As has often been stated on many other forums on securitisation Capstone Mortgage Services administer the mortgage or loan, not on behalf of the originators such as SPPL, SPML or Preferred but on behalf of the SPE or SPV (Special Purposes Entity or Special Purposes Vehicle.)
The SPV purchased the loan and mortgage book from the originator with the aim of marketing the underlying collateral and security (that’s your house and mine) as an investment. the SPPL/SPML etc brands are dead in the water and were the minute they stopped lending and then selling on or securitising your mortgage. That was all they ever existed for. Hell they didn’t even collect. That was left to our good friends at Capstone.
The SPV then took whole tranches of mortgages, bundled them together (called pools) and issued them as notes.
These investments were marketed in the prospectuses as being particularly attractive to investors.
1. They were rated by the rating agencies as more or less AAA, or AAB and the ratings agencies were incentivised to do so given that their client was the SPV. No conflict of interest there then.
2. The high rate of return (that is screwing you and me into the ground with exorbitant interest rates) created a steady flow of lots of cash for everyone involved in the securitisation process. Ever thought that interest rates of 5% were just pure greed on behalf of your original lender when the BoE base rate and the LIBOR are at historically low levels? Think again. Everyone in the chain needs their cash. It has little or nothing to do with your credit worthiness. That is just a guilt trip, and one of many they will lay at your door to get you thinking that it’s all your fault. Note how they are always talking about your obligations, never theirs.
3. Enforced early redemption of the security, that is stripping out the equity in your home through falsely premised repossession claims. Typically the prospectus boasts that they investors will have the notes redeemed within about 5 years not the 20 or 25 years you AND THEY contracted to.
As the Lehman’s Ghosts are exorcised by Price Waterhouse Coopers, the role of Capstone becomes even more pivotal. You see they don’t really act on behalf of SPML at all.
That is just a cover story to keep the cash flowing, to apply the charges and make and their own handsome profits from unlawfully gotten gains, and ultimately to issue proceedings against you in court for possession of your home and your equity.
The SPV wants no illumination of its regulation avoidance and especially its tax dodging.
After all who would pay tax if they could find a legal way around it? Especially if that way happens to be sanctioned by the Treasury when a certain G.Brown was Chancellor of the Exchequer. So in fact what we have is the very department charged with revenue and excise advising and regulating in such a way as to allow UK registered companies to avoid paying UK tax. All very neat.
In the Treasury Select Committee section of this blog read Carmel Butler’s submission which details the tax avoidance structures which were essentially green lighted by the Treasury in 2002. Don’t just take my word for it. Have a read of this.
I particulalry like the bit about consumers not needing to be confused with all this. I don’t feel confused at all. In fact clarity illuminates and I now perfectly understand why Capstone Mortgage Services cannot treat customers fairly.
THEY ARE ENTIRELY BEHOLDEN TO THE RAPACIOUS DEMANDS OF THE SPV.