Although General Motors Acceptance Corp.'s mortgage lending unit GMAC-RFC's percentage of the market share has dropped this year, it expects to return to its lofty issuance levels of years past.

"This is a cyclical industry," said Managing Director Diane Wold. "What we were seeing this year was a significant amount of competition in the home equity market, along with a variety of new products and a fair number of new entrants," she added.

Year-to-date figures from Thomson Financial indicate the issuer has stepped down from its market leading 2003 position of dominating 10.8% of the market share to the second slot, issuing 6.3% of the total market share this year.

With the emergence of new loan types within the last year, such as subprime IO loans and 80/20 loans, the ABS market is one that has been quite busy with product innovation this year, however, GMAC-RFC has taken little part in this new activity, securitizing about 10% of its total subprime IO originations in the last five months and a minimal amount in 80/20 loans, said Wold.

"We will not participate in products that do not make sense for borrowers. We will also not participate where we do not have enough information to make prudent risk management decisions," Wold said. "Our business model is not driven by market share, rather our goal is to deliver quality earnings to our bond investors and our shareholders," Wold added.

In October, GMAC-RFC introduced the addition of a first lien of credit to its existing product offering and anticipates securitizing that product in 2005, said Julie Steinhagen, managing director at GMAC-RFC. The product provides homeowners with a 25-year line of credit consisting of a generous 10-year interest-only draw period followed by a 15-year amortized repayment period, purchase and rate term refinancing to 95% LTV, and cash out to 85% LTV, company information stated.

Moreover, the issuer has traveled overseas this year securitizing for the first time in Mexico and Canada and acting as a repeat issuer in the Netherlands and the U.K., according to Wold, with expectations to issue in these regions again next year.

In terms of pure volume, the mortgage lender is looking to be fairly flat in 2005, close to where it was this year, although the mix of issuance might change, said Wold.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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