Specialist UK mortgage lender Bradford & Bingley has entered into a further agreement with GMAC-RFC, the US financial services group owned by General Motors, to acquire up to GBP12 billion worth of mortgage portfolios over the next three years.
The agreement, which will see Bradley & Bingley acquire up to GBP4 billion of GMAC-RFC’s mortgage portfolios in each of the next three years, follows the purchase of a number of similar loan portfolios from GMAC totaling GBP6.5 billion since September 2002.
The acquisition will be made in four tranches per annum. The minimum consideration for each tranche will be GBP350 million up to a combined maximum total of GBP4 billion per annum. The assets are to be funded from the group’s existing resources.
The deal is expected to bring in an underlying profit before tax that is in line with the current market forecast.
The credit controls of GMAC will be reviewed, as well as the implementation of further tests by Bradley & Bingley on the loan books using its own credit scoring process to confirm that they meet the group’s credit standards.