BOCA RATON, FLA. - At last week's Information Management Network ABS East conference held here, issuers and at least one rating agency discussed the ways they have changed their policies or deal structures in response to Hurricane Katrina.
Jay Bray, chief financial officer and executive vice president with Centex Corp., said his company has initiated a 90-day moratorium on reporting to credit bureaus and on foreclosures. Bray, like most at the conference, said it will be several months before the full impact of the damage is known, but, in the meantime, Centex has hired a third-party consultant to track property damage and insurance claims. According to Bray, roughly 2% of Centex's portfolio is exposed to the affected areas.
Nissan Motor Co. reportedly pulled auto loans from Louisiana and Mississippi out of an auto ABS transaction that priced the previous week. A source familiar with the situation said in the chaos immediately following the storm, Nissan had no idea what impact the storm would have on the area, and in order to make investors comfortable and get its deal priced, it decided to pull all loans from the two states.
According to Moody's Investors Service Managing Director Warren Kornfeld, said the rating agency was poised to announce it is going to stop allowing loans from individual assistance areas of Louisiana and Mississippi into RMBS transactions it rates. In these areas, individuals can apply for Federal Emergency Management Agency assistance, unlike public assistance areas, in which only municipalities can apply. Kornfeld said he was not sure how long the prohibition on those loans would last, and that Moody's would keep the policy in place on a day-to-day basis.
Since Katrina hit, several different credit-card and consumer-loan companies have been heard discussing various breaks and relief to be given to borrowers in the affected areas. However, one speaker debated whether or not that would actually happen. Marianna Stershic, vice president of business development with Wells Fargo Corporate Trust Services, said normally credit card companies can only give breaks to servicemen and women, and that servicers cannot arbitrarily make these kinds of arrangements. "In a large pool, where you need noteholder approval, I am kind of curious to see how it will play out," Stershic added.
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