After scaling back on a residential mortgage-backed securities transaction filled with jumbo loans, the parent of New Penn Financial LLC is withdrawing the deal altogether. The move was made because market conditions are better for whole loan sales.
Shellpoint Asset Funding Trust 2013-2 was originally structured to include 431 prime jumbo mortgages with an aggregate principal balance of $309 million.
Most of the loans were fixed rate with 30-year maturities. The weighted average loan-to-value ratio was 65 percent, as was the combined LTV.
Aside from loans to foreign nationals, who had no FICO scores, the weighted-average FICO score was 773, according to Kroll Bond Rating Agency, which rated the RMBS.
But the transaction, also known as SAFT 2013-2, was cut last week to 345 loans for $251 million, according to Kroll.
However, a statement Tuesday from Shellpoint Partners LLC indicated that the RMBS is being withdrawn entirely just a week before it was expected to close.
Instead, according to the New York-based parent of New Penn, the underlying mortgages will be sold on a whole-loan basis.
Bob Magee, chief investment officer at Shellpoint, explained in the statement that the current RMBS bid is not competitive with the whole-loan bid — even when factoring in the qualitative cost of pausing the RMBS program.
He noted that they continued along the process with the hope that the disconnect would ease.
“This is not a decision we’re undertaking lightly,” Magee stated.
Shellpoint is still committed to building “a robust private label RMBS program,” Shellpoint Co-Chief Executive Officer Saul Sanders said in the news release.
“We intend to continue our efforts in the non-agency market and will, like other participants, monitor the secondary markets as they evolve,” Sanders stated. “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.”
