Egg's troubled outstanding securitization bonds under its Pillar Funding series (ASR,10/30/06) could see some relief, following statements from the seller that it plans to implements new accounting measures by early next year.
In a press release issued last week, Egg announced that it updated Moody's Investors Service on mitigating actions, which may be undertaken to alleviate the impact of recently revealed trust accounting policies on outstanding Pillar Funding Plc bonds. Under Egg's current procedures, delinquent accounts are terminated prior to being charged-off and these customers are placed on a reduced minimum payment plan amortizing over 10 years. The minimum monthly payment required for these borrowers is reduced from the typical 2.00% down to 0.83% of the outstanding principal. No interest or fees are charged on the principal balance. These 0.83% account balances can be reported as current, delinquent or charged-off, depending on the amount of payment being received.