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KBRA Publishes RMBS Research: “Five Things To Know About Reverse Mortgages”

September 21, 2018

NEW YORK--(BUSINESS WIRE)--Sep 21, 2018--Because of recent changes which lowered the proceeds level of FHA-Insured HECM reverse mortgages, many originators focused on HECM originations have begun to diversify into jumbo, uninsured, proprietary reverse mortgages (RMs). This trend has been bolstered by demographic changes which have seen an increase in home equity-rich retirees whom have not amassed and/or retained enough liquid assets to age-in-place in their homes. KBRA believes that these factors will give rise, after a period of absence following the financial crisis, to an increase in both private and public securitization of jumbo proprietary RMs. In anticipation of increased interest by those new to the RM sector (and specifically proprietary products), KBRA published a discussion of five things to know about reverse mortgages. Topics addressed include:

RM Lenders are Offering More Product Options, Including Forward Mortgages Borrower Credit and Capacity Matter As in RMBS, Property Value is Key, but There are Nuances Negative Amortization Does Have A Couple Positives Prepayments Are Not Dependent On Interest Rates

The discussion of these topics highlights the fact that, although fundamentally linked to residential real estate risk, the analysis of RMs on a loan and securitization level requires analytical considerations that can differ significantly from forward mortgages.

Related Publications: (available at )

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

View source version on businesswire.com:https://www.businesswire.com/news/home/20180921005396/en/

CONTACT: Analytical Contacts:

KBRA

Edward DeVito, Senior Director

(646) 731-2319

edevito@kbra.com

or

Jack Kahan, Managing Director

(646) 731-2486

jkahan@kbra.com

KEYWORD: UNITED STATES NORTH AMERICA NEW YORK

INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING FINANCE CONSTRUCTION & PROPERTY RESIDENTIAL BUILDING & REAL ESTATE

SOURCE: Kroll Bond Rating Agency

Copyright Business Wire 2018.

PUB: 09/21/2018 11:26 AM/DISC: 09/21/2018 11:26 AM

http://www.businesswire.com/news/home/20180921005396/en

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