Dan Perl, chairman & CEO of Citadel Servicing said that he sees a market for the securitization of private label, non-prime residential mortgage loans.
Perl spoke on the subject Wednesday as a guest on Capital Markets Today, an internet radio program. Citadel specializes in non-prime loans for residential properties, and also offers loans for certain commercial and investment properties.
The lender’s products include fixed and adjustable rate mortgages (ARMs). Perl said that Citadel’s non-prime mortgages conform to the Dodd-Frank requirements of 2010. That means that these loans are fully documented; show the ability to repay by the borrower; have accurate assessment of collateral value and have no prepayment penalty.
The key takeaway for these loans versus the subprime pre-crisis mortgages, is the “full documentation and the accurate assessment of collateral,” said Perl.
Perl said that in 2010 Citadel began lending these products and found that private investors were willing to buy these loans – this proved that there was an economic basis for the non-prime mortgages.
“We’ve discovered that there is a potential for a securitization exit for this product in volume,” said Perl on the radio show. He said that ratings agencies, bonds sales teams and private investors have all shown appetite for non-prime product.
Perl anticipated that the Citadel would be ready to bring a securitization of non-prime RMBS to the market by early Spring 2014.