The Mortgage Distributors Co-operative (MDC) is up for sale and hopes to complete a deal in the early part of next year according to chairman Mark Charlesworth.
Charlesworth said he hoped to have reached a shortlist of interested parties within the next two months. He said: “The operation would be attractive to someone that is a new player in the market like a US bank, or a current UK lender looking to expand its operation or secure distribution.”
Currently the MDC has 10 members – with the members of the Professional Mortgage Packagers Association expected to join soon. Members are doing a total of £11.5bn worth of mortgages annually. Charlesworth said: “The structure of the Co-op is that as long as the products offered are in line with the market, members will try to direct around 20% of their business through it.”
As such he said he expected between £2bn and £2.5bn to go through the MDC’s lending operation Rooftop Mortgages. Any purchaser will be valuing the option to take the forward lending onto its balance sheet, and make a down payment to secure the deal. Future payments will be annual and in arrears over a set period to be decided.
Members of the MDC will receive a pro rata share of the payments depending on the amount of business they are putting through the MDC. Charlesworth said: “We have created value by making a virtual lender and the intention was always to realise that value by making a sale.”
Tony Jones, managing director of MDC member Pink Home Loans, said: “We have gathered momentum now, following a bit of time to get going and sort out the logistics and systems.” Jones said the MDC would prove attractive to foreign investors as most had cited guaranteeing distribution as the major barrier to entry into the UK market. He felt this was no longer a problem.
Members of the MDC are The Mortgage Operation, Pink Home Loans, Mortgage 2000, ICMG, Genesis Home Loans, Solent Mortgage Services, Pavillion, Vantage, County Mortgages and BDS.