Amresco came to town last week to nail down what looks to be the first-ever home builder loan securitization. The Dallas-based firm also looks to securitize this collateral again, and in bigger volume as the program grows.
The $129 million deal was issued by Amresco's Home Builder Financing Group, which lends to entry-level or first-time move-up single families who are having their house built. Banc of America Securities led the offering.
The collateral in the portfolio comprised about 30% in acquisition and development loans, which primarily represent loans to consumers that enable them to buy raw land that has already been zoned for construction. There is also a small amount of "lot loans" within that 30%, where loans are made for the purchase of raw land slated to be subdivided into lots. The remaining 70% consisted of loans for both presold and "on spec" vertical construction of homes.
"The market moved on us a little bit towards the end of the marketing period," said Amresco Senior Vice President Tom Andrus about execution on the deal. Spreads widened a few basis points from talk a day prior to pricing.
Amresco had previously housed the collateral in a Bank of America-administered commercial paper program.
"What this does is give us an exit strategy out of that conduit," said Ross Thieden, director in Amresco's corporate finance department. "We think it will allow us to do more volume.
"This is an ongoing active business unit that was somewhat capital-constrained because we were funding it all under either the CP conduit - which had a upper end limit on it - or on our balance sheet. This [deal] has really freed up that business unit to grow," said Andrus.
However, for now Andrus and Thieden said they thought securitizations would remain in the $125 million range. - SK