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Lenders must know their risk exposure

The recent Financial Services Authority consultation paper on forbearance and impairment provisions in relation to mortgages has attracted a vast amount of comment on how it could lead to greater clarification on the issue of forbearance for lenders.


But on a basic level we wonder if all lenders know exactly what percentage of their mortgage book has had a loan modification on it, whether they actually collated all the relevant information to make the correct decision in the first place and whether they have a regular review process?

Unfortunately we have found some lenders have insufficient guidelines or quality controls in place to enable staff to make accurate judgement calls.

As a result some of those lenders are struggling to put together accurate data to identify what their loan modification exposure is.

Some lenders are no longer burying their heads in the sand and are implementing strategies to review their data and rebuild their decision-making processes.

We have recently been carrying out reviews of mortgage portfolios focussing on arrears and types of loan modifications for both holders and potential sellers of mortgage portfolios.

It seems to us that more lenders have started paying closer attention to the details of this subject at the moment in the knowledge that it is critical for them to analyse and understand the extent of their exposure to risk.


MS Leader: The realities of near-prime

An increasing number of lenders have come to the market over the past year with products for borrowers with impaired credit.


“Danny and Peter clasped their balls but didn’t realise they were for everyone to play with.” TONY CASTLEPREMIER MORTGAGES & PROTECTION


Guarantee is irrelevant for pricing of 100% LTV deal, says Aldermore

Aldermore has defended the rate of the 100% LTV mortgage it launched last week. The lender’s three-year fix at 6.48% available up to 100% LTV requires the loan amount above 75% LTV to be secured on a parent or grandparent’s property. Many brokers claim the rate is too high because the guarantee on the second […]


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