By Rachel Williams
The summer of 1999 was one of upheaval for the sub-prime market
SPML was forced to stop lending when Barclays put the brake on further funding lines, and just months later The Money Store was sold and rebranded as Platform. Now Ocwen’s management buyout has hit the headlines
Andrew Gibbons of Blue Water Home Loans said brokers were now turning to the most established lenders
Gibbons, chief executive of the packager, added: “Brokers are often attracted by the incentives offered by lenders but now they are having to look more carefully at the lender. They are looking for established lenders with a strong parent and good track record
It was these reasons that factored into Blue Water’s decision to heighten its relationship with RFC after SPML pulled out of the market
Paul Marks, chairman of Mortgages Plc, said: “Intermediaries are not worrying, but these recent events will become part of the decision process. In certain instances they may be concerned about the survival of the lender, and there may be a possible lack of confidence in US lenders
In the mid-1970s and throughout the 1980s a number of US lenders including Citibank, Mortgage Corporation and Chemical Bank made aggressive entries into the UK market, followed by equally aggressive exits
Marks said: “History could be repeating itself. Unless the individual US-backed businesses can show success within the time frame they have committed to they will always be vulnerable
Different market conditions meant US lenders were often under prepared for the competitiveness of the UK market
“The UK and US markets are different,” he said. “In the US, for example, there is no mature intermediary market and they are not used to the same level of competition and diversity of products
As a result, he added, brokers were becoming nervous of US lenders
“The impression we get from intermediaries is that they are increasingly concerned about who they deal with. They want to work with lenders that understand them and their customers
l Blue Water Home Loans is to enter the sub-prime mortgage market early in 2000. It will trade as The Mortgage Lender and will be funded by an as yet unrevealed source
