Kensington's support for borrowers hikes 2010 six-month arrears book
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Increased forbearance measures resulted in almost 23% of Ken-sington Mortgages’ portfolio being 180 days or more in arrears in 2010, up from 16% in 2009 and 9% in 2008.
As of November 2010 almost 23% of its book was in arrears of six months or more, compared with the industry average of just 1.24%. The lender says its increased forbear-ance measures in 2010 caused the rise.
The volume of loans in reposs-ession steadily declined over the same period from 5% reported in 2008 to 2% at the end of 2010.
A Kensington spokesman says: “The actual number of customers in arrears has fallen over the past 18 months, even through a difficult economic environment.
However, as the size of our book has diminished the proportion of customers in arrears has increased. But this is not representative of the true number.”
In April 2010 Kensington was fined £1.2m by the Financial Ser-vices Authority and told to pay £1.1m to customers in arrears who it treated unfairly.
One of the failings the FSA found was that the firm focussed on the profitability of the business, rather than on treating customers fairly.
Meanwhile, Fitch Ratings rev-ealed last week that it has affirmed Kensington’s UK Residential Spe-cial Servicer rating at RSS2+. It says the lender has improved its systems and has a robust risk and manage-ment process in place, despite its increasing number of arrears.
The ratings agency says Kensing-ton continues to use arrears strategies and loss mitigation tactics consistent within the market and adheres to regulatory standards surrounding Treating Customers Fairly and the pre-action protocol.
In reference to the percentage of its mortgage book in arrears of 180 days or more, Fitch says: “This fig-ure, influenced by market and regu-latory forces, is indicative of the longer timeframes from default to possession observed among other UK rated servicers across the market.”
As of November 2010, Kensington was servicing 14 UK residential mortgage-backed securities with an outstanding balance of £2.4bn inclu-ding 27,699 loans, down from £3.08bn and 35,023 loans in 2008.
The majority of Kensington’s portfolio is non-conforming with 75% classified as light adverse and 15% unlimited adverse.
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