FT Mortgage just got approval from the Securities and Exchange Commission to issue its very first securitization, which will be for nonconforming 30- and 15-year fixed-rate mortgages, company officials say. The deal will launch either in the fourth quarter 1999 or first quarter 2000.
"We will file the shelf in the first part of October, and we just went through our due diligence with the rating agencies," said Carol Justice, the head of secondary marketing at Dallas-based FT Mortgage. "We don't know how much it is going to be yet, but the deal is definitely in the works."
Justice said this securitization will be the first in a rapidly developing securitization program for the company that has included the hiring of new staff members, the acquisition of subprime lender McGuire Mortgage and other new products.
"Securitization is one of a number of things that we are doing to take FT to another level," said Jerry Baker, president of the Dallas-based FT Mortgage, which is in the midst of expanding into new products and loan types.
FT reached an agreement in January to acquire McGuire Mortgage, a Kansas-based subprime specialist. Baker said that acquisition will open up an entirely new market for FT Mortgage, which currently specializes in conforming Fannie Mae and Freddie Mac mortgage loans.
However, according to Justice, the company does not have any immediate plans to securitize subprime product, and is instead selling everything.
"Right now, we are finding more satisfactory execution with the regular mortgage product, plus we don't like the aggregation period required for subprime," Justice said. "Actually, McGuire does more single-A-minus issuance than subprime, so although we would consider securitizing it going forward, we are staying away from that for the time being."
Justice also said that although FT had not set an exact goal for issuance volume, he expects the company's mortgage-backed securities volume to be in the $1 billion to $1.5 billion range for the year.
"We always play the best execution game, so if somebody else wants to buy them on a whole loan basis at a better execution, we'll do them that way," he added.
In addition to subprime mortgages and a securitization program, Baker said FT is also planning to start a real estate investment trust in the coming year. FT Mortgage is the mortgage-lending arm of First Tennessee Bank.