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Capital Markets

Rooftop's slimline documents help debut securitization

Bear Stearns's young UK subprime lender has entered the RMBS market using an innovative offering circular that should position it well for future deals.

Deal: Farringdon Mortgages No. 1 FRN due 2037
Size: £125 million
Originator: Rooftop Mortgages Ltd (RML)
Date closed: February 25 2005


Bear Stearns's entry into the highly competitive UK subprime mortgage market has produced its first securitization. The originator, Rooftop Mortgages, is only the second new entrant to UK subprime RMBS since 2002. The deal, Farringdon 1, features a new style of offering circular, designed by Bear Stearns and law firm Norton Rose.

In October 2003, Crown Mortgage Management launched Rooftop, a subprime lender funded by Bear Stearns. Crown is the only independent mortgage servicer in the UK to be rated by Standard & Poor's, Fitch, and Moody's.

Rooftop sources business through 18 mortgage packagers, to whom it supplies technology and training. "Rooftop was set up to meet the needs of a select group of entities, not just flood the packager market," says Richard Downer, senior managing director, mortgage and consumer assets, at Bear Stearns.

Packagers can pre-underwrite loans using software systems to which Rooftop also has real-time access. After valuation, the packager prepares a mortgage offer and sends the underwriting information to Rooftop. If the loan is accepted, the packager can print a mortgage offer.

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