March will be a busy month for the securitization of home equity and credit-impaired loans, credit rating agency executives said.
The increased activity will be welcomed by industry executives after the unusually slow January and February for securitizations, they said.
"January was as slow as you can get," said Jennifer E. Schneider, vice president, Duff & Phelps Credit Rating Co., New York. And February, when there were only a handful of securitizations, was not much better, she said.
But Ms. Schneider and others have high expectations for March.
"In March we do expect volume to increase significantly," said Nancy E. Gigante, director, Standard & Poor's, New York.
Mike Strauss, senior analyst, Moody's Investors Service, New York, says many lenders want to securitize in March so that they can make note of it in first-quarter earnings reports.
Also, credit-impaired and home-equity lending are on the rise now that the production volume of first liens with the highest credit quality has fallen off significantly, other analysts said.
Home equity loans are no longer only securitized on their own. Now, second-mortgage securitizations often have first liens in them.
Loans of B-to-D quality are securitized, to a large degree, separately.
Securitization of B-to-D and home-equity loans soared last year to $11 billion, from as little as $6 billion in 1993, according to Moody's Investment Service, New York. The credit rating agency predicts "further strong growth in 1995" of perhaps 20%.
Peter D. Rubinstein, senior vice president, Donaldson, Lufkin & Jenrette Securities Corp., New York, expects March to be a heavy-duty month for securitizations of credit-impaired loans in particular.
He said higher interest rates have meant more borrowers cannot meet the high credit qualities of the agencies. They must turn to lenders for the credit deficient, he said.
Ms. Schneider, of Duff & Phelps, said there are more lenders now originating loans of B-to-D credit quality. That has - and will continue to - increase the number of securitizations in this industry.
CWM Mortgage Holding Corp., Pasadena, Calif., is one of the latest conduits to begin buying and providing correspondents and mortgage brokers B-to-D loans. It is expected that CWM will do its first securitization soon.
Residential Funding Corp., Minneapolis, did its first securitization of home-equity lines of credit last month.
Ms. Schneider knows of at least two securitizations coming in March. S&P's Ms. Gigante said six to 10 securitizations of home equity and credit- impaired lending would be done this month.
Quality Mortgage USA Inc., Irvine, Calif., has become the most frequent securitizer of credit-impaired, according to industry observers. It now does monthly securitizations.
In February it did two. One was for $115.4 million of lesser-credit- quality loans.
ContiMortgage Corp., the Money Store, and Long Beach Bank, Calif., are among the most frequent securitizers of B-to-D loans.
