Springleaf is readying an RMBS totaling $835 million, according to a pre-sale report released by Standard & Poor’s April 2.
The deal consists of a $500 million senior tranche and a number of subordinate and mezzanine tranches. The expected closing date is April 10.
Backing the transaction are “seasoned first-lien, fixed- and adjustable-rate residential mortgage loans secured by one-to-four residences, manufactured housing, land, and packages of multiple real properties to subprime borrowers,” according to S&P.
The originator is Springleaf Finance Corp. and its subsidiaries. The company no longer originates new home loans, having closed down that business at the end of 2011.
The deal has a handful of arrangers — Merrill Lynch; Pierce, Fenner & Smith; Credit Suisse Securities; RBS Securities; and Citigroup Global Markets.
S&P said the loans are “significantly more risky” than the archetypical pool assessed by the agency. About 23% of the collateral consists of first-lien home equity lines of credit.
In the deal’s favor is the fact that loans in the pool have been current for the past 12 months. They are also geographically diverse. But S&P said it still expected “significant” delinquencies. The agency added that loan modifications were not likely to have much of an impact on the deal, given the age of the loans and that none has been modified in the past two years.
Some 98% of the loans have a seasoning beyond four years.
Springleaf is the sole provider of the reps and warranties in the transaction. S&P rates it ‘CCC’, meaning that it could struggle to meet repurchase claims in a breach of reps and warranties. When folding in this risk, the agency increased its loss expectation for higher rated tranches in the deal.