GMAC-RFC, the most prolific ABS issuer over the past year-and-a-half recently introduced a new securitization product backed by what could become a new sub-sector in the mortgage related ABS market. Residential Asset Acquisition Corp. Trust (RAAC), issued off the RAMP shelf, is backed by heavily seasoned collateral acquired by RFC's Principal Investment Activities group acquired from banks selling assets and prime scratch and dent loans. Many of the loans were repurchased by originators following deal clean-up calls, as factors shrank during the three-year-long refi wave.

RAAC is actually a derivative of GMAC-RFC's RAMP shelf, which securitizes loans that do not conform to any of its other programs. Some of the collateral in the inaugural series 2004-SP1 was originated in the mid 1970's, according to sources, and were purchased in the whole loan market. In fact, the SP nomenclature stands for "Seasoned Portfolio."

The Principal Investment Activities group, which purchases seasoned and credit-sensitive assets deemed complementary to GMAC-RFC's conduit-funded products.

"Due to the refi boom many deals are hitting the clean up calls and lots of seasoned loans are in the marketplace right now, hence the opportunity to find this product," a company source said. "We do plan to have a program with this type of seasoned product, we just can't really project the volume due to the infancy of the program."

The average seasoning in RAAC 2004-SP1 is 66 months, or just over five years, with 15% seasoned more than 12 years. An additional 15% is in the five-year bucket with 11% in the four-year bucket.

This offering, a fixed- and floating-rate senior/subordinate structure, featured four fixed-rate senior classes, a senior floater and three subordinated floaters. Merrill Lynch led the inaugural offering, with Deutsche Bank Securities and GMAC-RFC Securities as co-managers.

The structure used is more typical of a subprime mortgage ABS - using subordination, overcollateralization and excess spread as enhancement - although roughly 70% of the collateral exhibits prime and alt-A characteristics, a rating agency source said.

The plans for future RAAC issuance are unclear at this time, but sources close to the situation speculate that RAAC could become a regular issuer among GMAC-RFC's numerous mortgage securitization platforms.

Residential Funding Corp. is master servicer for RAAC, with Bank of America N.A. and Wilshire Credit Corp. the primary servicers on over 80% of the pool.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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