Some $552.2 million in securitized notes from the Finance of America Structured Securities Trust, 2024-S1, backed by participation interests in a diversified pool of four types of residential loans.
Seasoned jumbo "proprietary" reverse mortgages, seasoned loans that were initially originated as FHA-insured Home Equity Conversion (HECM) Loans but then classified as ineligible for such insurance, recently originated proprietary reverse mortgage loans and loans through its EquityAvail loans, according to ratings analysts from Kroll Bond Rating Agency. In the case of the latter, EquityAvail requires borrowers to make partial interest payments for the loans' first 10 years. After that the loans revert to a no-payment interest-accruing product similar to a traditional reverse mortgage, Kroll said.
KBRA considers the reclassified loans' inclusion in the pool as a potential credit shortcoming, for reasons that were generally benign, the rating agency said. Still, KBRA said, a small number had exceptions that are potentially meaningful, such as an expired or unapproved appraisal.
Overall, some 3,565 underlying loans back the collateral pool, and they have an average balance of $136,092, KBRA said. On a weighted average (WA) basis, the loans have an original credit score of 732, and a current loan-to-value (LTV) ratio of 49.7%.
Raymond James & Associates and Finance of America Securities are the initial note purchasers on the deal, Kroll analysts said.
The transaction will issue five tranches of class A notes, and Kroll assigns preliminary ratings to tranches A1 and A2, according to KBRA. The notes have an optional redemption of February 2027, a February 2029 mandatory redemption and a February 2074 stated final maturity, the rating agency said.
Excess spread provides credit enhancement to the notes.
In geographic terms, the pool is heavily concentrated by balance, with California accounting for 56.1% of the pool. New York, Florida, Colorado and Washington account for the rest of the top five states, with 10.4%, 8.8%, 4.8% and 3.8%, respectively. As far as cities with the highest concentration of loans by pool balance, Los Angeles and San Francisco account for the top two, with 26.3% and 11.4%, respectively, KBRA said.
