Stephen Knight, founder of Checkmate Mortgages and ex-chairman of GMAC-RFC, stated in a speech to the Council of Mortgage Lenders’ annual conference, that portfolio sales and securitisation remained a ‘valid and safe’ form of raising capital.
Knight said: “The portfolio sale is sound. Whether it is a business wanting external assets, using new distribution channels, or that they just don’t want to compete and so buy in assets, it has created major opportunities. It has created a new liquidity for consumers and new choice. The Financial Services Authority (FSA) is concerned with portfolio sales, but I think it should get inside it more.
“The securitisation market has proven to be a valid and safe environment for investors. It will come back; it will just take time.”
Mark Jannaway, director at OC&C Strategy, commented: “I absolutely believe the principle of portfolio sales and securitisation is sound and beneficial. Fundamentally it provides capital to businesses that can serve a community that otherwise would not have access to these products. It is easy to talk about the loan in arrears but no one ever seems to mention the number of home owners who previously would have been unable to buy their own home.
“The only challenge is when the mechanisms do not operate efficiently at an extreme point when banks lose confidence in the underlying data and their risk models allowing emotion and risk adversity to dominate leading to a ‘lock down’.”
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