The Civil Justice Council
Many will now be familiar with the Civil Justice Council’s pre action protocols, a series of steps lenders MUST go through, before they should seek repossession. CAPSTONE MORTGAGE SERVICES NEVER go through these steps.
They cant. The SPVs will not allow it.
If you ever feel that you have been denied a fair hearing on substantive issues ( let’s face it, who hasn’t?) or if you feel that the brief acting for CAPSTONE has wilfully misrepresented the position then…
LET THE CJC know.
REMEMBER. CAPSTONE NEED A COURT ORDER FOR YOUR KEYS AND IF THE COURTS ARE WISE TO THEIR TACTICS AND PRACTICES THEY WONT GET WHAT THEY WANT.
THE CJC ISSUE INSTRUCTIONS TO THE COUNTY COURTS WHICH ARE GUIDANCE AND PRACTICE. ONCE THE WORD GOES OUT YOU SHOULD AT LEAST GET A FAIRER HEARING.
Now that Survivor has posted his excellent letter to the CJC I thought I would give it Prominent BIlling and tidy up the formatting: Here Goes…
The Civil Justice Council
Royal Courts of Justice
London, WC2A 2LL
Dear Sir or Madam
I am writing to express my concern that there is injustice for defendants in repossession hearings, especially those whose loans have been securitised, and that the courts are not sufficiently aware of the repossession pre-action protocol. More specifically, my concerns are as follows.
1. Capstone Mortgage Services, which administers my secured loan account on behalf of SPML, the original lender, has made no effort whatsoever to negotiate a repayment settlement with me as it is obliged to do under the pre-action protocol, and the “arrears” on the account are the subject of an ongoing complaint both to Capstone and the Financial Ombudsman yet the hearing for repossession is still going ahead at the XXX county court on XXX.
2. The consumer defendant of this type of mortgage product is unfairly discriminated against. The securitisation covenants prevent the administrator from observing the range of consumer protections available such as waiving, reducing or refunding charges or observing the CJC pre-action protocols, by for example switching to interest only or modifying the date of payment due. It cannot have been the intention of the regulators that some mortgage holders would benefit from these additional forms of support and others would not, through no fault of their own. Indeed the FSA has criticised this particular model of securitisation.
In terms of the issues raised around securitisation, we expect a firm to adopt the same approach to forbearance for borrowers with mortgages that have been securitised as for borrowers whose mortgages remain on the firm’s books. Securitisation covenants should not constrict a firm’s ability to treat its customers fairly by exercising appropriate forbearance strategies.
My regulated loan has been securitised and sold on to an unregulated third party (SPV). One of the main reasons for arrears is unexpected and unplanned for circumstances such as a temporary drop in household income which then triggers oppressive and unfair charging regimes.
Whereas in a mainstream agreement defendants could change from repayment to interest only, extend the term or numerous other modifications to get them out of trouble the effect of securitisation means these suggested options in the pre-action protocols and the FSA regulations MCOB 13 Rules are not available. This further unfairly penalises a borrower and leads to an uneven distribution of justice in similar cases.
2. Another ground for concern is that typically court hearings in repossession cases last for 10 minutes. This hardly seems long enough when defendants are typically litigants in person because of the lack of legal aid for homeowners with financial difficulties, whereas the lender has access to enormous resources. There is no equality of arms in such cases.This lack of access to legal representation and advice is itself deeply troubling when the European Court of Human Rights recently ruled in a case against the UK— McCann v. UK—that the right to respect for one’s home, guaranteed by article 8 of the European convention, includes adequate legal protection for homeowners. It said:
“The loss of one’s home is a most extreme form of interference with the right to respect for the home. Any person at risk of an
interference of this magnitude should in principle be able to have the proportionality of the measure determined by an independent tribunal in the light of the relevant principles under Article 8 of the Convention, notwithstanding that, under domestic law, his right of occupation has come to an end… the applicant was dispossessed of his home without any possibility to have the proportionality of the measure determined by an independent tribunal. It follows that, because of the lack of adequate procedural safeguards, there has been a violation of Article 8 of the Convention in the instant case.”
Article 11 of the international covenant on economic, social and cultural rights also protects the right to housing. The UN Committee on Economic, Social and Cultural Rights has interpreted this in its general comments to include a right to due process and appropriate procedural safeguards before being evicted from one’s home.
