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B&B hit by GMAC arrears

Bradford & Bingley says arrears in its recently acquired mortgages from GMAC-RFC have been higher than expected.

In a trading update for the first four months of this year, B&B, the UK’s biggest buy-to-let lender, says accounts three months or more in arrears have risen to 2.16 per cent from 1.63 per cent at the end of December 2007.

It says arrears in organically originated loans, particularly buy to let, have proved substantially better than acquired mortgages. The B&B statement: “Arrears in more recently acquired mortgages from GMAC have been higher than anticipated.

“We have already cut back our purchases from GMAC to the minimum commitment under our contract.”

The firm also has a contract with Kensington Mortgages to buy whole-loan books for an unknown period but only singles out GMAC business for criticism over arrears’ levels.

Self-cert represented £342m gross lending compared with £275m gross lending for standard and other mortgages and £172m for buy to let.

The number of acquired self-cert loans three months or more in arrears has risen from 2.99 per cent at the end of December last year to 4.3 per cent at the end of April.

Acquired buy-to-let loans in arrears of three months or more increased from 2.07 per cent to 3.52 per cent.

GMAC spokesman Jeff Knight says: “We are confident in the quality of the origination practices that we use to build portfolios for trading partners.

“All transactions are completed following thorough due diligence and we ensure our practices remain of high quality by collecting performance data from trading partners relating to past portfolios we have sold and the performance of loans on our book.”

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