Fortress Investment Group (FIG) prepared a $970 million mortgage-backed security tied to some subprime loans originated by a former American International Group (AIG) 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.
