Kensington and GMAC-RFC are improving their arrears servicing although their 90-day arrears rates are still above average compared with other sub-prime lenders, says Moody’s.
Kensington was fined £1.23m in April for unfair treatment of borrowers in arrears. This followed a £2.8m fine that was dished out to GMAC-RFC last October for hitting borrowers in arrears with charges that the regulator deemed excessive and unfair.
Both Kensington and GMAC-RFC are responsible for overseeing the day-to-day operations of Homeloan Management Limited which acts as their loan administrator.
Moody’s says Kensington has invested in its servicing operations to strengthen its infrastructure and controls.
As of February 2010, the lender’s 90-day-plus delinquency rate as a percentage of the current balance was 31.15%, 32.69% and 29.27% for its three residential mortgage-backed securities books.
This is 62%, 70% and 52% higher than the UK non-conforming index of 19.22%.
Cumulative losses as a per-centage of the original pool balance were 1.86%, 3.31% and 2.95%, which is 22%, 118% and 94% higher than the UK non-conforming index of 1.52%.
This compares with GMAC-RFC whose 90-day-plus delinquency rate as a percentage of the current balance was 22.61% – which is 18% higher than the UK non-conforming index.
The GMAC cumulative losses as a percentage of the original pool balance were 0.87%, which is 43% lower than the UK non-conforming index.
GMAC Financial Services sold its UK financial arm GMAC-RFC to asset manager Fortress Investment Group in April and Moody’s says it will be keeping a close eye on its new owner.
But its report says: “GMAC has significantly enhanced its control and governance framework, including its oversight of the loan’s administration since its prior review in 2008 and considers that it currently has one of the most advanced frameworks of its peers.”