Fitch Ratings has piled on more pressure on lender Rooftop by stating it expects its already-troubled 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 in the coming months. The news comes three 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 the earlier securitised book, Farringdon 1.
Rooftop’s most recent portfolio Mansard 2006-1 has performed far better than the two Farringdon loans, though it includes far less heavy adverse business.
Rooftop this week said it is likely to up its presence in the heavy adverse sector after having taken somewhat of a backseat over the past few months.
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 in properly resourced to minimise those losses.”