HVB Group launched £108m UK non-conforming residential mortgage backed securities (DE)

HVB Group has now launched the second Residential Mortgage Transaction under its Bluestone Programme, Bluestone Securities plc – Series 2005-1, to the capital market. The securitised portfolio acquired from a third party has a total volume of £108 million (over €156m) and consists of non-conforming mortgage loans secured by properties in England and Wales. HVB Group placed the securitisation as sole bookrunner.

In April 2004, HVB arranged the Bluestone Programme to purchase from third parties portfolios of UK residential mortgage loans and to refinance the purchase through the issuance of mortgage backed securities. The Series 2005-1 portfolio has been acquired from a reputable originator, Platform Funding Limited, a subsidary of Britannia Building Society. The loans will be serviced by Western Mortgage Services Limited, a very experienced non-conforming mortgage servicer.

Non-conforming residential mortgage loans are a separate market segment in the UK. Specialized lenders provide clients who would not pass the scoring process of high street lenders with mortgage loans. Non-conforming clients may be self-employed with no regular monthly income or may have an adverse credit history.

The portfolio consists of first lien mortgages with an average Loan-to-Value ratio of 77.0%. The portfolio is well seasoned with a weighted average seasoning of 13 months and all the loans are secured by owner-occupied properties.

The portfolio will be sold to Bluestone, which will issue five classes of notes to refinance this purchase. All five classes of notes will benefit from a fully-funded reserve account at 0.60%. The new Bluestone transaction has been rated by S&P and Fitch (see table below).

The transaction was well-received by HVB´s investor base. Settlement date will be august, 3rd.

Source: HVB Group

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