mortgages to other companies, appointing them as receivers. no need to keep the property until mortgage is fully paid or defaulted

Mortgagee’s right to sue

If the sale of the repossessed property does not make up the entire arears due - the mortgagee then has the right to sue for the amount left in contract

• Rudge v Richens

Mortgagees right to foreclosure

Mortgagee takes legal ownership of the property and sells it themselves

• carter v wake

• NOT OFTEN USED ANYMORE MORE COMMON TO APPOINT RECIEVER

Mortgagees right to consolidate

LPA 1925 S.93

Mortgagee may require a mortgagor with two properties mortgaged with them, to redeem both if any.

Mortgagors have some rights, however these are often overshadowed by the Mortgagee [Bullet pointed, not in detail]

• Right to request a suspension of possession order under first mortgages

  • Only applies if possession is through court order

• Mortgagees cannot use forces to repossess properties

• Time orders CCA 1974 second mortgages

• suspension of possession orders cca 1974

• Ability to make amendments to the mortgage agreement

• Pre action Protocols

Mortgagors right to request a suspension of possession order under first mortgages

AJA 1970 S36

• If the mortgagor can prove they have the means to pay back ‘any sums due’ within a reasonable time the court may order a suspension of possession with a reasonable payment plan then put into place

  • Reasonable time is the remainder of the mortgage life [Norgan]

  • Sums due is the amount in arrears - as long as it is clear C can continue to pay the mortgage after

    • S8

BUT

• this only applies if repossession is through a court order

  • If a mortgagor willingly gives up their house they cannot later apply s36

    • Ropaighleach

• must be a dwelling house

• If mortgage sold to a third party this does not apply

  • Horsham loophole

Time order for second mortgages

CCA 1974 s129

a time order request can be made to the court if Ds can prove they will be able to

purpose is to restructure payment plan

Suspension of possession orders

CCA 1974 s135

purpose is to suspend immediate repossession during or before court proceedings regarding the property occur

Mortgagors ability to make amendments to the mortgage agreement itself

CCA 1974 s136

Barnes - monthly rates of interest were reduced by half to make it more fair on the mortgagor

Pre action protocols

Encourages lenders to postpone possession proceedings

• however this is equitable- no legal rights altered

• therefore in law mortgagees still front

Regulated mortgage Contracts are a pre action protocol that enable the CCA to put forward time orders

These rights tend to focus on the economic concerns of parties to a mortgage. this is unfair

• Lisa Whitehouse discusses resilience

  • Resiliance is having means to confront misfortune

    • mortgagees have a lot more than mortgagors

      • Requirement for mortgageees to have minimum capital levels so that they may absorb some faulted mortgages

      • 2008 crash is why this came in to play

    • Mortgagors lack of resiliance

      • Loss of income can be sudden and unexpected - not due to carelessness

        • 54% of first time buyers had no savings

          • english housing survey

        • State support fluctuates

• CCA attempted to make more fair regulations

  • Focused on non economic concerns

    • Any time period allowed to be created by the court

    • court may change interest rate

  • The case of Greene would have been more positive had it been decided under the CCA 1974

Lisa Whitehouse and Cecil Crmapin discussion on changes needed

• A programme of measure would be sufficient and the man issues is pre existing preferences for motrtgagees in courts

  • Judiciary needs to exercise a wider view of discretion to properly assess the imbalance or resiliance in cases

• education around mortgages needs to be better so mortgagors know how to act with their rights

  • Ropaigleach

• Cecil Crampin Focuses on Clark LJ’s opinion that Section 126 should be understandable to Lawyer and layman alike

Conclusion

Mortgage law is in favour of the mortgagee and needs to be adapted to see the non economic side, this will even out the imbalance