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23 Jul 2004
CORRECTION TO TEXT OF 6/3/04 PRESS RELEASE: MOODYS ASSIGNS PRIME-1 TO EXTENDABLE ABCP OF AMERICAN HOME MORTGAGE'S PRIME WAREHOUSING PROGRAM - BROADHOLLOW FUNDING, LLC (1st paragraph, Callable Notes are rated P-1)
Approximately $2.0 Billion of Debt Securities Affected.
New York, July 23, 2004 -- Moody's Investors Service has assigned a rating of Prime-1 to $1.915
billion of extendable ABCP, in the form of Secured Liquidity Notes
("SLNs") to be issued by Broadhollow Funding, LLC (Broadhollow).
Moody's has also assigned a rating of Baa2 to the $85 million Variable
Rate Subordinated Notes ("Sub Notes") to be issued by Broadhollow.
Broadhollow also has the flexibility to issue Callable Notes ("the CNs"),
which are another form of extendable ABCP (also rated P-1) and
Medium Term Notes (MTNs), but the MTNs have not yet been rated by
Moody's. The Sub Notes are subordinated to the SLNs, the
CNs and the MTNs. The SLNs and CNs issued by Broadhollow are short-term
debt with an expected maturity of up to 180 days, but which may
be extended up to an additional 120 days under certain conditions.
Broadhollow is a single-seller prime residential mortgage loan
warehouse facility sponsored by American Home Mortgage Investment Corp.
("AHMIC", unrated). Broadhollow will fund the purchase of
prime mortgage loans originated by subsidiaries of AHMIC, from the
proceeds of the SLNs, CNs (and, when rated, MTNs) and
Sub Notes on a revolving basis. From time to time mortgages will
be removed by securitization or whole loan sales and replaced with new
RATING OPINION: The Prime-1 rating assigned to Broadhollow's
SLNs and CNs was based on, among other factors, the following:
" Expected performance of the mortgage loans based on Moody's review of
both the program eligibility criteria and AHMIC's experience;
" Credit enhancement provided by a reserve fund equal to 0.70%
of the authorized amount of the program, in addition to 4.25%
subordination of the Baa2-rated Sub Notes for the SLNs and CNs.
" A market value swap provided by Calyon (Aa2/Prime-1/C),
and other Prime-1 rated Swap counterparties that provides price
protection when mortgages are sold by the program;
" A commitment from Deutsche Bank Securities (A1/P-1-),
acting as a committed buyer of the mortgages, to purchase non-delinquent
and non-defaulted collateral
" Performance triggers, including a requirement to cease issuing
SLNs and purchasing mortgage loans if the portfolio is not in compliance
with aging guidelines or if the program credit enhancement is not at the
" Program support services provided by Deutsche Bank Trust Company Americas
(A1/P-1)] as trustee, collateral agent, depositary
" Mortgage servicing, performed by Columbia National Inc.
a wholly-owned subsidiary of AHMIC;
" Structural protections to preserve the bankruptcy remoteness of the
The Baa2 rating assigned to the Sub Notes was based primarily on the credit
enhancement equal to 0.70% of the total authorized amount
of the program provided in the form of a cash reserve, funded at
CREDIT ENHANCEMENT: Credit enhancement is sized to cushion SLN and
CN investors against loss or yield erosion through a pre-funded
cash reserve fund equal to 0.70% of the program size and
4.25% subordination provided by the Baa2-rated Sub
Notes for the Prime-1 SLNs and CNs. In the event that the
collateral performance deteriorates or winds down, there is a mechanism
that allows for the capture of all excess spread for the benefit of first
SLN and CN investors and then Sub Note investors.
PORTFOLIO GUIDELINES: The quality of the prime mortgages purchased
by Broadhollow is maintained through strict eligibility criteria and portfolio
concentration limits to ensure a well diversified loan portfolio.
A majority of the loans are required to be newly originated and each purchased
loan must be sold or securitized within 1 year from date of acquisition.
LIQUIDITY: Liquidity support is provided through a combination of
a committed buyer and a market value swap. Deutsche Bank AG is
the committed buyer, and is obligated to make a bid on non-delinquent
or non-defaulted collateral as and when required, essentially
if efforts to sell the collateral to other parties is unsuccessful.
The market value swap, provided by Calyon and other Prime-1
rated Swap counterparties, covers any loss on sale for non-delinquent
or non-defaulted collateral. The combination of a required
liquidation of mortgages in the pool upon a failure to reissue SLNs at
their initial maturity of up to 180 days or during the subsequent 120
day extension period, plus the committed buyer arrangement and market
value swap, is structured to repay the SLNs by their legal final
maturity of up to 300 days.
PARTIES TO THE TRANSACTION
Subsidiaries of AHMC (American Home Mortgage Corp and American Home Mortgage
Acceptance Inc.) will originate the loans purchased by Broadhollow.
Columbia National Inc. ("CNI"), a wholly-owned subsidiary
of AHMIC, will act as Servicer. AHMIC will guarantee the
performance of CNI as Servicer, but AHMIC is unrated.
AHMIC is a corporation that operates as a real estate investment trust
and through its mortgage banking subsidiary originates residential mortgage
loans through 279 retail branches and wholesale production offices located
in 37 states, an online channel called MortgageSelect.com,
and through two Internet call centers. The Company offers a wide
range of residential mortgage products that are primarily designed to
meet the needs of high credit-quality borrowers.
Deutsche Bank Trust Company Americas (A1/Prime-1/C) will act as
Indenture Trustee, Paying Agent, Collateral Agent and Depositary,
and as such, will manage the day to day operations of the conduit.
A detailed description of this and other mortgage warehouse programs may
be found in MOODY'S ASSET-BACKED COMMERCIAL PAPER MARKET REVIEW,
Structured Finance Group
Moody's Investors Service
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
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