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Scratch and Dent Reverse Mortgage MBS Could Help Private Label Market

NewImage.jpgStructured Finance News is reporting that the $92 million securitization of private label “scratch and dent” reverse mortgages from Bank of America could help pave the way for reverse mortgage MBS deals in the struggling private label market.

While the deal has yet to find a buyer, “It could signify that the private securitization market is coming back, maybe starting the return of the HECM securitization process on a private basis,” said Bob Yeary, chairman of Reverse Mortgage Solutions.

Yeary told National Mortgage News that to the best of his knowledge, the transaction is the first securitization of this type done in the reverse mortgage market.

RMS says the it’s involved in a portion of the deal, and of the loans it has seen are HECMs not in government or agency securities pools for one reason or another. They are “most likely in portfolio,” he said, noting that they might be Fannie Mae buybacks, have a shortfall in equity or taxes and insurance, or be in a foreclosure situation. They do not involve borrower distress, he added.

Reverse Mortgage Securitization Seen as Breaking New Ground