After three successful high-loan-to-value mortgage transactions this year, GMAC-Residential Funding Corp. is gearing up another 125% LTV deal for the fourth quarter, substantiating the company's significant dominance in this sector.
The deal looks to be in the $200 million range, similar to previous GMAC-RFC's high-LTV transactions.
"I think we are a very consistent player in those markets," said Terry Farley, managing director for GMAC-RFC. "We've spent a lot of time and a lot of resources developing what we believe are fundamentally sound criteria, and a terrific servicing platform to manage the assets."
According to Farley, GMAC-RFC has spent the last few years moving away from the core jumbo mortgage product, and has followed the market into a higher yield product.
"What you're seeing in the ABS [market], it's home-equity products, it's the subprime, it's the high LTV, and it's all the products that we have been issuing regularly over the last couple of years," Farley said.
GMAC-RFC's current increase in those products is a continuation of a strategy that works, Farley said, adding that it is also a reflection of the market, and the slowdown of jumbo A-quality originations.
The fourth quarter deal looks to be similar to a $175 million September transaction, which was structured with a 4.9-year, $125 million A-1 tranche, and a 4.9-year $50 million A-2 class. Bear, Stearns & Co. was lead manager.
Also this year, GMAC-RFC launched two deals in the United Kingdom, reflecting the company's "branching out" game plan. "You can expect to see additional issuance over the next several years of different products in different markets," said Farley.
As far as new asset classes go, GMAC-RFC might soon consider securitizing charged-off credit card loans. "We are in the business of distressed credit card receivables," said Farley. At this point, however, GMAC-RFC has no plans to securitize these loans.
"But of course we do keep our options open," said Farley. "At such time as it makes sense, we'll do it."