Fortress Investment Group ($7.21 0.03%) prepared a $970 million mortgage-backed security tied to some subprime loans originated by a former American International Group ($44.69 0.16%) lender.
Springleaf Financial was known as American General Corp. when AIG acquired it in 2001. It exited the mortgage lending business after the housing bust. Fortress bought an 80% stake in the company in 2010. Just 1% of its loans provided to the Springleaf Mortgage Loan Trust 2012-2 were originated in the last two years, according to Standard & Poor's, which rated the deal.
The offering includes loans secured by one- to four-unit homes, manufactured housing, land and "packages of multiple real properties to subprime borrowers," according to the credit rating agency.
S&P rated more than half of the deal AAA.
Classes making up more than 77% of the issuance were rated investment grade.
S&P said a credit enhancement of 49.5% on the AAA tranches would withstand stress scenarios. The credit enhancement includes subordination, an interest shortfall reserve fund, excess interest and overcollateralization.
Fortress brought a similar Springleaf deal to market earlier in the year. Private-label issuance has been dormant since the financial crisis struck in 2007. Fannie Mae, Freddie Mac and Ginnie Mae have financed more than 95% of the mortgage market since.
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