MOODY'S RATES OAKWOOD'S 1999-B MANUFACTURED HOUSING TRANSACTION
Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued in Oakwood's 1999-B manufactured housing securitization. In addition, Moody's also assigned ratings ranging from Aa3 to Baa3 to the mezzanine and subordinate classes of the deal. The 1999-B pool is of higher risk when compared to Oakwood's 1999-A pool, primarily due to the high percentage of repo refinances, and is somewhat more risky when compared to industry standards.
The rating actions are based on the quality of the underlying manufactured housing loans; the credit support in the form of subordination and excess spread; the structure of the transaction; and the experience of Oakwood Acceptance Corporation (Oakwood) in originating and servicing manufactured housing receivables.
Moody's analyst, Dave Caspar, stated that the pool's most notable positive features are the moderate percentage of new multi-section units - many of which are land/home contracts, and the approximate 80 basis point increase in excess spread. In addition, the pool has sufficient geographic diversity to mitigate the impact on pool performance of isolated local or regional events. Caspar noted that although the weighted average loan-to-value (LTV) ratio of 92% for 1999-B is lower than that of Oakwood's prior three securitized pools, it is still higher than the weighted average LTV of other recently securitized manufactured housing pools. The riskiness of the pool is evident in the high percentage of repo refinance loans (17%) - the majority of which are single-wide units whose LTV exceeds 95%.
Credit support consists of excess servicing and subordination. The ratings assigned to each class reflect the different levels of subordination and of excess servicing available to cover shortfalls. Excess servicing is the difference between the loan rates and the certificate rates. In this transaction, initial excess spread (not including servicing fees) is approximately 3.8%. Credit support for the Class A certificates is derived from the subordination of the Class M-1, M-2, B-1 and B-2 classes, which represent 6%, 5%, 5% and 7%, respectively, of the initial pool balance. Oakwood will provide a limited guaranty on the Class B-2 certificates. Unlike Oakwood's prior deals, payment of interest and principal on Class B-2 is subordinate to the payment of principal and interest on all other classes. As a result, the Class B-2 certificate in this transaction is weaker relative to the B-2's issued in recent Oakwood securitizations and is more dependent on the limited guaranty. Likewise, the other classes are somewhat stronger as they benefit from the interest subordination of Class B-2.
The complete rating actions were as follows:
Issuer: OMI Trust 1999-B
$ 61,200,000 1 Mo Libor + 0.12% Class A-1 Certificates, rated Aaa
$ 49,100,000 6.19% Class A-2 Certificates, rated Aaa
$ 28,900,000 6.45% Class A-3 Certificates, rated Aaa
$ 57,628,000 6.99% Class A-4 Certificates, rated Aaa
$ 15,337,000 7.18% Class M-1 Certificates, rated Aa3
$ 12,781,000 7.52% Class M-2 Certificates, rated A2
$ 12,781,000 8.04% Class B-1 Certificates, rated Baa2
$ 17,894,150 9.05% Class B-2 Certificates, rated Baa3
Oakwood is a wholly owned subsidiary of Oakwood Homes, with headquarters in Greensboro, North Carolina. Oakwood is primarily engaged in the business of underwriting, originating and servicing manufactured housing contracts. Oakwood Homes is a vertically integrated manufacturer and retailer of manufactured homes. As of December 31, 1998, Oakwood serviced approximately $3.7 billion in manufactured housing receivables. The company is a capable servicer of manufactured housing loans.
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