Lack of New Lending May Increase Arrears

The U.K. nonconforming lending market got smaller last week when the news of two more lenders stepping out of the game hit the European market - Southern Pacific Mortgage Loans (SPML) and Preferred Mortgage Loans (PML), which are both units of Lehman Brothers.

In February, SPML and PML announced they intended to scale back origination in the U.K. and would focus instead on servicing their mortgage portfolios via Capstone (see cover story). However, both groups have now decided to stop new originations starting April 2.