Given that it bought Advantage Home Loans as long ago as December 2005, Morgan Stanley has taken its time to launch its first non-conforming RMBS transaction, ResLoc UK 2007-1. But the deal is not an Advantage deal; just 9.87% of the loans in the deal are actually originated by the lender. Morgan Stanley has been busy buying whole loan portfolios from other non-conforming lenders to ramp up this deal and the lion’s share of the collateral is actually originated by GMAC-RFC (79.9%). This will certainly offer investors comfort, given GMAC’s longevity in the sector. However, given the intense scrutiny that sub-prime lending has been under of late, the low, 6.1-month seasoning of the portfolio together with its 82.6% loan-to-value ratio might give some pause for thought. The US bank hired mortgage market veteran Rob Collins from Abbey last year to front its residential mortgage securitization business.
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