Printer Friendly

U.S. BUSINESS EQUITY LOAN ASSET-BACKED CERTIFICATES, SERIES 1992-1 CLASS A RATED 'AAA' BY DUFF & PHELPS

 U.S. BUSINESS EQUITY LOAN ASSET-BACKED CERTIFICATES, SERIES 1992-1
 CLASS A RATED 'AAA' BY DUFF & PHELPS
 CHICAGO, Jan. 29 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned to the $288.2 million Class A-1 and the $61.5 million Class A-2 certificates of U.S. Business Equity Loan Trust, Series 1992-1 ratings of 'AAA' (Triple-A).
 The securities are underwritten by Merrill Lynch. The trust consists of a pool of variable and fixed rate first and second mortgage loans. Approximately 94 percent of the mortgages are first liens. The loans were originated or acquired by Chrysler First Business Credit Corp. The 'AAA' rating on the Class A senior certificates reflects the 35 percent subordination layer represented by the Class B and Class R certificates. The estimated weighted average debt service coverage on the Class A certificates is 2.81 times. The estimated weighted average loan-to-value is 40.90 percent.
 The pool is diversified by property type. Nearly 30 percent of the pool consists of multi-use loans, 19.6 percent are loans on multifamily complexes, and 4.5 percent represent loans on residential homes. The remainder of the pool are loans on various property types such as retail, industrial, warehouse, restaurants and hotels. Less than 3 percent of the pool represent loans on service stations, paint shops, mobile home parks and improved lots. While the seller did not obtain any environmental reports on the mortgage properties originated prior to February 1991, the seller has made the standard representations and warranties normally included in pooled transactions to cover this risk.
 The properties are geographically diverse with locations in 43 states and the District of Columbia. State concentrations include 18 percent in California, 10 percent in New York, 9 percent in Florida, and 9 percent in Texas. No other state represents more than 7 percent. As of Dec. 31, 1991, the current outstanding balance of the pool is $541.5 million and contains 2,582 loans. Each mortgage loan selected was less than 30 days delinquent and has a current balance no less than $500 and no more than $2 million with an average loan size of $209,730. Approximately 77 percent of the mortgage loans have balloon payments at maturity with 67 percent of the balloons due between the years 1992 and 1995.
 The 'AAA' rating on the Class A certificates is consistent with D&P ratings on similar collateral pools analyzed and rated recently by D&P, including portfolios from failed thrifts. CB Commercial Real Estate Group, Inc. performed a due diligence loan audit on 293 properties, which included review of the initial loan documents and files. In addition, CB Commercial performed site inspections on 30 properties. Duff & Phelps reviewed all audit file reports prepared by CB Commercial. Additionally, Duff & Phelps performed site inspections on a sample of 47 properties or 10 percent of the pool balance. The D&P sample consisted of a small overlap of large loans in the CB Commercial sample. The sample properties were located in 17 states with a variety of property types.
 "As with all commercial real estate ratings for large pools, we spent a significant amount of time reviewing the sample properties on- site to determine current occupancy, current value, current debt service coverage, and the quality of underwriting by Chrysler First Business Credit Corporation. We also reviewed qualitative characteristics of the properties and market, and reviewed reports prepared by seasoned real estate professionals from CB Commercial. This level of due-diligence is customary when we are requested by the issuer and investment banker to issue a rating; it provides us with a high degree of comfort that cannot be achieved by review of the documents and loan audit reports," said a D&P spokesman.
 The multi-use loans were analyzed based on Chrysler's underwriting standards and historical experience. Loan approval focused on the borrower's ability to pay rather than a heavy reliance on the real estate value. Foreclosures have increased substantially in the past year due to economic conditions. Credit enhancement was calculated assuming a continued deterioration in credit quality of the small business loans, with no credit for recoveries on foreclosed properties.
 The single family residential loans were analyzed using an actuarial approach which assigns credit enhancement according to the relative risk of each individual loan. All of the loans are secured by single family detached homes with 18 percent of the pool comprising jumbo loans (over $250,000). The weighted average loan-to-value is 70 percent. On average, the loans are amortized over 15 years with a balloon payment after eight to ten years. The credit enhancement calculated for the residential loans covered the balloon risk based on the loan-to-value at the balloon date. The weighted average seasoning of the pool offsets a portion of the risk. Approximately 95 percent of the pool is seasoned one year or more, 50 percent is seasoned three years or more, and 10 percent of the pool is seasoned six years or more. Additional credit enhancement was required for geographic concentration. Nearly 50 percent of the loan balance was located in Pennsylvania, New Jersey, and New York. The remaining portion of the pool was located throughout 25 states.
 The commercial property loans were stressed by decreasing the net operating income annually over the ten year projection period or until their maturity, with an additional stress on loans with balloon maturities. Additionally, debt service on the adjustable loans was increased annually. Credit enhancement required by this stress was added to that required by the other two stress tests performed on the multi-use loans and residential property, and the qualitative review of the commercial properties. The total credit enhancement required was equal to 35 percent.
 Chrysler First Business Credit Corp. (CFBCC), a wholly owned subsidiary of Chrysler First, Inc., either originated or acquired the mortgage loans during their ordinary course of business. As of Nov. 30, 1991, CFBCC had a total portfolio of approximately $798 million (3,386 loans). Chrysler Financial Corp. (CFC) is the master servicer for the transaction. CFC provides diversified financing and insurance products and services through its subsidiaries, Chrysler First Inc., Chrysler Credit Corp., Chrysler Capital Corp., Chrysler Insurance Company, and Chrysler Realty Corp. Duff & Phelps currently rates the senior unsecured debt of CFC 'BB+' (Double-B+).
 -0- 1/29/92
 /CONTACT: Daniel J. Smith, group vice president of Duff & Phelps, 312-368-3181/ CO: U.S. Business Equity Loan Trust ST: Illinois IN: SU: RTG


PS -- NY097 -- 4991 01/29/92 18:18 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jan 29, 1992
Words:1075
Previous Article:FIRST CONSTITUTION FINANCIAL REPORTS YEAR-END RESULTS
Next Article:KAMAN FOURTH QUARTER AND 1991 RESULTS


Related Articles
HOUSEHOLD INTERNATIONAL, HOUSEHOLD FINANCE DEBT RATINGS LOWERED BY DUFF & PHELPS
DUFF & PHELPS: MBNA MASTER CREDIT CARD TRUST SERIES 1993-1 $750 MILLION FLOATING RATE ASSET-BACKED CERTIFICATES RATED 'AAA'
DUFF & PHELPS: ASSET-BACKED RATINGS REAFFIRMED
DUFF & PHELPS REAFFIRMS RATINGS
DUFF & PHELPS: GREENWICH CAPITAL ACCEPTANCE, INC. $265,387,000 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1994-LB6 ADJUSTABLE RATE MORTGAGE LOANS
M.D.C. MORTGAGE FUNDING CORPORATION $172,018,000 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1994-LB7 ADJUSTABLE-RATE MORTGAGE LOANS
DCR UPGRADES GREEN TREE FINANCIAL CORPORATION TRANSACTIONS
DCR Rates The Money Store Business Loan Backed Certificates, Series 1997-1
DCR Rates Fremont Small Business Loan Master Trust, Series D $100.00 Million Class A Certificates 'AAA' $9.26 Million Class B Certificates 'BBB'
DCR Rates New Century $466,889,300 (Approximate) Asset-Backed Certificates Series 1998-NC3

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters