B&B to end GMAC-RFC deal in March

Bradford & Bingley has renegotiated the termination date of its loan sale agreement with specialist lender GMAC-RFC to March.

The beleaguered buy-to-let lender revealed at the beginning of June that it was looking to renegotiate the terms of its existing loan deal with GMAC-RFC and Kensington Mortgages.

In its interim results at the end of August B&B announced that it had extended its contract with Kensington by 25 months and the value increased by £132m.

In total it will purchase loans of a maximum aggregate value of £1.2bn from Kensington by April 2011.

The new deal with GMAC-RFC amends the contract it signed in December 2006 and will see B&B buy £500m of loans bought in Q4 2008 and between £225m and £250m in Q1 2009. After that the deal expires.

The original terms of the deal stipulated that B&B would buy a minimum £350m mortgage loan assets per quarter, with £1.75bn remaining to be bought by the end of 2009.

In a trading statement at the beginning of June 2008 B&B revealed that the arrears levels of loan books bought from GMAC-RFC were higher than those it had originated itself.

At the time B&B said it had already cut back on its purchases from GMAC-RFC to the minimum commitment under its contract and was looking to renegotiate.

A spokesman for GMAC-RFC says: “”We are pleased to have reached this agreement which provides GMAC-RFC with certainty in this market, both by providing a secure exit of the loans it has originated and in terms of the equivalent premium that would have been paid should the agreement have run the full term.

“This fits with our strategy going forward in the UK market.”

But sources close to GMAC-RFC say staff are now concerned about what the future will hold for them at the end of the March deadline.

The source says: “What we took from the announcement was that as of March 2009 we will just be servicing stuff on the books and there will be no more origination.”