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Towd Point Mortgage Funding 2019 - Granite 4 Plc: 19 April 2019

A stand-alone transaction which will be the fourth deal in the Towd Granite series (Granite 1 and 2 have now redeemed, and Granite 3 is a consumer securitisation), where again the Issuer will make payments on the Notes and Certificates from payments of principal and revenue on a portfolio comprising owner-occupied mortgage loans originated by Landmark Mortgages Limited (formerly NRAM plc and Northern Rock plc) and secured over residential properties located in England, Wales and Scotland.

This deal is effectively a re-financing of the earlier Towd Point Mortgage Funding 2016 – Granite 1 plc and Towd Point Mortgage Funding 2016 – Granite 2 plc transactions.

The provisional portfolio (as at 31 December 2018) consists of 66,564 sub-accounts, where the average loan balance is £59,186 and the largest loan is for £1.779mln. Of these sub-accounts, some 4,588 are either in arrears, default or foreclosure. Mortgage Loan Purpose (by current balances): no data – 91.49%, equity release – 7.82%, and right to buy – 0.68%. Repayment type: interest only – 56.91%, repayment – 42.91%, P&P – 0.18%. Interest rate type: variable – 98.32%, fixed – 1.68%. Arrears: 60-89 Days in Arrears – 1.34%, 90+ Days in Arrears – 3.19%. Additional info: Bankruptcy/IVA – 6.70%. The WA indexed current LTV is 57.25% (original LTV was 84.00%) and the WA seasoning is 158 months. Regional concentration: South East – 21.16%, North West – 13.92%, Yorks & Humber – 9.63% and Scotland – 8.83%.

Significant investor: The Seller will acquire 100% of the Subordinated Rated Notes, the Class XB Certificates, the Class Z Notes and the NIM Notes. The Seller will, either directly or through a majority-owned affiliate, on the Closing Date, hold the economic exposure to the EU Retention Notes and the U.S. Required Risk Retention Interest. It is expected that the remaining Class A1 Notes will be acquired by two third party investors. 95% of the Subordinated Rated Notes will be sold by the Seller to and will be purchased by Morgan Stanley & Co. International plc and/or Merrill Lynch International and/or their affiliates.

EU Risk Retention: On the Closing Date the Seller, in its capacity as an originator for the EU Securitisation Regulation, will undertake that it will retain (either directly or through a wholly-owned subsidiary incorporated in The Netherlands) on an ongoing basis a material net economic interest of at least 5% in the securitisation as required by Article 6(1) of the EU Securitisation Regulation and in accordance with Article 6(3)(a) of the EU Securitisation Regulation. Such interest will be comprised of the retention of no less than 5% of the nominal value of each of the tranches sold or transferred to investors as required by Article 6(3)(a) of the EU Securitisation Regulation. Such retention requirement will be satisfied by the Seller holding the economic exposure to the EU Retention Notes.

US Risk Retention: The Seller and FirstKey Mortgage, LLC are required under Section 15G of the Exchange Act to ensure that one of such Co-Sponsors (directly or through a majority-owned affiliate of such Co-Sponsor) acquires and retains the U.S. Required Risk Retention Interest. The Co-Sponsors intend to satisfy the U.S. Credit Risk Retention Requirements on the Closing Date by designating the Seller as the sponsor that will acquire and retain, directly or through a wholly-owned subsidiary, the U.S. Required Risk Retention Interest in the form of an EVI.

Compare/contrast: Towd Point Mortgage Funding 2016 – Granite 1 plc (Redeemed), Barley Hill No.1 plc