8
NEWS
LENDERS
Two lenders offer golden goodbyes
to prompt borrowers to move on
● ROBERT THICKETT AND NATALIE MARTIN
Morgan Stanley and GMAC-RFC
were last week revealed to be off -
ering borrowers 15% to 20% golden
goodbyes in an attempt to get them
to remortgage elsewhere.
Sources have told Mortgage Strat -
egy that two large specialist lenders
– one of which is confirmed to be
Morgan Stanley, parent of defunct
UK len der of Advantage – are using
asset management firm Exact to
offer borrowers around 15% of the
value of their loans.
Defunct lender Edeus, which
turned into Exact after the former
company went into administration,
became the first firm in the country
to offer this type of deal in 2008,
dubbing the strategy the golden
goodbye.The loan books have a
combined value of £1bn.
Other lenders are thought to be
interested in the scheme that uses
Exact’s Mortgage Asset Reduction
Strategies.
On Exact’s website MARS is des -
cribed as a way of maximising val -
ue in a pool of mortgages using a
strategy that focusses on the pro -
vision of cash allowances to borr -
MPPI
ow ers which “enables
them to par ticipate in
the refinance market”.
As Mortgage Strategy
went to press nobody at
Exact was available for
comment.
One broker contacted
the magazine to say that
one of his clients has
been offered close to 25%
off of their existing bal -
ance, allowing them to
remortgage to a 75% LTV deal.
The broker says: “Because £21,000
was being taken off their balance
it’s understandable that the client
jumped at the chance to fix their
mortgage at less than 4% for the
next couple of years.”
But he was not so keen on the fact
that while the letter informing the
customer about the deal recomm -
ended that they get in touch with
their originating broker, it also
sugg ested that they could make
contact with a rival brokerage.
GMAC-RFC is also offering to re -
duce borrowers’ debts if they re -
mortgage elsewhere.
Jeff Knight, director of mar -
keting at GMAC-RFC, says: “At
the moment we are operating
a pilot scheme and have only
con tacted some 300 customers
so far.
“We are trying to get their
LTVs down to about 80%. We
are not targeting those with
LTVs of 125%.”
He adds: “This initiative will
help individuals who want to
remortgage while helping to
free up some of our funding.”
London & Country is being re -
commended to borrowers as one
option if they want to remortgage.
But David Hollingworth, mort -
gage expert at L&C, says GMAC-
RFC has made every effort to ensure
customers are aware that they will
be offered the same deals if they
go back to their original mortgage
advisers.
He says: “Coming to us is only
one of the options available to borr -
owers. It’s right that such an option
should be available in case the ori -
ginal advisers have sadly gone out
of business.”
MPPI firms are warned the FSA has its eye on them
● NATALIE MARTIN
Mortgage payment protection in -
surance providers have been
warned they risk incurring the
wrath of the Financial Services Au -
thority if they fail to treat their
customers fairly.
Speaking at the Association of
British Insurers’ annual conference
last week, Lord Adair Turner,
chairman of the FSA, told insurers
that potential mis-selling of the
product means the regulator will be
scrutinising the sector closely.
He says: “As the likelihood of
unemployment-related claims increases,
some insurers are responding
by increasing their pre -
miums or reducing cover for ex -
isting policyholders.
“While it is natural for the in -
dustry to respond to changes in
risk, this raises questions con cern -
ing unfair contract terms, disclo -
JEFF KNIGHT
THIS COULD FREE
UP OUR FUNDING
sure and our Treating Customers
Fairly initiative.
“How many consumers would
have taken up this cover if they had
known that at the very time they
needed the protection most the
price of it could significantly rise or
the amount of cover fall?”
Turner says this is an area where
in surers must expect the regulator
to intervene to address poor con -
sum er outcomes.
He warns that providers should
think strategically about the impact
of their actions on the MPPI sec -
tor’s reputation.
Assurant Intermediary has seen
a 166% increase in the number of
MPPI claims in the past year. While
unemployment claims accounted
for around half of its claims at the
beginning of 2008, they now account
for almost 90%.
Nigel Payne, managing director
of Assurant Intermediary, says that
due to unprecedented numbers of
claims, all providers of MPPI are
monitoring their products and pri -
cing to ensure that they are able to
meet their obligations.
He says: “If any providers have
not upheld TCF principles it would
be a cause for concern, but it would
be unfair to tar all MPPI providers
with the same brush.
“We have done our best to absorb
the pressure of rising claims in the
past year but have been forced to
increase our premiums.”
He adds: “But unlike some in our
industry we have not changed the
terms and conditions applicable
when making a claim against our
policy, nor have we withdrawn un -
employment-only cover from ex -
isting customers.”
www.mortgagestrategy.co.uk
IN BRIEF
�Property code body
suspends HIP firm
The Property Codes
Compliance Board has
suspended Home
Information Pack Code
subscriber Apollo
Surveys after it failed to
meet the board’s
requirements.
�Mortgage requests for
Turkish homes rocket
Overseas property
specialist Conti saw
mortgage applications
for Turkish properties
rise 65% in the first five
months of this year
compared with the last
five of 2008.
�Corrie star helps man
get debt written off
Coronation Street star
Michael Le Vell, who is
also a director at claims
management firm Ratio
Money, has helped a
Wetherby man to get
£15,000 of credit card
debt written off.
�Ex-Praxis directors to
launch claims firm
Former directors of
Birmingham-based
mortgage packager
Praxis, Nick and Richard
Stettner, are set to
launch claims
management company
Claims Master.
�CML publishes guidance
on buy-to-let arrears
The Council of Mortgage
Lenders is publishing
guidance to reinforce the
message that lenders
should act fairly when
dealing with buy-to-let
arrears.
MORTGAGE STRATEGY June 15, 2009
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