As a result, several lenders appear unwilling to risk their preferred-lender authority in return for the increased liquidity that the securitizations afford. What they ve told us is that they would have to think twice before pulling the trigger on one of those deals. When the agency announced plans to link portfolio performance with the preferred-lending privileges of lenders that securitize the unguaranteed portion, the SBA lending community at large maintained that such a regulation would have a chilling effect on the nascent market. The argument was that the stakes were too high for many lenders to continue securitizing, or for some new issuers to enter the market. If they could lose their preferred-lender status, that s something to be considered.
Lenders do take that quite seriously.
Non-bank lenders have been the leading issuers of the unguaranteed portion. On the bank side, SierraWest Bancorp , First International Bancorp , formerly First National Bank of New England, and California s Bank of Yorba Linda have completed deals. Becker emphasized that activity in the securitization market for the unguaranteed portion has been sporadic since the first deal in 1994. The primary reason is that it can take a significant period of time to accumulate a pool of the unguaranteed portion with volume levels suitable for securitization. Nonetheless, the market has grown significantly since the first transaction five years ago.