Lending services provider Edeus has developed an innovative method of raising liquidity, offering borrowers the chance to redeem their mortgages at an eight per cent discount.
With funding remaining expensive and difficult to obtain on wholesale markets, Edeus is presenting 400 borrowers with the chance to terminate their deals with the company.
While acknowledging this will see the company make a loss on each reclaimed deal, Edeus seeks to remove the loans from its books allowing it to continue lending.
Edeus, which was established at the height of the subprime hubris in 2006, has been unable to sell the loan book following the closure of the securitisation markets, and is thus seeking to deal with customers directly.
It is thought around 20 per cent of those offered the deal have issued a positive response.
While the company is willing to disregard early redemption and exit fees, borrowers will still be forced to remortgage elsewhere and may face financial costs from setting up a new mortgage.
The company is not seeking to exit the market altogether, however, and is presently operating as a mortgage intermediary for other lenders.