Northern Rock calls time on SPML backed sub-prime range

Northern Rock is withdrawing its Southern Pacific Mortgage Limited back near prime and sub-prime range as of close of business tonight.

NR began originating loans on behalf of Lehman Brothers owned UK mortgage brand SPML in April 2007, in return for fee income.

The arrangement worked on the basis that NR would attract applications via its existing distribution channels, then process them through to completion, while SPML would fund the mortgages.

Following completion, SPML and their partners were responsible for the servicing, overall administration and credit performance of the accounts.

Near-prime and sub-prime mortgages were never written to the company’s balance sheet, which remains for prime mortgages only.

All previously submitted applications currently in the pipeline will be unaffected, provided there are no subsequent, material changes to the original application details.

NR’s standard, prime range of residential fixed rate and tracker mortgages, buy-to-let mortgages and lifetime mortgages remain unchanged and there will be no major impact on company operations.