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Mortgage invalidity

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The concept of mortgage invalidity is a peculiar form of pseudolegal bollocks currently on the ascendant in the UK in which a borrower, party to a mortgage contract, attempts to find ways to get their mortgage declared completely null and void in a way in which they get to keep the house but where they don't have to pay back the money they borrowed to purchase this house. The entire basis of it is usually along the lines of banks securitising the mortgage debt, a perfectly valid practise, removing any liability held by the borrower because it is illegal (which it isn't); of the mortgage contract being a "promissory note" (which it isn't); and of money being an illusion (which it isn't). The "reasoning" behind it has a lot in common with freeman on the land philosophy, chiefly the fundamental lack of understanding of everything and the wilful misinterpretation of common terms and items.

Naturally, this is bullshit on a grand scale and nobody has ever got their money back from their mortgage lender in this manner. What it has done is cost banks and others a great deal of money in time wasted dealing with absurd complaints. Ombudsmen at the UK's Financial Ombudsman Service, not known for their bluntness, have described these arguments as having "no basis in law, logic or common sense", which just about sums it up.[1] Even posters at a forum called "" whose slogan boasts of "beating the banks" and whose main site peddles freeman "A4V" woo and encourages people to send their creditors made up-bank notes, think it's rubbish.[2]

Brief overview of the claims[edit]

You can, if you wish, read the full treatise containing the nonsensical and completely idiotic ramblings of Jean Keating[3] but the basic points are summarised here. Excitingly, the document burbles about "admiralty law" and Black's legal dictionary, thus bearing the mark of a truly special freeman on the land lunatic document.

Securitisation is bundling up lots of different mortgage (or other, for that matter) debts so that they can be sold on to investors as securities, in the same manner as stocks and bonds. This process is illegal as it fraudulently converts a "negotiable instrument" under Article 3 of the Uniform Commercial Code into a security under Article 8. The mortgage contract is not a contract that binds the mortgagor to repay the mortgage; it is a promissory note (IOU) that you create by signing it and therefore an asset, the proceeds of which should go towards its creator (the mortgagor). Further more, because this is an asset to the mortgagor, it is actually a liability to the bank, and so the "debt" can be netted off against it.

The securitised debt/note is sold off to an SPV (special purpose vehicle) which then owns the debt/note. The bank is therefore unable to foreclose on your debt/note because it doesn't own it, and can't own it as you can't hold a non-negotiable instrument. The suggestion is that the contract is invalid and this should be pleaded as such in court; in the worst case, criminal fraud charges should be brought. There is also some insane bullshit about how the money the banks want for the mortgage isn't real money because there isn't a gold standard or somesuch.

Standard freeman concepts such as the strawman theory are also brought up, marking this as fully fledged FOTL fuckery.

Why it is bollocks[edit]

Securitisation isn't illegal and a securitised debt is still valid[edit]

Securitisation is a perfectly valid action and is not only not illegal but is widespread - it certainly isn't fraudulent and definitely not for the reasons claimed vis-à-vis the UCC, chiefly because a mortgage is not actually a negotiable instrument; it is a straightforward agreement between the mortgagor and the mortgagee to borrow money secured against a house. However the main thing this idiot gets wrong is what is actually being securitised. The mortgage contract is not being sold off when a mortgage is securitised; what is being sold off is the debt. The debt still exists, and you still pay it to the mortgage company; they just then pass it on to the debt's actual owners, and act as your point of contact for the debt. Title to the mortgage remains with the bank, but the actual cash flows go to the owners of the mortgage backed security.

This is quite possibly the closest that this gets to reality, but this is rather like saying that a high mountain is the closest you'll get to the sun.

The mortgage agreement/deed is what it is[edit]

This is just so obvious that there's hardly any point explaining it. The mortgage agreement is not a fucking asset. The mortgage itself, or more accurately the equity in the property vested in the mortgagee by the mortgage agreement and the cash flows associated with the mortgage, is.

Even if it was such an asset, you would not own it[edit]

You gave it to someone else in exchange for a house. It's not yours. Curiously, mortgagors who try this bullshit often don't want to give the house back (or have already given the house back involuntarily and want a way out of their remaining obligations.)

