Canada’s sole lender in home reverse mortgage equity products is marketing a new publicly rated series of notes from its securitization master trust for the first time in four years.
According to a presale report from DBRS Morningstar, the trust will issue an undetermined volume of medium-term notes to finance new reverse-mortgage originations by HomeEquity Bank, a CAN$4 billion-asset (approximately US$3.12 billion) portfolio company of Birch Hill Equity Partners Management Inc., a mid-market private equity firm based in Toronto.
HomeEquity chief executive officer Steve Ransom estimated in mid-November the firm was on track to originate about CAN$850 million in reverse mortgages in 2020, with plans to sell 10%-to-20% of the volume to investors, according to a Bloomberg report.
The offering comes less than a month after
DBRS Morningstar has assigned a provisional AAA rating to the Series 2020-1 notes from CHIP Mortgage Trust.
The notes will be supported by a minimum credit enhancement equal to 5% of the asset balance of the pool to be assigned for the trust.
HomeEquity originates loans under its CHIP Reverse Mortgage Reverse brand. Loans held by the trust have an average loan-to-value ratio of 44.5%, according to DBRS Morningstar. (The maximum advance allowed for a reverse mortgage is 60% loan-to-value).
The Canadian reverse mortgages have average terms of 10 years, compared to conventional Canadian mortgages which average about five years tenor.
