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UKAR sells £2.7bn of ‘bad bank’ mortgages to JP Morgan

by: Emma Lunn
  • 15/10/2014
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UK Asset Resolution has sold £2.7bn worth of mortgages to JP Morgan-led consortium Commercial First.

The sale, affecting 27,000 mortgages, is the biggest loan disposal since Northern Rock and Bradford Bingley were bailed out by the Government in 2008. UKAR was advised in the sales process by Credit Suisse.

UKAR, the “bad bank”, was tasked with winding down £75bn of historic loans.

The portfolio comprises performing residential mortgages from the legacy books of B&B, Northern Rock (NRAM) and Mortgage Express (MX) and is secured on residential property assets in the UK.

The sale was based on the portfolio position as at end May 2014, from which point the buyers acquired the risks and rewards of ownership. The proceeds include a c.£55m premium over the book value at that point in time, which UKAR says represents good value for the taxpayer.

The full transfer of legal title and servicing of these accounts will be phased over the next 12 months and UKAR will continue to fully service the loans.

The sale will not affect the terms and conditions of the mortgages in this portfolio and the c.27,000 customers impacted will be contacted directly by B&B, NRAM or MX and the new lender at the point at which servicing responsibility transfers.

This action forms part of UKAR’s ongoing process to manage down the closed mortgage books of both B&B and NRAM whilst maximising value for the taxpayer.


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