EXHIBIT 99.3
[PricewaterhouseCoopers LLP letterhead]
Report of Independent Accountants
We have examined the Administrator's Annual Certificate of Compliance (Exhibit
99.1 to this annual report on Form 20-F), which asserts that Northern Rock plc
("the Administrator") has fulfilled its obligations, in its capacity as
Administrator, in respect of the minimum servicing requirements for the
mortgage receivables arising on designated accounts as set forth in the
clauses of the Sixth Amended and Restated Administration Agreement between
Northern Rock plc, Granite Finance Funding Limited, Granite Finance Trustees
Limited and The Bank of New York dated January 19, 2005 (the "Administration
Agreement") specified in paragraph 3 below during the year ended December 31,
2004. Management is responsible for the Administrator's compliance with those
requirements. Our responsibility is to express an opinion on the
Administrator's fulfilment of obligations under the Administration Agreement
based on our examination.
Our examination was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants and,
accordingly, included examining, on a test basis, evidence supporting
management's assertion about the company's compliance with those requirements
and performing such other procedures as we considered necessary in the
circumstances. We believe that our examination provides a reasonable basis for
our opinion. Our examination does not provide a legal determination on the
Administrator's compliance with specified servicing requirements.
We examined the Administrator's compliance with the Administration Agreement
clauses 5.3, 5.1, 17.1 (d) and (e), 5.2, 14.1, 14.2, 14.3 and 14.4, 4.1, 4.2
and 4.4, 12.3 and 12.1(a) and the Cash Management Agreement clauses 4.1, 4.2
4.3 and 4.4, using definitions set forth in the Master Definitions Schedule
signed for the purposes of identification by Brown & Wood and Clifford Chance
Limited Liability Partnership on March 26, 2001 (as amended).
In our opinion, management's assertion that the Administrator complied with
the aforementioned requirements during the year ended December 31, 2004 is
fairly stated, in all material respects.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
June 7, 2005
APPENDIX 1A
Servicing Standards Contained in Administration Agreement
Capitalised terms used and not otherwise defined in the following list of
Servicing Standards shall have the meanings assigned to them in the Fifth
Amended and Restated Administration Agreement and the Amended and Restated
Master Definitions Schedule.
Servicing Undertakings
The Administrator undertakes that at all times during which it acts as
Administrator under the Administration Agreement it will:
1. (Maintain records) keep and maintain records in relation to the Mortgage
Portfolio on a Mortgage Loan by Mortgage Loan basis for the purposes of
identifying amounts paid by each borrower, any amount due from a borrower
and the balance from time to time outstanding on a Borrower's account
(5.3)
2. (Collections) using reasonable endeavours credit all monthly payments
made by a Borrower to the relevant Collection Account within three (3)
London Business Days of receipt (5.1)
3. (Qualifications and compliance of laws) maintain all licences, approvals,
authorisations and consents necessary in connection with the
Administrator's performance of its obligations under the Administration
Agreement and not knowingly to fail to comply with any legal requirements
in the performance of those obligations. (17.1(d) and (e)).
4. (Enforcement) in relation to any default by a Borrower under a Mortgage
Loan or a Mortgage, enforce the terms of such Mortgage Loan or Mortgage
in accordance with the Enforcement Procedures and as otherwise provided
in the Administration Agreement (5.2).
