As new chief executive officer A. Jay Meyerson takes the helm, Aames Financial Corp. readies a fourth quarter subprime home-equity deal in the $400 million range, which will include a new twist on high loan-to-value product, according to director and former interim CEO Mani Sadeghi.
The new product and Meyerson's hire are examples of an aggressive effort on the company's part to get back into the game after financial troubles earlier this year. With Meyerson's experience in the asset-backed market, Aames hopes for growth, including larger deal volume and an ultimate return to profitability.
"The strategy of the company in a nut shell is to reposition Aames as a prudent, profitable and innovative leader in the subprime home-equity industry," said Sadeghi.
Meyerson has worked on home-equity, auto and student loan deals in the past. Before joining Aames, Meyerson was at KeyBank USA, the national consumer finance business of KeyCorp. KeyBank subsidiary Champion Mortgage Co. is a regular issuer of home equity paper.
Sadeghi said that Aames will continue a quarterly issuance calendar - split 50% between whole loans and securitization - unless market conditions dictate otherwise. The fourth-quarter issuance will be typical of what can be expected from the company, he said.
"It's going to have similar size, similar mix of collateral [to our last deal]," said Sadeghi. "I think our collateral will exhibit some of the improved performance in underwriting and risk management."
Aames' last deal was managed by Lehman Brothers and came to market in August. The $393 million auto loan-backed deal was structured in three parts, and insured by Financial Security Assurance.
As a subset of the pending transaction, Aames will introduce a bundle of high-LTV loans that are partially insured, allowing for a "borrow against the benefit, without the risk."
"Let's say it's a 85% loan-to-value, and we've insured it down to a 65% loan-to-value, it's going to look like a 65% deal," Sadeghi said. "So it's not going to look like a high-LTV part of the transaction."
He added that few companies are using this type of program. "It's been very successful," Sadeghi said. "Especially with changes in the interest rate environment."
Though Sadeghi was unable to disclose the name of the insurance company working with Aames, he did say, "It's a specialty of theirs, and I think we are one of the premier customers that they have chosen to do this program with."