Private Placement Securitization of Reverse Mortgages Receives AA Rating

NewImage.jpgHousingWire is reporting the private placement offering of reverse mortgage loans lead by Bank of America Merrill Lynch received a AA rating from Standard and Poor’s on the $92 million of senior notes.

The deal was the first private label reverse mortgage securitization seen in the market since the downturn.  The sale also is important because the collateral behind the transaction.  According to HW:

The collateral pool includes 716 loans that are in technical default because of delinquent taxes and insurance, repair or maintenance issues, or occupancy problems, according to Standard & Poor’s.


Analysts also said the remaining 40 mortgages are document deficient. Borrowers don’t repay HECMs until the loan matures, but often run afoul when property taxes and insurance premiums are not paid.

To read more about the due diligence results, check out the link below.

BofA HECM securitization notes merit double-A from Standard & Poor’s

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  • It was interesting to see how few of these HECMs were originated by B of A and how many of them B of A will service. rnrn”Reverse Mortgage Solutions is servicing nearly half of the notes, while Financial Freedom Acquisition and Bank of America Home Loans Servicing split the remainder.rnrnFinancial Freedom originated around a quarter of the reverse mortgages, as did Seattle Mortgage. World Alliance Financial originated nearly half and BofA a little more than one percent.rnrnThe credit risk officer is Wells Fargo.”rn

    • Is it just me or is anyone else bothered by the S&P rating of AA for a “scratch and dent” portfolio that consist of loans in default or they are document deficient?

      • reversemaniac,rnrnHow can you even question all of the legislation Congress has passed these last two years? (Or did you?) Congress as usual got it right. Why before Congress instituted NLMS and exempted nationally chartered lenders, we ALL know S&P would have given this HMBS, well, a AA rating. rnrnIt is obvious the bond raters were right all along (well, at least to those controlling Congress). You can see how much things have really changed because of the actions of Congress.rnrnI know your point was not about Congress. I apologize for using your reply for that purpose. It seems this bond rater is as bold and careless with its ratings as it ever was in the past. rnrnThe more things change, the more they remain the same. rn

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