5. (Insurance) (a) administer the arrangements for insurance in which the
Mortgages Trustee or the Seller has an interest (14.1); (b) not knowingly
take or omit to take any action that could result in avoidance,
termination or invalidity of any Insurance Policy in relation to any
Mortgage Loans and Mortgages or reduce the amount payable on any claim
made on behalf of the Mortgage Trustees under any Insurance Policy
(14.2); (c) prepare and submit any claim under the Insurance Policies in
accordance with their terms (14.3); and (d) use reasonable endeavours to
credit all proceeds received under any Insurance Policy to the relevant
Collection Account within three (3) London Business Days of such receipt
(14.4)
6. (Determination of interest rates) (a) determine the Standard Variable
Rate chargeable to Borrowers from time to time and the Existing
Borrowers' Re-Fix Rate in accordance with sections 4.1 and 4.4 of the
Administration Agreement; and (b) take all steps necessary pursuant to
the relevant Mortgage Conditions or applicable law to bring such change
in the Standard Variable Rate to the attention of the relevant borrowers
and notify details of such change to the Mortgages Trustee, the Security
Trustee and the Beneficiaries (4.2)
7. (Provision of information) provide such information from its records in
relation to the Mortgage Loans to the Mortgages Trustee, Funding or the
Security Trustee at any time upon reasonable notice, subject to the
conditions set forth in the Administration Agreement (5.3)
8. (Access to books and records) permit the Mortgages Trustee, Funding (and
their auditors) and the Security Trustee and any other person nominated
by the beneficiaries (to whom the Administrator has no reasonable
objection) upon reasonable notice during normal office hours to have
access to all books of record and account (including Title Deeds and
Mortgage Loan Files) relating to the administration of the Mortgage Loans
and the Related Security, subject to applicable law and the conditions
set forth in the Administration Agreement (12.3)
9. (Custody of records) keep the Mortgage Loan Files relating to the
Mortgage Portfolio in safe custody and shall take appropriate technical
and organisational measures against the unauthorised or unlawful
processing of personal data and against accidental loss or destruction
of, or damage to, personal data. The Administrator shall maintain in an
adequate form such records as are necessary to enforce each Mortgage
comprised in the Mortgage Portfolio and, where relevant, any other
Related Security. The Administrator shall keep the Mortgage Loan Files in
relation to the Mortgage Portfolio in such a way that they can be
distinguished from information held by the Administrator for its own
behalf as mortgagee or for other third persons (12.1(a)).
10. (Ledgers)
(a) establish and maintain memorandum ledgers in the books of the
Mortgages Trustee to enable the ongoing identification and
segregation of principal, revenue, and overpayments;
(b) on a monthly basis ensure that the memorandum ledgers are reconciled
to the Trustee bank accounts;
(c) establish and maintain memorandum ledgers in the books of the
Funding to enable the ongoing identification and segregation of
principal, revenue, funding reserve amounts and issuer reserve
amounts;
(d) on a monthly basis ensure that the memorandum ledgers are reconciled
to the funding bank accounts; and
(e) establish and maintain ledgers in the books of the Funding and each
Issuer to record the initial intercompany loans and subsequent
payments of interest and principal on each of the intercompany
loans. (Cash Management Agreement clauses 4.1, 4.2, 4.3 and 4.4)
APPENDIX 1B
Management's Assertion Concerning Compliance
With Specified Servicing Requirements
June 7, 2005
As of and for the year ended December 31, 2004, Northern Rock plc (the
"Company") has complied in all material respects with the minimum servicing
standards as set forth in the Sixth Amended and Restated Administration
Agreement among the Company, as Administrator and as Seller, Granite Finance
Funding Limited, Granite Finance Trustees Limited and The Bank of New York
dated January 19, 2005 (the "Administration Agreement") as follows:
1. (Maintain records) keep and maintain records in relation to the
Mortgage Portfolio on a Mortgage Loan by Mortgage Loan basis for the
purposes of identifying amounts paid by each borrower, any amount
due from a borrower and the balance from time to time outstanding on
a Borrower's account (5.3);
2. (Collections) using reasonable endeavours credit all monthly
payments made by a Borrower to the relevant Collection Account
within three (3) London Business Days of receipt (5.1);
3. (Qualifications and compliance of laws) maintain all licences,
approvals, authorisations and consents necessary in connection with
the Administrator's performance of its obligations under the
Administration Agreement and not knowingly to fail to comply with
any legal requirements in the performance of those obligations.
