SPML and Capstone Mortagges

walmsley7274_2

Just have received this news from Google Alert?

Can anyone advise me what this means? My mortgage is with SPML, although we haven't missed any payments, our circumstances dictate that we wouldn't be able to re-mortgage?

HELP

"Lehman Brothers UK mortgage book in fire sale

Lee Jones - 06-Jan-2009
The Lehman Brothers UK sub prime mortgage book is up for sale after it reportedly failed to deleverage the books of both SPML and Preferred Mortgages.

PricewaterhouseCooper, Lehman Brothers administrators, has confirmed that second round bids for the portfolios have begun, with a bid date at the end of the month. The UK books have been packaged up with other mortgage assets from Ireland and Portugal. The sale also includes Capstone Mortgages, Lehman’s administrator that has 450 staff.


The administrator says the bidders are a mix of private equity investors and more established names in the mortgage market. It says the sale, which will include a second round of several other European mortgage books and the US mortgage adminstrator, will total around Euro 2.5bn.

PWC partner Graham Martin says: “We hope to sell the book and the servicing platforms together, as there is a synergy between them. As for bidders, there has been interest from private equity firms new to the sector, as well as players already in the market.”

Reports suggest that the sale could see the assets being sold for less than 50p in the £1. Former Edeus managing director Michael Bolton says brokers were previously written to last year with an offer to remortgage off the books for 70p in the £1.

Bolton says: “Obviously they couldn’t remortgage the borrowers last year, so now they are desperate to sell the books. The administrators will be lucky to get 50p in the £1 now, with house prices falling as they are.”
Martin could not confirm that the UK books had been previously touted, but did admit that some trading of non-performing assets had taken place.

http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=178710&d=pnd2&h=pndh2&f=pndf2

spellinn

To you - it means nothing. The "big pot of money" someone paid Capsone/Lehman for your mortgage is up for grabs "at a discount" to other financial institutions.

You may find that if Capstone is sold, you're mortgage will transfer to a new owner, but they will have to honour your existing mortgage deal until it finishes.

Once that happens, you're in the same boat as everyone else who is looking to remortgage.

Cheers

Neil

nothingleft

I'm with Spml, fixed till March 09. What exactly happens then ?

Wutang_2

nothingleft wrote: »

I'm with Spml, fixed till March 09. What exactly happens then ?

You have to move out

nothingleft

Gee, thanks for the help !

beaujolais-nouveau

nothingleft wrote: »

I'm with Spml, fixed till March 09. What exactly happens then ?

In your place, I would be looking NOW to move to another lender. (My fixed rate ends in August.)

luckyfool

Don't automatically think that you have to/should move lenders.

1) It could be impossible or very expensive depending on your equity position and credit status now

2) The reversionary margins on alot of Preferred and SPML mortgages are actually pretty good in the current market and may beat anything you can get from another lender. You will have signed up to a contract for the 25 years lets say (not just the initial fixed period), and you may well be reverting to a mortgage at around 2% above the lenders LIBOR rate (reset every 3 months normally and based on the 3 month sterling libor). The current Libor for SPML/Preferred I believe is 3.91% (reset at beginning of December), but the actual current 3 month libor rate is approaching 2% so when it next resets at the end of February it is likely to be at a much lower rate (around 2% as a guess). Depending on what your margins are above this libor you could have a contract with SPML that is competitive with what high street lenders are offering (e.g. 2% above their current libor might be 5.91%, but when it resets again it might be 4%).

It is monumentally poor advice to say that you should just panic and remortgage to whoever will take you now(potentially onto 8-10% rates with what few specialist lenders that are still offering mortgages), when you can ensure that any new owner of the SPML deal you have honours their contract.

Of course this all depends on your specific circumstances, and the reversionary rate on your deal (i.e. it could be 4% above libor in which case it might be less attractive!). You need some specialist advice from a decent broker. I would pull out your mortgage paperwork and give someone a call to chat through it with you.

luckyfool

Wutang wrote: »

You have to move out

Not a particularly helpful post.

At the end of your fixed rate it will move on to your contractual variable rate. Dig out your paperwork and find out what that will be.

SteveStone

Preferred Mortgages current Libor rate is 3.91%, which is due to be changed on 1st March.

luckyfool

SteveStone wrote: »

Preferred Mortgages current Libor rate is 3.91%, which is due to be changed on 1st March.

http://www.capstonemortgageservices.co.uk/capstone/sitedocs/libor.aspx

Libor rate for Preferred/SPML can be found at above address. Not sure where I was getting the 4.05% earlier, I know Beacon reset at 4.05%, and I think I saw someone else post that Preferred was 4.05%, but clearly thats not correct!

SteveStone

Does a lender have a limit as to how low this rate would go? My example is that if the base rate dropped again over the next few months and the libor rate followed to say 1% would this be the figure used or do these companies have a minimum rate as such?