A pool of reverse mortgages, mainly performing loans that are non-recourse and fixed-rate, will secure $225.9 million in securitized bonds from the Brean Asset-Backed Securities Trust 2025-RM13.
The deal closes this week, with all eight tranches of notes paying a 4.25% coupon. Brean 2025-RM13 is expected to repay investors sequentially, and notes have a stated final maturity date of October 2065, according to Morningstar DBRS.
Brean has advanced rates that range from 95.3% on the A1 tranche, rated (P) AAA (sf) to 122.7% on the class M5 notes, which has a rating of (P) B (sf), from Morningstar DBRS. The A1 class hold $178.3 million of the offered note balance, DBRS said.
The collateral pool includes 476 mortgages, all of which were originated in 2025. Also, all the loans are performing, except for one loan that is non-performing because the owner passed away, DBRS said.
The transaction structure includes a rate house price index (HPI) trigger. Over the course of the reverse mortgage, changes in home prices can trigger a change in the note rate, based on the performance of the aggregate home value, DBRS said. On any payment date, if the S&P Cotality Case-Shiller U.S. National Home Price NSA Index, declines by more than 30% than the rate prior to the cutoff, then the class A note rates will be reduced to 0.25%, DBRS said.
Also, if the average one-month conditional prepayment rate (CPR) over a six-month period is equal to or greater than 25%, then Brean ABS will deposit 50% of available funds into the Refunding Account. The deal can use that account to purchase additional mortgage loans, DBRS said.
Smartfi Home Loans, Nationwide Equities and South River Mortgage, primarily, originated the loans in the pool, and Compu-Link is the servicer, the rating agency said.
Reverse mortgages are extended to borrowers who are 62 years or older, typically. Borrowers get their home equity through a lump sum, and do not have to repay the loans until a maturity event occurs. That is usually required if the borrower dies, sells the mortgaged property or if the borrower no longer occupies the property among other reasons.
