OREANDA-NEWS. Fitch Ratings has affirmed 12 tranches of ResLoc UK 2007-1. A full list of rating actions follows at the end of this rating action commentary.

The transaction comprises a combination of mortgage loans that were either originated by Advantage or purchased by Advantage from GMAC-RFC, Amber Homeloans Limited and Victoria Mortgage Funding. The loans in the portfolio are serviced by Homeloan Management Limited.

KEY RATING DRIVERS
Asset Performance
The transaction has shown sound asset performance over the last 12 months. As of end- December 2015, three-months-plus arrears (excluding loans in possession) stood at 5.4% of the current pool balance, which is well below Fitch's UK non-conforming three-month-plus index (9%). The cumulative balance of loans with properties taken into possession has increased by 41bp over the past year, reaching 9% of the original portfolio balance; below Fitch's UK non-conforming cumulative possessions index (10.5%).

This stable asset performance, in combination with sound levels of credit enhancement, has led Fitch to affirm the current ratings with Stable Outlooks.

Pro-rata Amortisation
The notes in ResLoc 2007-1 are currently amortising on a pro rata basis which is expected to continue until the notes reach 10% of their initial balance, barring any significant deterioration in performance.

Interest-only Concentration
Over 72% of the pool consists of interest only (IO) loans (where loans have an interest-only schedule, whether in full or in part, Fitch assumes the loan to be IO). Fitch has analysed the concentration of maturities to assess the effect of a period of limited lending availability coinciding with a significant proportion of expected bullet repayments. The IO loans maturing between 2030 and 2034 account for more than 20% of the portfolio balance.

To account for this risk a sensitivity analysis was conducted where a 50% foreclosure frequency was applied to the IO loans maturing in that period. The analysis showed that this higher stress did not have a rating impact. Nevertheless, Fitch will monitor this exposure as the transaction pays down.

Non-Amortising Reserves
A fully funded amortising reserve fund (1.25% of initial note balance) and liquidity facility (LF) (5.5% of initial note balance) are in place. Neither is able to amortise due to a breach in the performance trigger on aggregate principal losses (i.e. 3.2% versus a trigger limit of 1.8%).

The LF is only available to cover senior fees and interest shortfalls for the class A notes and is able do so without restriction. However, the LF will not be available to fund interest on the class M1 or M2 notes if the principal deficiency ledger on each is greater than 50% of the then outstanding principal on that tranche (and similarly for the class B1 and B2 notes).

RATING SENSITIVITIES
The transaction is backed by 100% floating-interest-rate loans. In the current low interest rate environment, borrowers are benefiting from low borrowing costs. An increase in interest rates and subsequent increase in arrears and losses beyond Fitch's stresses may trigger negative rating action on the notes, if not offset by the increase in credit enhancement.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.

DATA ADEQUACY
Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring.

Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years has been consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable.

Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.

SOURCES OF INFORMATION
The information below was used in the analysis.
- Loan-by-loan data provided by Mount Street Mortgage Servicing Limited as at 31 December 2015
- Transaction reporting provided by Mount Street Mortgage Servicing Limited as at 15 December 2015

MODELS
The models below were used in the analysis. Click on the link for a description of the model.

ResiEMEA:
https://www.fitchratings.com/rmbs/resiemea

EMEA RMBS Surveillance Model:
https://www.fitchratings.com/site/fitch-home/rmbs/emearsm

Fitch has affirmed the following ratings:

ResLoC UK 2007-1 plc
Class A3a notes (ISIN XS0300468385): affirmed at 'AAAsf'; Outlook Stable
Class A3b notes (ISIN XS0300470365): affirmed at 'AAAsf'; Outlook Stable
Class A3c notes (ISIN XS0300472817): affirmed at 'AAAsf'; Outlook Stable
Class M1a notes (ISIN XS0300473203): affirmed at 'AAAsf'; Outlook Stable
Class M1b notes (ISIN XS0300473542): affirmed at 'AAAsf'; Outlook Stable
Class B1a notes (ISIN XS0300474193): affirmed at 'AAsf'; off Rating Watch Positive; Outlook Stable
Class B1b notes (ISIN XS0300474607): affirmed at 'AAsf'; off Rating Watch Positive; Outlook Stable
Class C1a notes (ISIN XS0300474789): affirmed at 'A-sf'; off Rating Watch Positive; Outlook Stable
Class C1b notes (ISIN XS0300475083): affirmed at 'A-sf'; off Rating Watch Positive; Outlook Stable
Class D1a notes (ISIN XS0300475323): affirmed at 'BBsf'; off Rating Watch Positive; Outlook Stable
Class D1b notes (ISIN XS0300476057): affirmed at 'BBsf'; off Rating Watch Positive; Outlook Stable
Class E1b notes (ISIN XS0300477022): affirmed at 'Bsf'; off Rating Watch Positive; Outlook Stable