Single Family Securitization Collapse Loan Sales

David Tobin, Senior Managing Director

Mission actively makes a market in whole loan single family pools arising from legacy securitization collapses (securitization collapse loan sales). At the same moment that interest rates have gapped out and new single family origination volumes have dried up, demand for these seasoned performing loans has never been stronger. Regional and community banks that hold single family loans on balance sheets have contributed to this inexhaustible appetite for a number of reasons:

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– Unprecedented liquidity resulting from slack commercial loan demand, unused PPP funds, elevated post-COVID payoffs and an overall flight to the safe haven of the United States.
– Low commercial loan margins due to spread compression and competition between lenders.
– Unexpectedly strong bank credit metrics, high GDP growth and economic activity.

Typically, these single family pools have similar characteristics:
– They consist of performing loans originated prior to the financial crisis.
– They exhibit slow prepayments for varying reasons, including HAMP balances, prior delinquency, property condition or unappealingly small unpaid principal balances
– They live in securitizations that have substantial realized losses.
– They have limited compliance risk.

Harvesting these pools is a complex process, involving the cooperation of call right holders, trustees, servicers, collateral custodians, bondholders and MSR owners. Completed transactions resemble landing multiple planes almost simultaneously during rush hour but occasionally the process resembles herding cats.

Mission’s securitization collapse loan sale process navigates these hurdles and produces maximum recoveries for all constituencies involved and eliminates the administrative, reporting and servicing burden of odd lot securitizations. With housing price appreciation still strong, it’s an opportune time to price and sell these portfolios.

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Mission Capital is a subsidiary of Marcus & Millichap.