Shellpoint Partners said today that its withdrawn its Shellpoint Asset Funding Trust (“SAFT”) 2013-2 securitization in favor of selling the underlying whole loans.

Shellpoint said it made the decision based on the “substantial pricing disconnect” between the whole loan and new issue RMBS secondary markets. 

“This is not a decision we’re undertaking lightly,” said Bob Magee, Chief Investment Officer of Shellpoint, “but at some point we can’t ignore best execution. “We went very far down the road on SAFT 2013-2 – in fact we planned to close next week – hoping that the disconnect would ease, but the realities of the current market are clear.”

Shellpoint, the home lender founded by mortgage-bond pioneer Lewis Ranieri, last week announced that it had removed loans made to foreign nationals from Shellpoint Asset Funding Trust 2013-2. The deal was first announced in September.  

In June, Shellpoint restructured its first RMBS deal, Shellpoint Asset Funding Trust 2013-1, on the back of investor requests. Market reports indicated that investors were looking for extra credit support to mitigate concerns over loans originated for foreign borrowers.

The structure was split into a super senior and support senior note structure, where the credit enhancement on the super senior was 20% and the support on the A3 was 10.10%.

Saul Sanders, Co-CEO of Shellpoint, said that Shellpoint still remains committed to building its private label RMBS program.  “We intend to continue our efforts in the non-agency market and will, like other participants, monitor the secondary markets as they evolve,” he said. “We will also continue to work with others in the industry and in Washington to help evaluate the issues that challenge the return of a healthy, sustainable RMBS market.”




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