Cityscape Corp. is taking on a British accent.
The Elmsford, N.Y., company, which specializes in loans to people with blemished credit records, has established a joint venture to originate such loans in parts of the United Kingdom.
The move highlights just how far lenders will go to find originations in today's highly competitive mortgage market.
"We expect very, very significant volume levels in the joint venture," said Cityscape president Robert Grosser.
Greenwich International Ltd., an affiliate of Greenwich (Conn.) Capital Markets Inc., has made a commitment to buy and securitize loans from the joint venture, known as City Mortgage Corp. A subsidiary of the new company, City Mortgage Servicing Corp., will service the venture's loans.
The joint venture was formed with three mortgage bankers in the United Kingdom. Mr. Grosser said the three have made loans to U.K. borrowers with damaged credit since 1987. He said they preferred to remain anonymous.
Mr. Grosser said the mortgage markets in England, Wales, and Scotland, where the venture will initially be concentrated, do not have a secondary market for credit-impaired loans. He said it was Cityscape's goal to create one.
But he said the U.K. market lacks the consistent underwriting practices and quality guidelines common here. He said Cityscape and Greenwich would work closely with their U.K. counterparts to ensure that originations are of sufficient quality.
"We certainly don't want to minimize that it is an English-speaking country," he said. "That makes for a quicker learning curve."
He said the company would consider setting up similar ventures in other countries.
Greenwich Capital has placed much confidence in Cityscape's expertise. William K. Komperda, a senior vice president, said Greenwich Capital was a "logical group to be involved" considering that the investment bank has done billions of dollars of business in the U.S. market for credit-impaired loans.
City Mortgage expects to initiate its first loan securitization through Greenwich Capital by yearend.
