Fitch Ratings has piled more pressure on lender Rooftop by stating that it expects the firm’s second portfolio of securitised mortgages to continue drawing on its reserves.
The agency predicts that Farringdon 2 is likely to continue to seek help from its reserve fund over coming months. The news comes four weeks after it plugged a £216,000 gap with a reserve draw.
Market commentators had expected that to be the end of the troubles for Farringdon 2, with some saying it was likely to follow the upturn in fortunes of its earlier securitised book, Farringdon 1.
Rooftop’s most recent portfolio – Mansard 2006-1 – has performed far better than the two Farringdon loans although it includes far less heavy adverse business.
Rooftop last week said it is likely to increase its presence in the heavy adverse sector.
Fitch associate director Charlotte Eady says: “The profile of properties in possession and sold repossession cases reflects substantial exposure to borrowers with heavy adverse credit history. Nevertheless, Fitch expects to see higher loss severities on the lighter products given the higher permitted original loan to values on these loans.”
Rooftop special servicing division Jonathan Naylor says: “We see Farringdon 1 and 2 performing in a broadly similar way. We agree with Fitch that the market needs to ensure that the servicing is properly resourced to minimise those losses.”