Knight saw market crisis coming

Stephen Knight, executive chairman of Checkmate Mortgages, has revealed that fears of a serious market adjustment spurred his decision to give up his former position as chairman of GMAC-RFC in April 2007.

In an exclusive interview with Mortgage Strategy’s sister title Lending Strategy, he says that while he didn’t predict the credit crunch he did foresee that there would be a big supply side adjustment.

He adds that risk layering led to the downturn affecting the mortgage industry.

Knight says: “What we were doing, forced by competition, was to lend on high LTVs to clients with covenant issues. That’s risk layering and it was a mistake.”

He says Checkmate has been working with credit ratings firm Experian to write credit scores fit for its 2009 launch.