A Kroll Bond Rating Agency presale report shows a property tax lien securitization from a new player in the deal pipeline.
FNA 2013-1 is the first securitization for First National Holdings LLC and the initial collateral will be about $89.7 million in property tax lien certificates within Cook County, Ill.
According to Kroll, the weighted average age for the collateral pool is 16.9 months and the weighted average lien to value is 18.17%
A reserve account, overcollateralization, excess interest on the tax certificates, subordination of certain payments and in the case of the class A notes, subordination of the class B notes, provide credit enhancement for the transaction.
Preliminary ratings by Kroll give the A notes a top investment grade rating of AAA(sf) and the B notes a lower investment grade rating of A(sf).
Tax lien certificates are created when a property owner fails to pay the property taxes or charges associated with the property and the taxing authority creates a tax certificate on the property. The tax certificate in many states is subsequently sold to an investor by auction.
Tax liens supersede other property liens.