Robbie Sargent van Gilde Schuldhulpverlening over Actief, Preventief en Bijzonder Beheer.

1. Special Servicing
The UK vs. The Netherlands
Robbie Sargent, Senior Director
4 September 2013

2. Agenda
A Changing Environment
UK Best Practices
The Netherlands Playing Catch-Up
Key Rating Drivers
Conclusion

3. Agenda
A Changing Environment
UK Best Practices
The Netherlands Playing Catch-Up
Key Rating Drivers
Conclusion

4. A Changing Environment
The world has changed since 2008…..
• The UK and Netherlands mortgage markets have seen drastic changes
• Impacted on not only origination, but servicing practices
• More focus on what servicers are doing
• Investors
• Regulators
• The courts
• Rating agencies…..
www.fitchratings.com

5. A Changing Environment (cont.)
The UK and the Netherlands Faced Significant Challenges
Mix Adjusted House Prices Index Annual Change
UK change
(%)
20
NL change
15
10
5
0
-5
-10
2001
2002
2003
2004
2005
2006
2007
Source: Office of National Statistics and Centraal Bureau voor de statistiek
www.fitchratings.com
2008
2009
2010
2011
2012

6. A Changing Environment (cont.)
UK Arrears Peaked Mid-2009
3M+ Arrears
Leek Finance Number Seventeen PLC
Leek Finance Number Nineteen Plc
Leek Finance Number Twenty One PLC
Great Hall Mortgages No. 1 plc (Series 2006-1)
Great Hall Mortgages No. 1 plc (Series 2007-2)
Leek Finance Number Eighteen Plc
Leek Finance Number Twenty Plc
Leek Finance Number Twenty Two PLC
Great Hall Mortgages No. 1 plc (Series 2007-1)
(%)
20
15
10
5
0
Sep 06
Jan 08
May 09
Oct 10
Source: Fitch
www.fitchratings.com
Feb 12
Jul 13

7. A Changing Environment (cont.)
Dutch Arrears Still on An Upward Trend
Selection of Dutch Transactions – 3 Month Plus Arrears
(%)
1.4
Saecure 7 (6.1% NHG)
Orange Lion V (31% NHG)
Orange Lion IV (0% NHG)
Green Lion I (0% NHG)
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Jul 10
Jan 11
Aug 11
Mar 12
Source: Investor reports
www.fitchratings.com
Oct 12
May 13

8. Agenda
A Changing Environment
UK Best Practices
The Netherlands Playing Catch-Up
Key Rating Drivers
Conclusion

9. UK Best Practices
What did the UK do to arrest the increasing arrears?
• Development of servicing tools to enable appropriate action
• Default probability models
• Risk Modelling/Behavioural Scoring
• Income and expenditure analysis
• Right time to call analysis/modelling
• Dialler strategy
• Use of credit reference data
• Borrower/loan segmentation
• Self-cure scorecards
• Forbearance
www.fitchratings.com

10. Agenda
A Changing Environment
UK Best Practices
The Netherlands Playing Catch-Up
Key Rating Drivers
Conclusion

11. The Netherlands Playing Catch-Up?
• Difficulties in the NL arrived later than the UK, and still might get worse
• Comparison to the UK
• Default probability models 
• Risk Modelling/Behavioural Scoring 
• Income and expenditure analysis 
• Right time to call analysis/modelling 
• Dialler strategy 
• Use of credit reference data 
• Borrower/loan segmentation 
• Self-cure scorecards 
• Forbearance ??
www.fitchratings.com

12. Agenda
A Changing Environment
UK Best Practices
The Netherlands Playing Catch-Up
Key Rating Drivers
Conclusion

13. Key Rating Drivers
What has driven special servicer ratings in the UK?
Arrears
Performance
Innovative
Technology
Experienced
Management
Practical
Experience
Staff Training
Risk
Management
www.fitchratings.com

14. Key Rating Drivers (cont.)
What has driven special servicer ratings in the NL?
Arrears
Performance
Innovative
Technology
Experienced
Management
Practical
Experience
Staff Training
Risk
Management
www.fitchratings.com

15. Key Rating Drivers (cont.)
What has driven special servicer ratings in the NL?
• Fitch sees the Netherlands following closely in the footsteps of the UK
• The key reasons for upgrades in special servicer ratings are the same
• A slight timeline lag in economic activity driven these changes later
• But, UK continues to evolve, and the NL should take care to pay attention
www.fitchratings.com

16. Special Servicer Rating Transition
Special Servicer Rating
Company
Acenden
Country
UK
Sep 13
RSS2
Dec 09
RSS3+
Transition
2 notches
Charter Court
UK
RSS2-
n.a.
n.a.
Crown
UK
RSS3+
RSS3-
2 notches
HML
UK
RSS2
RSS3-
4 notches
KMC
UK
RSS2+
RSS2+
0
Oakwood
UK
RSS2+
RSS2-
2 notches
Paratus
UK
RSS2
n.a.
n.a.
CMIS
NL
RSS2-
n.a.
n.a.
Hypocasso
NL
RSS2-
n.a.
n.a.
Quion
NL
RSS2
RSS2-
1 notch
Source: Fitch
www.fitchratings.com

17. Agenda
A Changing Environment
UK Best Practices
The Netherlands Playing Catch-Up
Key Rating Drivers
Conclusion

18. Conclusion
• A new landscape for both the UK and the Netherlands demanding a
new approach
• Problems in the Netherlands came after the UK, hence a lag in servicer
innovation and development
• Competition drives innovation and improved performance
• Regulatory rules somewhat restricts servicing practices
• A recognition that things needed to change, and The Netherlands has
come a long way in the last 12 – 18 months
• Never stop looking to develop!
www.fitchratings.com

19. Questions?
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20. People in Pursuit of Answers
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21. Disclaimer
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Fitch Ratings cannot ensure that all such information will be accurate and complete. Further, ratings
are inherently forward-looking, embody assumptions and predictions that by their nature cannot be
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