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Countrywide and LSL scale back claims pot

Countrywide and LSL Property Services have decreased the amount they have set aside to deal with claims from mortgage lenders over alleged inaccurate valuations.

The companies both released their annual results for 2011 last week, showing that the combined amount they have set aside has fallen from £22.8m to £18.9m.

Countrywide has lowered its provision from £11.9m in 2010 to £9.3m in 2011, while LSL has downgraded from £10.9m to £9.6m.

Lenders make claims on repossessions if they believe the original valuation was wrong and have subsequently lost money from a lower priced sale.

Richard Sexton, business development director at e.surv, part of LSL, says the number of claims being made has fallen.

He says: “We have taken a prudent approach and are confident we are over the worst of the claims. We settled where appropriate and believe claims will be lower in 2012. A lot came from sub-prime lenders and as that market gets smaller so does the number of claims.”

A spokesman for Countrywide says: “The industry has seen a rise in professional indemnity claims and we make provisions in our accounts which reflect our prudent approach and market conditions.”

Overall, Countrywide Group’s earnings before interest, taxes, depreciation and amortisation before exceptional items was £56.4m in 2011, compared with £51.4m in 2010, with revenue of £509.1m, up from £477.9m in 2010.

Financial services profits rose to £9.4m from £5.7m in 2010.

The firm attributes this increase in profits to the rollout of mortgage administration fees across the business and its acquisition of Mortgage Intelligence group in April 2011.

Meanwhile, LSL – parent of Pink Home Loans and First Complete – reported a pre-tax profit of £17.6m for 2011, compared to £36m in 2010.
Group revenue increased by 6% to £218.4m, from £206.6m in 2010, while underlying operating profit was £31.1m, compared with £31.9m in 2010.

Income in its financial services division income rose 49% in 2011 to £27.6m, against £18.6m in 2010.

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