MOODY'S RATES METROPOLOTAN'S 1999-A SELLER-FINANCED MORTGAGE DEAL Aaa
Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued in Metropolitan Mortgage & Securities Co.'s 1999-A seller-financed mortgage loan securitization. Moody's said the credit quality of the loans is better than the credit quality of the average pool of subprime mortgage loans. In addition, Moody's assigned ratings ranging from Aa2 to Ba2 to the mezaanine and subordiante certificates issued in the deal.
Moody's analyst Kamran Kazim explained that the ratings are based primarily on the initial subordination and excess spread available to the certiificates. Kazim observed that the ratings are also based on the structure of the deal and on Metropolitan's ability to service the loans. This is Metropolitan's first deal of the year. The credit enhancement available to the senior certifcates is sufficient to counterbalance the risky character of the underlying loans. The underlying pool of loans includes seller financed loans (41%); loans originated by Metwest Mortgage Services, a Metropolitan subsidiary (18%); loans purchased from correspondents (25%); and loans to facilitate ("rescue" loans on properties in foreclosure) (4%). Fifteen percent of the loans, by principal balance, consist of loans on commercial properties that are typically riskier than mortgage loans on residential properties. Other factors that add to the risk of the pool are the high levels of non-owner occupied properties and the low levels of full doc loans.
Seller financed loans, as the name implies, are loans extended to borrowers by sellers real property. The absence of standardized underwriting guidelines in generating seller financed loans adds to the overall risk of such loans. Properties on which these seller financed loans have been made may be in rural locations or of a type which require long lead times for re-sale and where conventional mortgage financing is not available.
The complete rating action is as follows:
Issuer: Metropolitan Asset Funding, Inc. II
Securities: Mortgage Pass-Through Certificates, Series 1999-A
$23.800 million 6.252% Class A-1 Notes, rated Aaa
$22.500 million 6.382% Class A-2 Notes, rated Aaa
$11.000 million 6.624% Class A-3 Notes, rated Aaa
$13.740 million 7.183% Class A-4 Notes, rated Aaa
$35.000 million 6.757% Class A-5 Notes, rated Aaa
Notional principal balance 0.780% Class X Interest only Note, rated Aaa
$8.732 million 7.182% Class M-1 Notes, rated Aa2
$4.990 million 7.656% Class M-2 Notes, rated A2
$3.555 million 8.000% Class B-1 Notes, rated Baa2
$1.434 million 8.000% Class B-2 Notes, rated Ba2
Metropolitan Mortgage and Securities Co., Inc. and its affiliates are the originators and servicer of the underlying loans. The company originates and buys real estate loans and contracts. The majority of their loans have been purchased in the secondary market. The company invests in a wide variety of mortgage collateral. Metwest is an acceptable servicer of mortgage loans.
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