In Westpac Banking Corporation v Mason [2011] NSWSC 1241 the defendants attempted to avoid foreclosure arguing that securitizing a loan is misleading, deceptive, and unconscionable conduct, and that the bank could not enforce the loan agreement, as it had:
“…already received a financial benefit for its “equitable interests” in the loan agreement and mortgage; that it has suffered no loss; that any loss suffered by the defendants’ default has been suffered not by the plaintiff but by some unidentified third party; and that enforcement against the defendants accordingly amounts to “double dipping”.
And that the loan:
“…having been securitised with other securities held by the third parties, it is necessary for the plaintiff to join those entities as parties to the proceedings.”
The court held that:
“In my view, the absence of any proper basis for pleading that contention is sufficient reason in itself to strike out the amended defence. In case that is wrong, I turn to consider the alleged legal consequences of securitisation of the loan.
The starting point is that the mortgage is registered. In accordance with the provisions of sections 41 and 42 of the Real Property Act 1900, the event of registration of the mortgage confers indefeasible title on the plaintiff charging the land with the amount due under the loan agreement. That proposition is so far beyond doubt as to require no authority to be cited in support of it.”
“The short answer to the defence is, accordingly, that whatever the position between the plaintiff and any third party so far as any equitable interest or equity is concerned, the legal interests of the parties to these proceedings are governed by the loan agreement and the registered mortgage. A debt is owed by the defendants to the plaintiff and the land stands charged with that debt. Default being admitted by the defendants in repayment of the sum secured by the mortgage, it follows inexorably that the plaintiff is entitled to an order for possession, there being no other defence raised to that entitlement.”