The Orlando Sentinel comments on how changing credit markets negatively impacted Disney Vacation Club during the 2009 fiscal year.
According to the Sentinel, DVC took a big hit in 2009 due to its inability to securitize loans as it had in the past. Securitization is a process in which DVC would bundle its mortgages and sell them to investors for a quick return. Reportedly DVC securitized only $17 million in loans during 2009 compared to $147 million securitized in 2008.
As long as it continues to hold the mortgages, Disney Vacation Club will see revenues from interest payments made over the life of the loan--a period that can run up to 10 years. In the short term those interest payments will not approach the revenues realized from securitizing the loans.
The possibility exists that DVC could still securitize these loans at a future date as credit markets improve.
Additional information can be found at www.thedailydisney.com.
