Manufactured housing lender Origen Financial, back in the ABS primary market in January after a two-year hiatus, has led the shift toward more conservative loan underwriting practices, something that is evident in the underlying collateral pool, Standard & Poor's, analysts said.
For example, FICO scores for the 2004 vintage were 711 on average, an exceptionally high score for the typical manufactured housing borrower, according to S&P analysts. By contrast, scores on the 2002 and 2001 vintages were 679 and 675, respectively.
The weighted average loan-to-value ratio fell slightly in the 2004 vintage to 86.48%, from 87.57% in 2002 and 88.25% in 2001. However, close to half of the pool in the most recent offering had an LTV upwards of 90%. This figure sounds unduly aggressive considering the push toward more responsible lending, but the rating agency's concerns were offset by the higher credit quality of the borrowers, analysts said.
The average loan size rose to $42,381 in 2004, versus $40,976 in 2002 and $41,000 in 2001.
Meanwhile, the loans backing the more recent vintage are written for shorter terms, and the collateral is seasoned at least 12 months. The percentage of used collateral in 2004 rose to 22.75%, up from about 11% in both 2001 and 2002. While it many seem counterintuitive, older units are actually a plus, as they bring added performance data to the pool, analysts said.
Origen's $200 million fixed-rate offering via Citigroup Global Markets tightened when it came in January. The three-year triple-A rated notes cleared at 85 basis points over swaps relative to guidance in the 90 to 95 basis point area.
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