Though its UK mortgage servicer Capstone has not been shut down, if it were to be liquidated as part of Lehman’s bankruptcy proceedings, HML and Scarborough Mortgage Services are named the standby servicers for the Fitch rated assets.
This means that HML could take on the servicing of high maintenance portfolios.
Mike Hildred, head of marketing at HML, says: “We have had conversations with Capstone regarding its RMBS but for now it is business as usual.”
HML says that it is not ruling out taking on additional staff should Capstone RMBS be transferred. It says that it would consider utilizing existing Capstone staff from the High Wycombe servicing facility.
The Skipton-owned third party outsourcer would be responsible for servicing Eurosail, Preferred and Southern Pacific Securities retail mortgage backed securities, which amount to around £5bn.
Arrears and possessions in these portfolios have soared over the last quarter with the average arrears three months and over sitting at 25% and possessions at 4%.
This is double the average of UK non-conforming RMBS reviewed by Fitch in Q2 2008 which sits at 12% for arrears three months and over and 2% for possessions.
A spokesman from Lehman says:”We are complying with all our obligations under the contracts and no provision for transfers to standby servicers has been triggered.
“Capstone is not a party to the disposition of RMBS assets from Lehman Brothers International Europe. It is very much business as usual.”
SMS is set to takeover the servicing of certain Marble Arch RMBS. Arrears in these portfolios are lower but still above average.