The short answer is that much of the UK sub-prime market has either stopped lending or simply disappeared. Deutsche Bank’s DB Mortgages operation was one of the first to cease lending to new sub-prime customers, in August 2007. Investec-owned Kensington Mortgages followed suit in November 2007. Paragon, a leading buy-to-let lender – a market that partly overlaps with non-conforming lending – ceased lending to new customers in February. In mid-September, it rejected a £373 million ($687.7 million) takeover proposal from a private equity group and abandoned talks with other potential bidders.
London Scottish Bank stopped writing new second-charge mortgage lending in January and first-charge lending in June. It is – rather appropriately – now principally focused on debt collection. Morgan Stanley pulled the plug on its Advantage Home Loans operation in February this year and Bear Stearns-owned Rooftop Mortgages ceased operating in April after its owner...