3. While they have the discretion to do so, it is rare for courts to investigate the legality of mortgage contracts, even when asked to do so by the defendant. Courts tend to focus on repayment of the arrears to the exclusion of anything else. When the arrears are genuine and not in dispute, this policy may well be sensible. However when the “arrears” are in fact extortionate fees added to the genuine arrears by the lender or its administrator, in breach of the Unfair Terms in Consumer Contracts, Section 12 of the FSA’s Mortgage Conduct of Business rules and Section 6 of the FSA’s Principles for Businesses, it is essential that courts should be willing to investigate their legality. The FSA has recently issued final notices to several lenders ordering them to compensate borrowers for these excessive and unlawful charges.
4. Furthermore, even if the defendant in repossession hearings does not raise the issue of the legality of the fees or the loan contract, courts should examine this issue of their own accord.
Courts in the EU must examine and rule on terms in consumer contracts that may be unfair even if no consumer has complained about them, the European Court of Justice (ECJ) has said. The duty will exist when a company seeks to enforce a consumer contract.
The European Union’s Directive on unfair terms in consumer contracts governs contracts because consumers have no bargaining power when presented with pre-written contracts to sign. It says that any term that is unfair will not be binding.
A Hungarian woman was taken to court by her mobile phone provider Pannon. It enforced a term of its contract with her which said that the court in Budaörsi had jurisdiction over the contract. The woman, Sustikné Győrfi, lived 275 kilometres away from Budaörsi. She receives invalidity benefit and there is no direct public transport between where she lives and Budaörsi.
The Budaörsi court said that the normal place of jurisdiction would be the court where Győrfi lives, and asked the ECJ whether it had the right or an obligation to examine the contract term governing jurisdiction for unfairness, even if the consumer in question had not raised an objection to its fairness.
The ECJ, the European Union’s highest court, said that the court had not only the right to make its own analysis of the contract’s
fairness, but an obligation to do so. Only if courts do that, it said, are consumers protected in the way the EU legislation envisages.
“The system of protection introduced by the Directive is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge,” said the ECJ ruling. “This leads to the consumer agreeing to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms.”
Referring to an earlier ECJ ruling involving Salvat Editores, the ruling said that “the aim of Article 6 of the Directive would not be
achieved if the consumer were himself obliged to raise the unfairness of contractual terms, and that effective protection of the consumer may be attained only if the national court acknowledges that it has power to evaluate terms of this kind of its own motion”.
“Article 6(1) of the Directive must be interpreted as meaning that an unfair contract term is not binding on the consumer, and it is not necessary, in that regard, for that consumer to have successfully contested the validity of such a term beforehand,” it said.
The ruling said that previous ECJ decisions indicated that courts had not only a right but a duty to assess terms on behalf of consumers.
“The nature and importance of the public interest underlying the protection which the Directive confers on consumers justify the
national court being required to assess of its own motion whether a contractual term is unfair, compensating in this way for the imbalance which exists between the consumer and the seller or supplier,” it said.
“The court seised [i.e. having ownership] of the action is therefore required to ensure the effectiveness of the protection intended to be given by the provisions of the Directive. Consequently, the role thus attributed to the national court by Community law in this area is not limited to a mere power to rule on the possible unfairness of a contractual term, but also consists of the obligation to examine that issue of its own motion,” it said.
The ECJ was also asked what factors should be taken into account to determine fairness. It said that distance, which was the primary concern in Győrfi’s case, could itself deny people access to justice.
Referring again to the Salvat Editores case, the ruling said that: “a term [deciding jurisdiction] obliges the consumer to submit to the exclusive jurisdiction of a court which may be a long way from his domicile. This may make it difficult for him to enter an appearance. In the case of disputes concerning limited amounts of money, the costs relating to the consumer’s entering an appearance could be a deterrent and cause him to forgo any legal remedy or defence”.
“The Court therefore concluded that such a term falls within the category of terms which have the object or effect of excluding or
hindering the consumer’s right to take legal action,” it said.
The ECJ did say, though, that it could not rule generally on whether a term was unfair, that national courts had to make decisions based on the facts of the case in hand.
I also refer you to the Capstone Action Group website, where many customers of Capstone express their dissatisfaction with the way the courts handle their cases, as well as the lackof enforcement of existing laws and regulations in repossession cases.