Victoria Mortgages Goes Under

Mon, 29 Oct 2007

Loan specialists Victoria Mortgages has been forced into administration .

The company, which specialised in loans to sub-prime borrowers with poor credit histories, became Britain's first failed sub-prime lender earlier this year after it was forced to call in administrators.

The Sunday Telegraph reported that finance firm KPMG has now sold the remnants of the lenders' £600m loan book to three investment banks – UBS, Morgan Stanley and to Dresdner Kleinwort's sub-prime mortgage operator, Livingstone.

KPMG, which was called back in September, completed the sale of a final £300m tranche to the banks at a significant discount earlier this month, but the firm was unable to find a buyer for the Victoria business and has now dissolved the company – forcing 50 members of staff to be made redundant.

The sub-prime loans crisis in the US, compounded by the collapse of the UK's commercial paper market – which previously provided a facility for short-term borrowing – left the mortgage lender without any way to raise money .

Victoria Mortgages was founded back in 2005 by Californian private equity firm Venturion Capital, which specialises in real estate deals. Unfortunately for the company, it has been deeply affected by the recent credit crunch as it relied heavily on borrowing in the financial markets to fund its mortgages .

A report by credit ratings agency Standard and Poor's last week said borrowers with a bad credit rating face having to pay up to 60 per cent more per month once their fixed-rate loans finish within months.
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