A diverse pool of reverse mortgage assets originated by Finance of America Reverse, LLC, will secure $250.6 million in securitized notes coming to market through the Finance of America Structured Securities Trust.
Some of the underlying assets were called from two previous securitizations that Finance of America had sponsored. This group represents 51.0% of the pool. Recently originated proprietary reverse mortgages and additional participation interests in unsecuritized loans make up the other portions of the pool, according to Kroll Bond Rating Agency.
The deal, Finance of America Structured Securities Trust, 2025-PC2, includes a replenishment mechanism that allows subsequent drawdowns on existing mortgages. Those proceeds can be included in the deal either at closing or in the future.
Reverse mortgages are essentially home equity loan products. Borrowers are typically older, at least 62, and are not required to repay the mortgage loan if they continue to live in the home. The balance comes due, however, following a repayment event, which can range from living away from the property for a year or not maintaining the property's value.
The deal will issue four tranches of notes, classes AV and A4, which will repay investors sequentially. The M1 and M2 notes are subordinate in the deal. They all have a mandatory redemption date of May 2030, and a stated final maturity date of May 2075.
Raymond James & Associates is the initial purchaser, along with Finance of America Securities, according to KBRA.
The pool contains 2,024 loans, with an average balance of $106,285 and a weighted average (WA) coupon of 8.30%. Most of the reverse mortgage assets (66.8%) represent loans that were paid out in a lump sum, while the next largest product type is a line of credit (30.0%), KBRA said. Term loans and modified term loans accounted for 2.84% and 0.36% of the pool, respectively.
Borrowers had an original weighted average (WA) credit score of 734, and the loans have a current loan-to-value (LTV) of 50.1%. In terms of geographic representation, California accounts for most of the pool, 79.4%.
KBRA assigned AAA and AA to the AV and A4 notes, respectively.
