Franchise woes continue, as Enterprise Mortgage Acceptance Corp. became the latest finance operation to shed its origination effort, in this instance remarketing itself as a loan servicer.

Last week EMAC announced it would implement staff reductions, citing "financial market uncertainty in the franchise loan sector and rising delinquency rates among borrowers in the sector" as the primary drivers in its business realignment.

It is understood that EMAC had no securitization imminent, although the company is currently servicing a portfolio of its own unsecuritized loans. EMAC has been in the market three times since debuting in 1998, for approximately $1.1 billion in proceeds. Morgan Stanley Dean Witter was lead manager on all three deals.

EMAC did not return phone calls.

Meanwhile, Bay View, which essentially put itself up for sale last year, announced that it was no longer intending to sell itself, but said last week that it would execute a share rights offering, allowing shareholders to buy equity at a discounted price.

There's no word as to the impact this will have on Franchise Mortgage Acceptance Corp., which cut its origination effort last fall. According to sources, FMAC was getting close to selling the remainder of its franchise unsecuritized loan portfolio.

"From my understanding, just about everybody on the Street has taken a look at [BVFMAC's portfolio]," said one source close to the matter. "It's coming down to price, from what I'm told, and that there are interested parties out there."

The rumor is that one of the large banks will end up purchasing the portfolio, although contacts at FMAC were unavailable for comment.

Recently, Fitch downgraded several classes from three FMAC securitizations, due to a write-down of principal associated with the liquidation of Blue Sky Petroleum (see Whispers, ASR 3/26/01).

Since last fall, when Standard & Poor's downgraded BVFMAC's servicer rating, citing employee migration as a factor, FMAC has managed to retain key talent, said a rating agency source.

So far this year there has been but one franchise loan deal, which was the sale of securities from a balance sheet securitization that FMAC structured for regulatory relief in mid-2000. The $250 million, Rule 144A offering was wrapped by Financial Security Assurance. Greenwich Capital Markets was lead manager.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.