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Lender profile Guy Anker finds GMAC-RFC is optimistic after the sell-off of a majority stake in its giant parent General Motors

GMAC-RFC in the UK is set for a big change this year after its parent company General Motors sold off 51 per cent of GMAC Financial Services in April.

It is confident as it waits to discover what impact the sale to a consortium led by private invest-ment firm Cerberus Capital, Citigroup and Japanese bank Aozora for 8bn will have on its mortgage business.

GMAC head of marketing services Jeff Knight says: “This is very much good news for us in the UK. GMAC will have to sit down with the consortium but that will not happen for a long time. Our strategy is the same and it is business as usual from the mortgage intermediary point of view. The sale gives outsiders a bit more confidence.”

Knight says the market will see some change in GMAC in the near future. He claims it is well ahead of competitors on technology and has more innovations up its sleeve.

He says: “We are always working on different things as some projects come to market and some do not, so we do have things going on in the background but the main thing is that we are always there to help intermediaries.

“We are not doing wholesale changes but it is a constant innovation process. Some firms with big changes have neglected the market but we do not stand still and think to ourselves, isn’t our system great? We are always thinking about what we are doing, otherwise we would be overtaken by the competition.

“A lot of people have tried to copy what we have done. Platform, for example, used a lot of the plus points that they saw in our range when developing their new technology.”

The main change brokers would have seen recently from GMAC is the cascade facility it introduced last September. It developed this system after feedback from brokers.

Knight says: “If someone has some small adverse credit, then some lenders might reject them but we can offer a near-prime product which is triggered by our system.

“We were one of the first people to take the online route and we are looking at ways to enhance our systems.”

He claims that GMAC has doubled the business with the same number of staff due to technology but insists that there must still be a place for manual transactions for more complex deals because sometimes you need to “twist people’s arms and you cannot twist the arms of a computer”.

He believes that more lenders will eventually go down affordability routes which could see the end for income multiples.

“We get more and more lenders going down affordability routes so income multiples could disappear. Some lenders have gone very high on multiples and I think that if people can afford high income multiples it is OK but it is about people’s ability to repay their loan. With greater technology I cannot see why we cannot see this in,” says Knight.

GMAC announced last month that its lending was up by 9 per cent in 2005 to 6.93bn and it made a profit of 153.2m, is also firmly in the spotlight as a major player in the booming sub-prime market.

There has been much talk over recent weeks of a sub-prime renaissance, particularly after Pink Home Loans revealed it has doubled business on the back of its adverse campaign to root out dodgy practices in the market.

GMAC is a major player in that arena and says it is aggressively targeting more business, much of which it will then sell on as a portfolio, which is a model that it hopes will help grow its business. Earlier this month, it secured a portfolio deal worth 729m with Bradford & Bingley.

Knight says: “We set out plans for the year and how much will be securitised or sold on. The more business we get in at the front end, the more we sell on. There are some possible deals going on but not all deals go through.

“The non-conforming market had some bad press a couple of years ago but it has settled down. New lenders might be coming in and it is an integral part of the market. I think there is much greater understanding of the market and the winner will be the consumer.”

Another area of debate has been the packager market with a number of high-profile figures such as former HBOS head of specialist lending Michael Bolton claiming the packager market has never been in a worse state. That outburst came after TMB managing director Nigel Payne claimed that the sector had never been healthier.

Knight confirms that GMAC has no plans to lessen its reliance on packagers and says they remain an integral part of its strategy.

He says: “We are the only lender that has distinct products for intermediaries and packagers as there are different distribution channels and we want to be part of all them. Packagers remain an important distribution channel for us.”

Knight says GMAC will continue to bring new products to the market and ends with a rallying call to his peers: “I would like to see more innovation in the industry on products. We introduced buy-to-let changes and 25-year mortgages a few years ago and you need innovation like that.”


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