Mortgages  

Tyrie wants auditors to look at Northern Rock mortgage sale

Tyrie wants auditors to look at Northern Rock mortgage sale

The Treasury select committee has asked the National Audit Office to look at the sale of former Northern Rock mortgages to a US private equity firm.

The committee’s chairman, Andrew Tyrie, has written to Sir Amyas Morse, the controller and auditor general, to ask his office to look at the deal.

Mr Tyrie has previously expressed concerns that short-term profitability has been prioritised over the long-term value of the assets in the sale to Cerberus Capital Management.

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He said: “Customers and UK taxpayers both need assurance that they will not be adversely affected as a direct result of this sale. The Treasury has yet to fully address these concerns.

“If Cerberus is as robust towards new customers who fall into arrears as they are reputed to be with their current ones, then Northern Rock customers could lose out from the government’s sale of the Granite portfolio to Cerberus.

“The National Audit Office are examining whether the taxpayer obtained value for money from the sale. That work is certainly needed. The government has provided little by way of assurance on this, so far.”

The 125,000 mortgages, which were originally owned by Northern Rock, were taken on by UK Asset Resolution when the Newcastle-based company was nationalised in 2008.

UKAR said it would be selling the portfolio for £280m more than its book value.

Economic secretary to the Treasury Harriett Baldwin said her department sought assurance that market conditions were right to support a sale, the sale followed a highly competitive process and UK Asset Resolution and UK Financial Investments both tested all bids against benchmark valuations.

She added that the mortgages will continue to be serviced by the same people in UKAR who service them today and there is no change in the terms and conditions of the mortgages being sold.