Last week's $1.3 billion senior/subordinate manufactured housing ABS from a Lehman Brothers vehicle -- a portfolio of highly seasoned loans Lehman purchased from The CIT Group Inc. this summer - priced on Thursday. While the collateral is on Lehman Brothers' balance sheet, CIT will retain the servicing rights.
The pool is said to have obligors with relatively high FICO scores and an average seasoning of two to three years, compared to the average MH issue that has only one month of seasoning.
CIT has been in the servicing business for at least 30 years and has been given strong incentives to service the pool as if the loans were still on their balance sheet, sources said. The last deal in the sector from its own balance sheet was in 1995 and the firm continues to originate loans since it sold a large portion of its portfolio to Lehman. The deal is rated by all three agencies.
It is noteworthy that the $1.33 billion deal does not include approximately $770 million of an I/O strip.