American Homes 4 Rent’s latest securitization, AH4R SFR 2015-1, addresses one of the biggest risks inherent in bonds backed by single-family rental properties: the possibility that the loans backing these deals cannot be refinanced at maturity.

The rental home securitizations that have been issued so far are backed by a single loan that is backed in turn by thousands of properties. To date, the loans backing most transactions have five- or 10-year terms, and many of them pay only interest for their entire terms. This begs the question of how difficult it will be to refinance the loans at maturity, particularly if the housing prices drop, reducing the value of the collateral, and the loan has not amortized.

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