Neighborhood Pay Services (NPS) said it plans to expand its direct deposit platform, Rent Assurance, to distressed single family rentals that will be packaged in securitizations.
NPS president Richard Levitan said in a press release today that, beginning in the first quarter of 2013, NPS will offer Rent Assurance for securitization of cash flow, single family home rentals.
Rent Assurance offers an alternative to higher security deposits for improved payment performance and net operating income throughout the term of a lease, said Ellen Calmas, a spokesperson for the company. “We eliminate the guess work and provide the automated service to this rental class that isn’t otherwise available,” she said.
Among chief concerns for getting securitization of single family home rentals off the ground is the lack of historical data on the single family rental market.
In an Aug. 23 report, Moody's Investors Service identified the variability of cash flows from the rentals as a major risk for investors. Fitch Ratings raised similar concerns in an Aug. 7 report in which it warned that "the lack of historical data and ambitious growth strategies by regional operators will make high investment grade ratings on these transactions difficult to attain."
Morningstar Credit Ratings also cited concerns over the lack of historical data on the newly-emerging asset class in a reported published the week of June 4. And a May 4 report form Standard & Poor's stated that "the property manager's expertise in large-scale residential real estate management and ability to manage subservicing arrangements may also be a credit consideration."
Rent Assurance would provide the market a measure that would go some way to eliminating the variability in rental cashflows and would create a more stable and better performing resident base. “For financial management it allows investors the ability to predict cash flow for rent and eliminate some of the risk associated with this asset class, “said Calmas.