(17.1(d) and (e));
4. (Enforcement) in relation to any default by a Borrower under a
Mortgage Loan or a Mortgage, enforce the terms of such Mortgage Loan
or Mortgage in accordance with the Enforcement Procedures and as
otherwise provided in the Administration Agreement (5.2);
5. (Insurance) (a) administer the arrangements for insurance in which
the Mortgages Trustee or the Seller has an interest (14.1); (b) not
knowingly take or omit to take any action that could result in
avoidance, termination or invalidity of any Insurance Policy in
relation to any Mortgage Loans and Mortgages or reduce the amount
payable on any claim made on behalf of the Mortgage Trustees under
any Insurance Policy (14.2); (c) prepare and submit any claim under
the Insurance Policies in accordance with their terms (14.3); and
(d) use reasonable endeavours to credit all proceeds received under
any Insurance Policy to the relevant Collection Account within three
(3) London Business Days of such receipt (14.4);
6. (Determination of interest rates) (a) determine the Standard
Variable Rate chargeable to Borrowers from time to time and the
Existing Borrowers' Re-Fix Rate in accordance with sections 4.1 and
4.4 of the Administration Agreement; and (b) take all steps
necessary pursuant to the relevant Mortgage Conditions or applicable
law to bring such change in the Standard Variable Rate to the
attention of the relevant borrowers and notify details of such
change to the Mortgages Trustee, the Security Trustee and the
Beneficiaries (4.2);
7. (Provision of information) provide such information from its records
in relation to the Mortgage Loans to the Mortgages Trustee, Funding
or the Security Trustee at any time upon reasonable notice, subject
to the conditions set forth in the Administration Agreement (5.3);
8. (Access to books and records) permit the Mortgages Trustee, Funding
(and their auditors) and the Security Trustee and any other person
nominated by the beneficiaries (to whom the Administrator has no
reasonable objection) upon reasonable notice during normal office
hours to have access to all books of record and account (including
Title Deeds and Mortgage Loan Files) relating to the administration
of the Mortgage Loans and the Related Security, subject to
applicable law and the conditions set forth in the Administration
Agreement (12.3);
9. (Custody of records) keep the Mortgage Loan Files relating to the
Mortgage Portfolio in safe custody and shall take appropriate
technical and organisational measures against the unauthorised or
unlawful processing of personal data and against accidental loss or
destruction of, or damage to, personal data. The Administrator shall
maintain in an adequate form such records as are necessary to
enforce each Mortgage comprised in the Mortgage Portfolio and, where
relevant, any other Related Security. The Administrator shall keep
the Mortgage Loan Files in relation to the Mortgage Portfolio in
such a way that they can be distinguished from information held by
the Administrator for its own behalf as mortgagee or for other third
persons (12.1(a));
10. (Ledgers)
(a) establish and maintain memorandum ledgers in the books of the
Mortgages Trustee to enable the ongoing identification and
segregation of principal, revenue, and overpayments;
(b) on a monthly basis ensure that the memorandum ledgers are
reconciled to the Trustee bank accounts;
(c) establish and maintain memorandum ledgers in the books of the
Funding to enable the ongoing identification and segregation
of principal, revenue, funding reserve amounts and issuer
reserve amounts;
(d) on a monthly basis ensure that the memorandum ledgers are
reconciled to the funding bank accounts; and
(e) establish and maintain ledgers in the books of the Funding
and each Issuer to record the initial intercompany loans and
subsequent payments of interest and principal on each of the
intercompany loans. (Cash Management Agreement clauses 4.1,
4.2, 4.3 and 4.4)
As of the same period, the Company had in effect insurance cover against
losses through wrongdoing of its officers and employees involved in the
servicing of mortgage receivables to the amount of GBP100 million.
Also, as of the same period, the Company has satisfied all obligations on its
part and maintain all qualifications required under requirements of law with
respect to each receivable and designated account and the servicing thereof,
whereby failure to achieve this would have a material adverse effect on the
interest of any mortgage receivable Beneficiary.
IN WITNESS WHEREOF, I have signed my name this 7th day of June, 2005.
By: /s/ K M Currie
--------------------------
Name: K M Currie
Title: Treasury Director