Springleaf Finance Corp. plans to sell $787 million of home-loan securities. The Fortress Investment Group-backed company raised cash for the last five months to repay maturing debt by packaging older mortgages into bonds.
The residential mortgage backed securities platform is backed by seasoned first-lien, fixed-rate and adjustable-rate residential mortgage loans secured by one- to four-family residences. The mortgages are held by subprime borrowers, news HousingWire covered back in April, when Springleaf first began to structure the vehicle.
Springleaf may sell these bonds this week, according to an article in Bloomberg, including $538 million of debt with AAA ratings, but nothing is set in stone yet. Springleaf issued mortgage bonds backed by older loans in two deals to the tune of $1.4 billion earlier in the year according to Bloomberg.
Standard & Poors explained the credit enhancement: "For each class of preliminary rated notes, subordination of the notes that are lower in the priority of payments, an interest shortfall reserve fund, excess interest, and over collateralization."
In a U.S. Securities and Exchange Commission filing back in March, it was said that Springleaf exited real-estate lending at the start of the year to focus on consumer financing and its insurance operations.