Moody’s Rates Nationstar-Issued Inactive Reverse Mortgage Securities

Moody’s Investors Service yesterday assigned provisional ratings to three classes of residential mortgage-backed securities issued by Nationstar HECM Loan Trust 2015-2.

The certificates are backed by one pool of inactive HECM reverse mortgage, first-lien mortgage loans, with the collateral pool comprised of 1,106 mortgages totaling a balance of approximately $228.7 million.

The complete ratings actions are as follows: Class A Assigned  (P )Aaa (sf); Class M1 Assigned (P )A3 (sf); and Class M2 Assigned (P )Ba2 (sf).

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Nationstar acquired the mortgage assets from Ginnie Mae-sponsored HECM mortgage backed (HMBS) securitizations. The loans are either in default, due and payable, foreclosure or REO. The breakdown includes approximately 21.59% of the mortgage assets are due and payable; 43.51% are in foreclosure; and approximately 16.31% of the mortgages are REO and were acquired through foreclosure or deed-in-lieu of foreclosure.

The pool includes 869 loans with an aggregate balance of approximately $191.4 million and 237 REO properties with an aggregate balance of approximately $37.3 million.

Factors that would lead to the upgrade of the rating would be “levels of credit protection that are higher than necessary to protect investors against current expectations of stress could drive the ratings up,” Moody’s noted in a release.

“Transaction performance depends greatly on the US macro economy and housing market,” Moody’s wrote. “Property markets could improve from our original expectations resulting in appreciation in the value of the mortgaged property and faster property sales.”

However, the inverse of these factors could result in a downgrade of the rating for the HECM securities, specifically, deterioration in the property markets that would result in depreciation in the value of the mortgaged property and slower property sales, Moody’s noted.

Written by Jason Oliva

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