Springleaf Holdings and the Re-Emergence of Sub-Prime Consumer Lending

Springleaf Holdings and the Re-Emergence of Sub-Prime Consumer Lending

Regarding the $2.82bil in unpaid balance (UPB), $2.6bil is present as of 30 June, while at the least $450mil associated with the $677mil loans that are credit-impaired present. It is critical since these loans had been bought at

63 cents regarding the dollar ($755mil value that is fair UPB of $1.2bil)

The company’s legacy real-estate profile The portion that is largest of Springleaf’s asset base is its property loans, that have been being held at $8.46bil as of 30 June versus an unpaid stability of $9.93bil. This huge difference of approximately $1.5bil represents a “push down” accounting therapy.

Whenever Fortress bought Springleaf from AIG this year, it used accounting that is purchase and therefore current loan loss reserves had been damaged and the net finance receivables were marked at “current market value, ” hence discounted by almost $2.5bil. Today, the worth associated with the staying property loans held on balance sheet is roughly $1.5bil underneath the balance that is unpaid.

Real-estate financing and securitization had been a major part of springleaf’s company while section of AIG. Management has made a decision to leave this section, and therefore it is currently in runoff mode.

It’s essential for investors to comprehend the push straight down accounting embedded in this device since it offers a margin that is large of. Read more