Green Tree Servicing's acquisition of GreenPoint Financial's manufactured housing portfolio is considered by Lehman Brothers analysts to be a positive over the medium-term for a select number of GreenPoint MH holders, given Green Tree's "superior servicing capabilities." But analysts warn that over the short-term, bondholders should expect considerably higher liquidation rates.
Following the the Oct. 1 purchase of GreenPoint by North Fork Bancorp, it agreed to sell GreenPoint Financial's $8.6 billion MH loan servicing portfolio to Green Tree on Oct. 8. In the MH sale, Green Tree will take over the servicing of GreenPoint 's portfolio and will add roughly 800 employees from GreenPoint's servicing operation to its own.
Green Tree will service the portfolio for a 100 basis points annual fee to be paid at the top of the waterfall, which is no different from the current fee structure, said analysts. This will probably limit the servicing expenses on the portfolio longer-term through the aggressive loan liquidation of the repo inventory and by the movement of delinquent loans through the pipeline.
Analysts predict CDRs (liquidation rates) will likely rise another 3% to 4% CDR from recent prints over the short-term. This is in addition to the already high liquidation rate seen in many trusts. The increase in CDRs will have an immediate effect on the most subordinate bonds in the capital structure for senior/sub deals as writedowns increase, said analysts. But, researchers said, the impact will be felt across the capital structure as credit enhancement will drop more precipitously. For wrapped deals, total prepayments will rise, which might be slightly negative for certain premium bonds, said analysts.
