1. Securitisation made simple
Treasury Management Conference: 8 October 2014
Sarah Hind, Partner, Clarke Willmott
Yogeta Partridge, Legal Counsel (Treasury), L&Q

2. Introduction to Securitisation
What is it?
Large scale mortgaging
More money = more risk + more stringent requirements
Why do it?
Lack of grant/reduced reliance on grant = increased need for private finance
Support development pipeline
Objective?
Achieve best value in shortest time

3. The Securitisation Process
RP - send property list/Information Packs to RP’s solicitors
RP’s solicitors carry out due diligence
Review Information Packs
Disclosures for Certificate of Title
Valuer carries out valuation (liaise with RP/Funder)
Finalise security
Funder’s solicitors – Review Certificate of Title and advise Funder
Valuer – Review Certificate of Title and advise on value
RP and Funder – Sign legal documentation

4. Challenges to the process
RPs’ Perspective
Relationship between Development and Finance
Defective Mortgagee Exclusion Clauses
RP’s Solicitors’ Perspective
Accuracy and availability of property information from RP’s
Different Funders have different approaches
Both have a negative impact on time and cost

5. Addressing the challenges
Legal Treasury Group
Formed in February 2014 with support of Treasury Managers Group
Representatives from 21 RPs across the country
Objectives
Securitisation Working Group
Formed in August 2014 with support of NHF
Representatives from and on behalf of borrowers, funders and valuers including regulatory bodies

6. Achieving Standardisation
Certificate of Title
Securitisation Working Group
Regulatory bodies to publicise the form for use
Mortgagee Exclusion Clause
Securitisation Working Group agree a sector approach
Set up meeting with regulatory bodies for Local Authorities to present, discuss and agree an approach
Regulatory bodies to publicise the approach for use

7. Standardised Certificate of Title
What is a Certificate of Title?
Legal report prepared by the RP’s solicitors
Highlights key information about the properties to be secured
Reviewed by the Valuer and Funder’s solicitors
Why does this need to be standardised?
To ensure consistency across the sector
To achieve time and cost efficiency across the sector

8. Examples of areas of focus for standardisation
Requirements for planning condition discharges
Section 106 obligations - compliance
Age of searches/search indemnity insurance
Restrictive Covenant/Restrictive Covenant indemnity insurance

9. Mortgagee Exclusion Clauses
What is a mortgagee exclusion clause?
Clause which provides for a Funder to be excluded from binding provisions within a legal agreement
Why does this need to be standardised?
Defective clauses = restricted value/unacceptable as security
Objective is to standardise the approach rather than produce a “cut and paste” clause

10. Example
“Chargee” - any mortgagee or charge of the Registered Social Landlord…………
Any Chargee shall prior to seeking to dispose of the Affordable Housing Units pursuant to any default under the terms of its mortgage or charge shall give not less than [ ] months’ prior notice to the Council of its intention to dispose….
then the Chargee shall co-operate with such arrangements and use its best endeavours to secure such transfer
the Council must give full consideration to protecting the interest of the Chargee in respect of moneys outstanding under the charge or mortgage

11. Summary Standardised CoT and standardised mortgagee exclusion clause
Timeframe for standardised CoT
General circulation – pencil date - Federation Finance Conference March 2015.
Timeframe for standard approach to mortgagee exclusion clause!?
Sector approach agreed by Securitisation Working Group by Federation Finance Conference March 2015
Need your support!
Questions?