Magazine article American Banker

March Thaw Expected in Equity and Subpar Loan Securitization

Magazine article American Banker

March Thaw Expected in Equity and Subpar Loan Securitization

Article excerpt

March will be a busy month for the securitization of home equity and credit-impaired loans, credit rating agency executives said.

The increased activity will be welcomed by industry executives after the unusually slow January and February for securitizations, they said.

"January was as slow as you can get," said Jennifer E. Schneider, vice president Credit Rating Co., New York. And February, when there were only a handful of securitizations was not much better, she said.

But Ms. Schneider and others have high expectations for March.

"In March we do expect volume to increase significantly," said Nancy E. Gigante, director, Standard & Poor's, New York.

Mike Strauss, senior analyst Moody's Investors Service, New York, says many lenders want to securitize in March so that they can make note of it in first-quarter earnings reports.

Also, credit-impaired an home-equity lending are on the rise now that the production volume of first liens with the highest credit quality has fallen off significantly, other analysts said.

Home equity loans are no longer only securitized on their own. Now, second-mortgage securitizations often have first liens in them.

Loans of B-to-D quality are securitized, to a large degree, separately.

Securitization of B-to-D and home-equity loans soared last year to $11 billion, from as little as $6 billion in 1993, according to Moody's Investment Service, New York. The credit rating agency predicts "further strong growth in 1995" of perhaps 20%.

Peter D. …

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