ALBA 2007 – 1 plc - Irish Stock Exchange

status, repayment ability, debt-to income ratio, rent coverage (in the case of non-owner occupiers), as
well as the value of the Property. There can be no assurance that the Lending Criteria will not be
varied or that Mortgage Loans originated under different criteria may not become part of the Mortgage
Pool (see "Mortgage Pool").
The Mortgage Pool will include Mortgage Loans to Borrowers who (a) may previously have been
subject to one or more County Court Judgments ("CCJs"), Individual Voluntary Arrangements
("IVAs") or Bankruptcy Orders ("BOs"); (b) are self-employed; and/or (c) are otherwise considered by
bank and building society lenders to be non-conforming borrowers ("Non-Conforming Borrowers")
and/or (d) are not owner occupiers. Mortgage Loans made to Non-Conforming Borrowers may
experience higher rates of delinquency, write-offs, enforcement and bankruptcy than have historically
been experienced by mortgage loans made to prime borrowers and therefore carry a higher degree of
risk. The Lending Criteria are more fully described in "Mortgage Pool – Lending Criteria".
Risk of Losses Associated with High LTV Mortgage Loans
Approximately 39.33 per cent. of the Mortgage Loans by value have a current loan to value ratio in
excess of 90 per cent. There can be no assurance that mortgage loans with higher loan to value ratios
will not experience higher rates of delinquency, write-offs, enforcement and bankruptcy than mortgage
loans with lower loan to value ratios.
Risk of Losses Associated with Interest Only Mortgage Loans
Approximately 72.16 per cent. of the Mortgage Loans by value constitute Interest Only Mortgage
Loans (see "Mortgage Pool – Characteristics of the Mortgage Loans"). Interest Only Mortgage Loans
are originated with a requirement that the Borrower pay scheduled interest payments only. There is no
scheduled amortisation of principal. Consequently, upon the maturity of an Interest Only Mortgage
Loan, the Borrower will be required to make a bullet payment that will represent the entirety of the
principal amount outstanding. The ability of such a Borrower to repay an Interest Only Mortgage Loan
at maturity frequently depends on such Borrower's ability to refinance the Property or to obtain funds
from another source such as pension policies, personal equity plans or endowment policies. Neither the
Originator nor the Seller has required that such policies be established with respect to any Interest Only
Mortgage Loans nor has the Seller required that the benefit of any such policies be assigned to it. The
only security that exists will therefore be the Mortgage covering the Property. The ability of a
Borrower to refinance the Property will be affected by a number of factors, including the value of the
Property, the Borrower's equity in the Property, the financial condition and payment history of the
Borrower, tax laws and general economic conditions at that time.
Although a low interest rate environment may facilitate the refinancing of an Interest Only Mortgage
Loan, the receipt and reinvestment by the holders of the Notes of the proceeds in such an environment
may produce a lower return than that previously received in respect of the related Mortgage Loan.
Conversely, a high interest rate environment may make it more difficult for the Borrower to accomplish
a refinancing and may result in delinquencies or defaults. Neither the Seller, the Issuer nor the Trustee
will be obligated to provide funds to refinance any Mortgage Loan, including Interest Only Mortgage
Loans.
Risk of Losses Associated with Non-Owner Occupied Properties
Approximately 19.35 per cent. of the Mortgage Loans by value are secured by non-owner occupied
Properties. These Properties are generally rented to tenants by the relevant Borrowers.