Wednesday, July 23, 2008

Arrear rates 2.5x higher on US subprime than British buy-to-let

Bradford & Bingley, the beleaguered British buy-to-let mortgage lender( British version of subprime), has successfully raised about $5 billion in its first securitization of the year. B&B has bought parts of GMAC's U.S. mortgage book last year and is now faced with loan losses from its own book and that of GMAC's. This new securitization is good news after a credit rating downgrade earlier this month to just two notches above junk.

In an interesting remark The Daily Telegraph cites arrear rates for both the U.S. GMAC book and B&B's origianted loans. Based on the assumption that GMAC's mortgage book is purely U.S. domestic (I can not confirm this at this point!) it appears that arrear rates are 2.5 times more frequent than B&B's originated loans.

The arrears rates on the GMAC book, from which it is obliged to buy £350m of mortgages every three months until 2009, are running at 5pc, against 1.9pc of the loans B&B originated itself.

source: Bradford & Bingley's £2.5bn deal proves ability to access funding
By Philip Aldrick, The Daily Telegraph

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