With the HomeGold Financial, Inc. and HomeSense Financial Corp. merger finally approved, HomeGold will lessen its dependence on the asset-backed securitization market going forward, said sources at the company.
However, this does not mean that HomeGold will exit the securitization market altogether. The company is currently working on a $20 million privately-placed securitization that will likely come to market this quarter.
"Our strategy has really changed now to be more focused on whole loan sales," said Kevin Mast, chief financial officer at HomeGold. "We likely will not have significant securitizations in 2000."
The change in focus was made "primarily from the standpoint of having more cash revenues and not relying on non-cash revenues," explained Mast. "So its really more of a liquidity strategy."
While subprime mortgage lender HomeGold has participated in the securitization market in the past, Columbia, S.C-based HomeSense, which also originates loans in the subprime arena, has not.
HomeGold last came to market in May 1999 with a $53.9 million offering backed by home-equity loans. The two-part deal with certificates featured a financial guaranty insurance policy from Financial Security Assurance. The average lives ranged from 2.50 years to 2.60 years. Prudential Securities was lead manager.