Tuesday, February 19, 2008
GRANITE – this could cause a bit of a headache!
"At Northern Rock's heart is Granite, a £45bn securtisation vehicle though which mortgages are parcelled up and sold to investors. Under "substitution clauses" in Granite, investors can call in their loans if maturing mortgages are not replaced with new ones. Should the clauses be triggered, investors could demand their funding back - potentially leaving the Government with an immediate £45bn bill."