|New Record-Breaking Subprime Home-Equity Deal Is Rated
NEW YORK (Standard & Poor's) Dec. 21, 2001--Standard & Poor's today announced the rating of the largest subprime home-equity transaction ever sold in the private-label market, marking the second time in a week that the old record was broken. The latest rating was done following Bank of America's Dec. 21 launch of an approximately $10.3 billion transaction collateralized by a combination of fixed- and adjustable-rate subprime mortgage loans originated by its wholly owned subsidiary, EquiCredit Corp. It comes on the heels of Bank of America's Dec. 14 launch of an approximately $7 billion transaction collateralized by fixed-rate loans, also originated by EquiCredit Corp.
EquiCredit, the fourth-largest originator of subprime loans in 2000 and one of the largest subprime originators and servicers in the history of the subprime market, halted its securitization program in August 1999. Prior to that, EquiCredit had completed 39 transactions dating back to 1991. Since August 1999, EquiCredit has originated subprime mortgage products and retained the loans in its portfolio.
Bank of America had previously announced that it was exiting the subprime origination and servicing business and that its approximately $23 billion servicing portfolio and platform located in Jacksonville, Fla., would be sold to Fairbanks Capital Corp. The $7 billion deal is part of that $23 billion total. The transaction will consist of seven loan groups. Each will collateralize one of seven triple-'A'-rated senior bonds, 'A-1' through 'A-7.'
"All classes will receive the benefit of a Financial Security Assurance Inc. (FSA) bond insurance policy that will guarantee bondholders timely receipt of interest and ultimate payment of principal," said Tom Warrack, a director in Standard & Poor's Residential Mortgages group. Credit enhancement prior to FSA's obligation will be in the form of excess spread and overcollateralization.
This information is contained in an analysis released today titled "EQCC Trust 2001-2." It is available on RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. The analysis will soon be available on www.standardandpoors.com. Click on Forum; then, under Ratings Analysis, click on Structured Finance.