The subprime mortgage market is in a tailspin - even the Alt-A and prime markets are showing signs of strain. However, GMAC Mortgage is moving ahead with plans to finance a variety of mortgage loans. The company is sponsoring another loan warehouse program under the name Mortgage Interest Network Trust (MINT).
The newest program, called MINT I, is successor to a program that was launched in 2002. That older program funded every type of residential mortgage originated by GMAC's subsidiaries, market sources said. It also had the option of using swaps or haircuts to mitigate risks associated with the performance of the mortgages while they were being warehoused. This time around, MINT I will have a slightly narrower investment focus, although it will still fund a variety of home loans, said market sources.
The single-seller vehicle can issue up to $25 billion in secured liquidity notes (SLNs), which are also extendible by an additional 180 days if they cannot be rolled. During that period, the program's administrator can either sell or securitize the mortgages in order to repay them by their final maturity dates. The program also has three top-rated swap counterparties that can step in and provide market-value risk protection during liquidation, according to Moody's Investors Service, which gave the program a P-1' rating.
GMAC rolled out the conduit amid increasingly troubling news from the mortgage sector. In a long conference call with investors and analysts last week, Countrywide Financial's CEO and chairman, Angelo Mozillo, said that falling housing prices, which have bedeviled the once-hot housing market and the RMBS sector, would continue to decline through 2008 and would not begin to recover until 2009, according to press reports.
Worse still, sales of existing homes dropped 3.8% in June, according to the National Association of Realtors, their fourth straight month of decline. That fact overshadowed news that the median price of an existing home edged up slightly to $230,000 in the same month.
MINT I is a sister program to the MINT II conduit, which was launched about a year ago and is authorized to issue up to $25 billion in SLNs. According to the most recent information available from Moody's, the program had $10 billion in SLNs outstanding. Both programs follow MINT, which was launched in 2002.
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