| 1 |
Funding /risk transfer / both |
Both. True sale of mortgages (out of banks balance sheets and into mortgage companys balance sheet.
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| 2 |
Eligible assets |
Qualifying Norwegian residential mortgages. Company policy currently focuses on amortising residential loans generally up to 75% LTV (within an 80% legal limit), with stricter limits for interest-only lending, plus programme credit, documentation, valuation and geographic criteria. The origination of the mortgages in the banks must be done using common risk models (PD & LGD) and common valuation principles.
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| 3 |
Brief description of structure for each |
A participating bank originates a mortgage and subsequently sells eligible loans by true sale under a Transfer and Servicing Agreement. SpareBank 1 Boligkreditt funds the purchase through covered bonds and owns the mortgages in its cover pool. Shareholder banks continue to service the customers.
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| 4 |
Fees / pricing structure |
All loans are floating rate, and transferred at par value. Mortgage margins (mortgage rate in the banks portfolio minus covered bond funding costs) minus operating costs to the company is on a monthly basis paid back to the banks. The company aim to keep 2% profit on the equity, which is distributed as dividends).
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| 5 |
Servicing |
The originating shareholder bank remains the customer-facing servicer under the Transfer and Servicing Agreement for any changes during the lifetime of the mortegages.
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| 6 |
Risk sharing (if appropriate) |
Sellers retain contractual representations, servicing duties and repurchase/substitution obligations for breaches of procedures/transfer agreement. The credit risk is carried by the company.
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| 7 |
Other Comments |
The bank that transfers the most mortgages, must transfer the most capital to the company, as the company is regulated as a bank when it comes to capital and liquidity. Shareholdings and capital contributions are adjusted periodically to reflect the mortgage volumes transferred.
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