Bradford & Bingley revealed last week that its mortgage accounts three months or more in arrears rose to 2.16 per cent from 1.63 per cent at the end of December 2007.
It said that arrears in organically originated loans, particularly buy to let, have proved substantially better than its acquired mortgages, singling out books of business recently bought from GMAC.
Independent mortgage consultant Kevin Duffy believes this could point to how the loans were serviced after they were bought. He says: “I would imagine GMAC feels a little disapp-ointed by this, especially as, from what I understand, its own arrears management performance and those of its other loan portfolio players has been better than B&B. It may well point to comparisons between each of the lenders’ back-office systems and processing capabilities, that is, it is not the toxicity of the loan underwritten, it is how it is supervised and vigilated that counts.”
John Charcol senior technical manager Ray Boulger says: “GMAC’s underwriting process was completely automated. This could raise questions of how robust it was.”
A B&B spokeswoman says: “We are working together with GMAC to monitor and improve origination and management of loan books as a whole to address the current issues.”
Mortgage analysis, p40