The Onity Loan Investment Trust, series 2024-HB2, is preparing to issue $469.3 million in securitized bonds, with repayment pledged from principal payments from pool of 1,078 reverse mortgage loan and real-estate owned (REO) assets.
Onity Loan Investment Trust will issue notes through six tranches of classes A and M notes according to DBRS Morningstar, which assigned ratings. They have a stated final maturity date of August 2037. Barclays, Nomura Securities International and SunTrust Robinson Humphrey Capital Markets as managers on the deal, which was upsized from $347.8 million, according to Asset Securitization Report's deal database.
Reverse mortgages give borrowers, typically 62 years and older, access to home equity financing. They can take the proceeds as a lump sum or a stream of payments. They don't have to repay principal or interest unless the borrower dies, sells the reverse mortgaged property or lives away from it for a long stretch, or several other reasons.
Pricing talk has yields ranging from 5.38% on the AAA-rated class A notes to 8.13% on the BB-rated M4 notes, according to the database. A senior-subordinate capital structure provides credit enhancement to the notes as they pay down, the database said. Should the transaction fail to repay noteholders in full on the stated final maturity date, that event will trigger a mandatory auction of all assets, DBRS said. If the recovery falls short of funds to repay the notes, another auction will follow in three months, and the transaction will repeat this process for up to a year.
Three hundred, eighty-one performing loans are in the collateral pool, representing 31.57% of the total unpaid balance. Of that group, 199 of the loans, representing 53.20%, are earmarked for Housing and Urban Development, and the remaining 182 of performing loans will be strategically held in the trust. In terms of the 697 non-performing loans, 365 of them are referred for foreclosure or in foreclosure, representing 41.42% of the balance.
DBRS assigns AAA to the class A notes and AA, A, BBB, BB and B to the M1, M2, M3, M4 and M5 tranches, respectively.
