Mosaic lifts lid on packager plight

Mosaic Mortgage Club says its search for a packager for its sub-prime business has revealed that many firms are suffering huge losses and a depletion in capital reserves.

It says it has been inundated with applications from packagers looking to be appointed to its panel.

But when it made enquiries into the financial standing of these firms it found that many packagers have seen their capital reserves reduced.

Mosaic warns brokers to make checks to ensure that packagers are in a sound financial state before referring business to them.

Antony Smith, chairman of Mosaic, says: “We were pretty shocked by the disparity between the fortunes of the packagers that are clearly successful in today’s competitive environment and those that appear to have suffered a massive downturn.

“On the evidence I have seen, I would not be surprised to see consolidation within this sector in the near future.

He adds: “It’s not just smaller players that are suffering. Some big firms’ profits have also hit the bottom line.”

Smith says that Mosaic has narrowed its search for a packager down to three prominent contenders and the decision will be announced at the end of the month.

John Rice, managing director of the Regulatory Alliance of Mortgage Packagers, says: “Many smaller packagers are finding life tough at the moment and I would agree that we are likely to see more consolidation.”

And Jeff Knight, director of marketing at GMAC-RFC, says: “There are too many players in the market and consolidation is inevitable.”