Web Gives High-LTV Players New Shot at ABS


Amaximis Lending L.P. expects to re-enter the asset-backed securities market with a combination of high loan-to-value mortgage and home-equity product, and will use the Internet as a springboard to get back into the game.

Amaximis and other companies such as GMAC-RFC and National Auto Finance Co., lately have unveiled Web sites that will act as a means to quickly and cost effectively close loans on the origination side prior to a securitization.

While thus far most ABS issuers have used the Internet solely as a tool to get customer lists and potential borrowers on the origination side, the push going forward is for end-to-end collateral collection over the Web, where all transactions and forms are completed electronically, from initial application to closing the sale. The cost savings, sources say, is enough to bring back ailing sectors like high-LTV.

Already, end-to-end online developments are said to be afoot, but the details are sketchy. Prudential Securities Inc. is said to be hard at work on a first-ever securitization of online revenue for an auto lender (ASR 10/4, p. 3), and GMAC is participating in a pilot program with eOriginal Inc. and Mortgage.com that will take mortgage collateral completely electronic.

Amaximis' system, meanwhile, will not work "end-to-end," but will function as a loan approval and buying tool that, according to the company, can preapprove a correspondent's loans in as little as five minutes, and close the subsequent sale within 48 hours.

The company is a buyer of second mortgage product, and will use the Web site to collect collateral from consumer lenders that will eventually end up being securitized. Securitization, said Amaximis Chief Executive Officer Jim Poythress, is the financing method by which the company hopes to fund itself long term.

"The long term outlook is that we will originate using securitization criteria, so that we go back to securitization within probably 12 to 18 months," Poythress said.

The company's first attempt to securitize was quashed by the liquidity crisis in late 1998, when a flight to quality took the floor out from under the high-LTV market. Amaximis had a $150 million securitization readied behind a $350 million FirstPlus transaction.

When FirstPlus pulled the trigger and "left all that money on the table," Poythress decided to pull back and wait. When the market failed to come back, Amaximis sold its high-LTV loans wholesale to an investor.

Since then, the company has worked out an agreement in which it will originate loans for this investor (Poythress would not name the buyer), and base its approvals largely on securitization and current market criteria. This has led the company to use a "more balanced production," according to Poythress, who said Amaximis' collateral now consists of 80% and 100% loan-to-value product, as well as 125% credits. Amaximis is working with Duff & Phelps Credit Rating Co. to make sure this criteria is being met, he said.

Currently, the company has $250 million in its portfolio, which Poythress says is approaching 18 months of age, with delinquencies in the 1.95% range.

In related news, National Auto Finance, which just announced it too was re-entering the ABS market (ASR 10/4, p. 3), has initiated an e-commerce loan approval system between itself and the more than 770 dealers it has a relationship with across 35 states. An application can be approved in two minutes or less, and like Amaximis' system, a loan can be funded within 48 hours of receipt of the application.

"In an Internet operation," Poythress said, "you eliminate a lot of the inefficiencies that are costly - the 1-800 lines, the human intervention - because you can go system to system to get information."