Magazine article American Banker

PaineWebber Touts High-LTV-Backed Securities

Magazine article American Banker

PaineWebber Touts High-LTV-Backed Securities

Article excerpt

The controversial high-loan-to-value mortgage is gradually gaining acceptance with lenders and Wall Street, and its proponents promise that it's here to stay.

The high-LTV loan will become as credible a basis for securities as subprime mortgages are, said PaineWebber vice president Peter Rubinstein.

PaineWebber, the largest issuer of securities backed by high-LTV loans, is sponsoring a conference devoted to the product today and Thursday in Chicago.

"Look back at the B and C market," Mr. Rubinstein said, referring to loans to less creditworthy borrowers. "When issuers started making these loans and Wall Street securitized them, people said, 'How can you do that?'"

Despite some early blowups in the securitization of subprime loans, demand for securities backed by these loans continues to grow, Mr. Rubinstein said.

The high-LTV product is so new, he said, that several dimensions have yet to be explored. "You can go to 135% or 145%" of a home's value, "do subprime high-LTV, do floating-rate loans, do extended terms ... these things haven't happened yet."

Wholesale Access, a Columbia, Md., consultancy, projects the volume of these loans in 1997 at $10 billion-twice last year's total. The number includes securitized loans only, the consultancy noted.

Mr. Rubinstein said the potential for growth is tremendous, considering that consumers have about $1 trillion of credit card debt and could replace much of that with home equity debt. …

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