HM Treasury confirmed that UKAR invited the top 25 active lenders to participate in the sale, but did not receive a bid from any of them that covered the full portfolio of assets.
It revealed the details in response to questions from Mortgage Solutions, following the latest asset sale of 66,000 mortgages and unsecured loans from UKAR to asset manager Citi last week.
The £4.9bn deal came under fire for not being completed to an active lender which would potentially allow borrowers to move to new products offered by that lender.
Pressure had been built from campaign group UK Mortgage Prisoners which warned such a sale would create thousands more mortgage prisoners.
Mortgage brokers also agreed that the books should only be sold to active lenders.
No ERCs or financial barriers
Responding to questions about the sale, HM Treasury indicated that selling UKAR assets to active lenders did not guarantee that customers would be able to access new products.
All bidders participating in the sale were required to agree to non-negotiable customer protections before bids were assessed on price and other factors.
Protections put in place for borrowers affected by the Citi sale mean there are no financial barriers such as early repayment charges for customers seeking to remortgage with another provider.
However, the protections do not include a requirement for Citi to offer new products to borrowers and Treasury noted it was not feasible to contractually require purchasers to offer new products.
Treasury also appears to be putting responsibility on lenders to secure permissions from the Financial Conduct Authority (FCA) to be able to offer new mortgage products, rather than making it a requirement of the sale process.
The FCA has proposed rule changes which should improve the ability of many of UKAR’s current and former customers to access new mortgage deals, providing they are up to date with their payments and meet lenders’ risk appetites.
In an interview with Mortgage Solutions last week, the FCA said it could not discuss why it was not considering borrowers at inactive lenders who were in arrears as mortgage prisoners.
