A pool of death non-recourse reverse mortgages will secure about $155.2 million in mortgage-backed securities from the Brean Asset-Backed Securities Trust 2023-RM6, the program's latest deal.
Nationwide Securities Corporation is selling the mortgages into the pool, after a group of companies Such as Nationwide Equities, South River Mortgage and SmartFi Home Loans originated them, according to a pre-sale report from Morningstar | DBRS.
In a death, non-recourse reverse mortgage the maximum amount owed on a reverse mortgage would be capped at the home's appraised value, should the homeowner pass away during the amortization period. DBRS noted that liquidity proceeds could fall below the loan amount in cases where the outstanding amount exceeds the mortgaged property's value, resulting in higher loss severities.
The fixed-rate jumbo reverse mortgages—with a weighted average coupon of 9.22%—are first-lien loans on single-family residences, condominiums, townhomes, multifamily properties and one manufactured home, the rating agency said.
Brean 2023-RM6 will repay investors on a sequential basis, where no subordinate notes will receive any payments until the balance of senior notes falls to zero, DBRS said.
The Asset Securitization Report's deal database did not specify the name of the lead manager or underwriter.
Borrowers that are couples, and where the female is younger, account for 32.55% of the pool's aggregate unpaid principal balance, the plurality. Single female borrowers, around 80 years old, account for the next-biggest slice of the
aggregate unpaid balance, 29.43%.
Single-family properties account for a large majority, 86.28%, of the pool balance, DBRS said.
DBRS expects to assign ratings of 'AAA' to classes A1 through AM; 'AA' on the class M1 notes; 'A' on the class M2 notes; 'BBB' on the class M3 notes; 'BB' on the class M4 notes and 'B' on the class M5 notes. All of the notes have a stated final maturity date of January 2063.