Accounting has absolutely nothing to do with it[edit]

The linked document refers to FASB regulations on accounting and what is a credit and debit, specifically with regards to securitised debt. This is begging the question in an attempt to give this utter shite some gravitas; if the mortgage contract isn't a negotiable instrument or promissory note then it has absolutely no relevance to anything.

References to the US Constitution and Uniform Commercial Code are completely irrelevant to the United Kingdom[edit]

A question which was rather decisively settled around 1781, and reiterated in 1814.

Success stories[edit]


The British invasion[edit]

The UK has a fairly good complaints system for financial services:

  • A bank or other lender has eight weeks to decide whether to uphold a complaint.
  • If the outcome isn't acceptable to the customer or the bank takes over eight weeks to give a final response, the customer can escalate these concerns free of charge to the Financial Ombudsman Service (FOS), who exist to provide an independent arbiter of complaints — this is paid for by the firms it covers, who are charged upwards of £550 for each complaint escalated to the FOS. These are often resolved at first point of contact by adjudicators.
  • Where either the bank or the customer doesn't agree with the FOS's decision, it goes up to the final level of ombudsmen, who deliver a final decision on such complaints which is legally binding on the bank if the consumer accepts it (the bank has no say in the matter). These final decisions are published freely on the FOS's website with personal and identifiable details redacted.

Recently, a large number of complaints using the above pseudolegal arguments have been submitted to banks and then referred to the FOS's adjudicators and finally onto ombudsmen, all of whom reject them for the simple reason that they are horseshit. While this is obviously an absurd waste of time and money on all levels, starting with the deluded person trying to get their mortgage nullified and going on from there, with special mention to the bank having to pay £550 for the privilege of having this shit dealt with, it has had one happy side effect; there is now a substantial published archive of pseudo-FOTL nonsense being shot down in flames and literally never ever succeeding even on the more informal grounds of the FOS[4]. The litany of published decisions make it quite abundantly clear that the ombudsmen are both extremely familiar with the bullshit arguments in play and extremely contemptuous of such idiocy.

I’m very familiar with the documents put forward by Mr and Mrs G – including template letters and statements downloaded from the internet. I am fully aware of the wider issues Mr and Mrs G have raised. Their points concerning securitisation, powers of attorney, the nature of money and promissory notes are the same as those raised on a number of internet forums where there is discussion about the reasons why they believe mortgages are invalid. In support of their arguments Mr and Mrs G have cited various medieval and ancient charters or Acts, none of which, in my opinion, are of any relevance to the issues I am being asked to consider.[1]

The main complaints are requests for "deeds of assignment" and other such utterly irrelevant and often non-existent documentation, and following this a complaint that if this is not provided then the mortgage is invalid and the bank is breaching the borrower's rights by trying to collect a debt that isn't owed:

Amongst other things [Mr and Mrs G] have requested a copy of the agreement signed by both parties to show that a legally-binding contract had existed. They also requested a copy of a Deed of Assignment to show who was assigned the debt, and the mortgage indemnity insurance showing Barclays as the sole beneficiary, along with evidence of the source of funds lent to them. Mr and Mrs G said that in the absence of those documents they were “being restrained of their fundamental human right to pay arrears they do not owe” unless Barclays could show a prima facie case concerning the debt.[1]

They often also hilariously misuse basic legal concepts:

Ms J has said in her affidavit sworn on 9 February 2015 that she has requested a “prerogative writ of mandamus” – a High Court procedure that, if granted by the court, would compel a public authority or government body to perform an act required by law when it has neglected or refused to do so. In my opinion, it is unlikely the High Court would grant Ms J a writ of mandamus, because GE Money is not a public body.[5]

Joyously, some complainants have even tried literally making up money to repay their mortgage:

Mr and Mrs D have also sent a promissory note to Lloyds which they believe has repaid their mortgage in full. [...] It didn’t accept the promissory note in payment of the mortgage and considers the remaining unpaid debt to be outstanding.[6][7]

The ombudsmen are equally scornful of the chance of any of this arsedribble working in court, and urge their complainants to stop taking advice from email forwards and green ink:

Should Ms J decide to continue to pursue her complaint through the courts, I would urge her to take legal advice from a qualified solicitor rather than relying on advice obtained on the internet before attempting to raise in court the arguments she has put forward here. As far as I am aware, no court or tribunal in the UK has ruled that a mortgage is void on the basis of these theories.[5]

...there have been a number of cases where borrowers have lost their case after trying to raise these arguments and as a result have been ordered to pay the lender’s substantial legal costs.[6]

However all that truly needs to be said was this lengthy smackdown by ombudsman Jan O'Leary, who appearing to be thoroughly sick of this shit very much made the legal position quite clear and who deserves to be quoted in full:

In an unreported case in Preston County Court decided in July 2013 a borrower raised the argument that the mortgage documentation did not comply with the required legal formalities and was therefore void. This is the argument Mr and Mrs J have raised here and so it is important to look at what the court said about this.

Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A) provides that a contract for the disposition of an interest in land must be made in writing, incorporating all the terms of the contract, and signed by each party to the contract. Section 27 of the Land Registration Act 2002 (LRA) provides that if a disposition is required to be completed by registration then it does not operate at law until the relevant registration requirements are met; and that the grant of a legal charge (or, a mortgage) is a disposition which is required to be completed by registration.

In the case I refer to, the borrower’s argument was that her mortgage was null and void for want of statutory formality because it was signed by the borrower only and not the lender (as is the case with the vast majority of mortgage deeds) and as such it did not comply with the LP(MP)A. Therefore, according to her, the mortgage didn’t exist at law and so could not be completed by registration as required by the LRA, and so it was not binding on the borrower.

But the judge held that the borrower's argument was "illusory" and "false". He was concerned that the spreading of these dangerous arguments on the internet could mislead borrowers into wrongly thinking that their mortgage was not binding upon them and that in the event of default they would not be in danger of losing their homes.

The relevant statutory provision for a mortgage, section 53 of the Law of Property Act 1925, does not require every term to be included in a document signed by both parties; rather the document just needs to be signed by "the person creating or disposing of the interest" (i.e. the mortgagor/borrower). The judge also explained that section 27 LRA does not go so far as to say that a disposition required to be completed by registration (such as a mortgage) is created by registration and that it does not therefore exist or operate in equity before registration.

So as far as the law is concerned, I am not persuaded there is any merit to Mr and Mrs J’s argument that they don’t have a valid mortgage agreement with GE Money. They signed the mortgage deed and acknowledged they received the money. That is all that is required for the granting of a valid mortgage.

As far as securitisation is concerned, the court has held in two cases decided in January 2014 (Sinclair v Accord Mortgages Limited and Overson v Southern Pacific Mortgage Ltd t/a London Mortgage Co) that it is irrelevant if the equitable interest in a loan has been transferred to a securitisation company. Where there is no transfer of the legal title to the mortgage GE Money is still entitled to receive payment and enforce the loan if payment isn’t made.[8]

That should be the end of it. There is also the slight complication that the FOS not only doesn't have the power to deem a debt null and void, but also doesn't wish to compromise its impartiality by making banks cough up documents to support quixotic vexatious litigation.


  1. 1.0 1.1 1.2 Financial Ombudsman Service, Ombudsman decision DRN4209752
  2., "read me first"
  4. The Financial Ombudsman Service specifically do not have to refer to published case law when making binding decisions; their role is to consider what is fairest and most correct in all the circumstances. To lose there with legal arguments means essentially that not only do your arguments have no merit whatsoever, but that they don't even work outside of the rigid evidentiary basis of law.
  5. 5.0 5.1 Financial Ombudsman Service, Ombudsman decision DRN0097628
  6. 6.0 6.1 Financial Ombudsman Service, Ombudsman decision DRN1823930
  7. An example of these "promissory notes" can be found at the aforementioned GetOutOfDebtFree. Lloyds Bank were clearly foolish not to recognise the power of the "powerful sacred geometry", perhaps preferring the similar collection of complex line art drawings found on Bank of England currency.
  8. Financial Ombudsman Service, Ombudsman decision DRN6253920 - O'Leary has gone on to write another decision, DRN0466749, which directly namechecks "freeman on the land" ideology and goes into more detail about some of the lunatic claims. RationalWiki is currently trying to get in contact to get her an account here.