Waterfall Asset Management Issues $571.8 Million in Active Jumbo Reverse Mortgage Bonds

The first offering of its kind since the financial crisis, Waterfall Asset Management is offering $571.8 million in performing jumbo reverse mortgage-backed bonds, according to Kroll Bond Rating Agency.

The Cascade Funding Mortgage Trust 2018-RM2 securitization is backed by 915 active non-FHA reverse mortgages loans that were taken out between 2002 and 2008 and have an average 131.7 months of seasoning according to Kroll’s offering report. The loans were originated by eight legacy reverse mortgage lenders with more than half of the loans based in California, especially around the Los Angeles area.

According to Kroll Bond, which is rating the bonds, the majority of the loans in the pool are adjustable rate based on 6-month LIBOR. The weighted average age of each loan’s youngest borrower is 84, and with this age in mind, Kroll Bond estimates that within 53.9 months, the pool will have reached an average 50% mortality probability.


Compu-Link Corp (Celink) services about 83.5% of these loans and Reverse Mortgage Solutions services the remaining 16.5%.

Kroll Bond also pointed out that there hasn’t been a securitization of performing non-agency proprietary reverse mortgage loans with a public credit rating since 2007.

New View Advisors is the Operating Advisor in the transaction.

Unlike defaulted reverse mortgage bonds, the active jumbo bonds have a different timeline as the bonds will remain active until the borrower dies, sells the house, refinances, or leaves the home for more than 12 months because of health issues, or defaults for other reasons.

Earlier this month, Finance of America Reverse released its second round of reverse mortgage-backed bonds backed by defaulted HECM loans, equaling $399 million. Nationstar also regularly issues bonds backed by non-assignable HECMs.

There have been several new jumbo reverse mortgage products introduced to the market this year, so more securitization of performing jumbo reverse mortgages is possible.

Written by Maggie Callahan

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  • I look at this as excellent news. If this offering goes well, this can open the doors for more to come in the future!

    This also would motivate lenders to increase their marketing and continued innovating creativity of other type of proprietary Jumbo products.

    This could also lead to more aggressiveness on the industry to create proprietary products along the principle limit guidelines of the HECM?

    I will be watching how successful this offering turns out, it could bee very important to our industry!

    John A. Smaldone

  • This is an important test to see the appetite of investors for a product that is nonrecourse and UNinsured. At what discount are these products being sold for? How many are underwater? As these rather mid-term life proprietary reverse mortgages terminate, perhaps we will see the effect either (or both) in changes to existing products or in premiums, if any, paid by the investment community for these products.

    Will we see discounts based on the location of the collateral since the product is nonrecourse? If so, this speaks positively for geocentric PLFs for HECMs to the extent that such change does not result in demographic discrimination.

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