Last week Merrill Lynch released its monthly Delinquency & Loss Trigger Report, predicting that the manufactured housing sector is heading for a rebound as it continues to reduce excess capacity. Among the ABS real estate issuers covered are Conseco/Green Tree Finance, Oakwood Mortgage Investors Inc., and Vanderbilt Mortgage Finance.
The report concludes that the performance of the manufactured housing (MH) and home-equity (HEQ) collateral did not materially change since October. Demonstrating MH's decline in excess capacity, the Manufactured Housing Institute reported that 144,500 MH homes have been shipped through September 2001 - a 29% decline from 2000. Also, numerous market players have recently announced a further reduction of production and/or retail capacity.
Merrill remains concerned that a weak economy and high levels of repossessions will continue to pressure loss severities. Repossessed levels remain above 2000 levels. However, the unseasonally warm winter months recently experienced may mitigate some of the seasonal downturn and enable the industry to work through its repossessed home inventory problem quicker than expected.
Merrill reported no status changes (a move from passing or failing a trigger test or vice versa) in any of Conseco's HEQ deals. However, Conseco's HIL (home improvement loans) 1997-C transaction failed its 60+ day delinquency test and is now failing its trigger tests. Additionally, HIL 1998-D and 1998-F failed their 30+ delinquency tests.
Oakwood transactions also saw no new status changes that would change cashflows. The only changes were for 1998-C and 1998-D, which failed their current-loss trigger test. Only one Vanderbilt transaction, 1998-C (A), had a status change, as it is now failing its 30+ day delinquency test. 1996-C reached its step-down date, Merrill said.