A pool of 298 reverse mortgages funding a range of properties will secure $189.4 million in asset-backed securities being offered to investors through the Brean Asset-Backed Securities Trust 2023-RM7.
Brean Capital and Nomura Securities are listed as underwriters on the deal, according to capital markets research firm Finsight. Ratings analysts from DBRS Morningstar say the deal will issue notes through seven tranches that will follow a senior-subordinate repayment structure. All of the notes have a stated final maturity date of March 2078.
Reverse mortgages are a form of home equity loan that gives borrowers a lump sum or a stream of payments without requiring them to repay any principal or interest until a maturity event.
Borrowers are typically at least 62 years old, according to DBRS, an amortizing event is triggered if the borrower dies, sells the house, no longer lives at the property, incurs a tax or insurance default or fails to maintain the residence.
As of September 30, Brean 2023-RM7 had a current, unpaid balance of $154.2 million in unpaid principal balances from the properties, which include single-family homes, townhomes, condominiums, cooperatives and multifamily homes, among other property types.
Originators funded 72.6% of the loans in 2023, while 16.7% of the loans were funded in 2022 and originators funded the rest between 2021 and 2018.
Nationwide Equities, South River Mortgage and SmartFi Home Loans originated the loans, DBRS said. A majority of the loans, by balance at the time of the cutoff date, are located in California, Florida and New York, with 47.4%, 23.0% and 11.0% of the pool balance, respectively.
DBRS assigns ratings of 'AAA' to classes A1, A2 and AM; 'AA' to the class M1 notes; 'A' to the M2s; 'BBB' to the M3 notes and 'B' to the class M4 notes.
