EXCLUSIVE: EverBank takes flight as regular 'jumbo' loan RMBS issuer
EverBank Financial Corp (EVER) is not a newcomer to the private-label residential mortgage-backed securities market. The company has been originating these types of loans for several years.
However, the Jacksonville-based company is adding another feather to its hat, becoming a first-time depositor and planning on being a regular issuer in the RMBS market as it returns.
The bank debuted on the private-label RMBS scene March 20, unveiling the platform, EverBank Mortgage Loan Trust 2013-1, with a reported total balance of $309.5 million.
"We’re proud of our status of becoming a first time depositor and the opportunities it opens up for us," J.B. Long, capital markets director of EverBank, told HousingWire.
He added, "With our ongoing retail lending expansion and organic growth outlook, we feel this additional liquidity affords us the opportunity to do more types of these offerings in the future."
In addition to having the deal as an alternative liquidity structure, the offering compliments the company’s high-quality origination platform, allowing the bank to sell 100% of EverBank originated loans, showcasing solid credit culture as well as corresponding performance.
While Long could not provide a specific timeframe on how often EverBank plans to issue deals, he did explain that the company's executives are "bullish on the opportunity out there" and did not become an issuer for "just one deal."
With EverBank attempting to stake its claim in the private-label RMBS sector, DBRS and Fitch Ratings mentioned some of the challenges the company faces, including representations and warranties conflicts and related putback claims.
"The originator may potentially experience financial stress that could result in the inability to fulfill repurchase obligations as a result of breaches of representations and warranties," Fitch said.
While Long believes that there are many things that rightfully concern the rating agencies, EverBank is comfortable with the quality of loans they underwrite and originate and are content in making the necessary reps and warrants.
In regards to the quality of the underlying collateral, the company views the loans as 'pristine.'
"The loans being securitized are sold as part of our preferred loan program and this is an important point, we are very much in line with the end investors as we originate to the exact same credit profile for our portfolio," Long said.
He added, "The differences here in the loans that we’re selling are the longer duration and the fixed-rate components of the program. As a bank with shorter-term liabilities, we choose to hold assets that reflect our funding profile and we sell the longer-term fixed rate through the depositor and into the market."
A large part of EverBank’s volume is through its retail lending channel, allowing the company to benefit from an expansion effort that is expected to continue through the remainder of the year.
"I think given where the yield curve is and the steepness of it as well as the ability to retain ARM products and sell fixed-rate products, we think we’re fairly bullish on the market and where it’s going," Long said.