Vertex placed on Ratings Watch Negative

The agency believed the fact that it had lost close to 40 per cent of its business when London Mortgage Company (LMC) and Victoria Mortgages exited the market meant there were serious questions about future volumes.

It believed that Vertex would struggle to add to its ‘limited number of clients’ due to the uncertainty in the lending market and this pointed to worries over its long-term viability.

Fitch Ratings said: “While Victoria’s and LMC’s exit from the market have no immediate effect on Vertex’s servicer rating, Vertex’s long-term viability is contingent on a steady flow of new originations from its remaining clients, as well as the acquisition of new servicing contracts. In the current market climate, achieving this objective is going to be a significant challenge, at least in the short to medium term.”

However, one unnamed source believed that the issues ran much deeper and there were serious question marks over Vertex’s future.

“Vertex’s problems are much worse than Fitch admits. The biggest problem is that Omega, its administration system, is very out-of-date. Also, one of its new clients, db mortgages, is apparently unhappy as it hasn’t been given what it was supposed to be and is now looking at the contract. Ultimately, most of its clients are adverse lenders and these are the ones which are rocking at the minute.”

However, Rob Lemon, director of risk and compliance at Vertex, dismissed any fears. “We’ve had various conversations with Fitch. It has a duty to report on the companies it looks at, but we believe the conclusion it has come to on this occasion is wrong and not a fair reflection. In fact, only 3 per cent of our business is Victoria and the 14 per cent quoted by Fitch is the total loan originated including ones which have already been moved on.”

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