Moody’s Investors Service recently assigned final ratings on a HECM mortgage-backed securitization.
The deal is highly rated for a pool of inactive reverse mortgages, due mainly to the expectation that the loans will be covered by the Federal Housing Administration.
The collateral is being serviced by Nationstar, which acquired the mortgage assets from Ginnie Mae.
However, since most of the loans are located in judicial states (in this case, New York, New Jersey and Florida), it may take awhile to receive those federal insurance payments, Moody’s notes in its ratings report on the deal.
“These funds will be received with irregular timing,” the report states. “In the event that there are insufficient funds to pay interest in a given period, the interest reserve account may be utilized.”
In other words, the losses are covered under the deals structure, thus the high ratings.
There are 1,364 mortgage assets with a balance of $316,490,687.
From the report:
35.7% of the assets are in default, of which 0.9% (of the total assets) are in default, due to non-occupancy and 34.8% (of the total assets) are in default due to delinquent taxes and insurance. 29.6% of the assets are due and payable, 26.7% of the assets are in foreclosure and 2.2% of the assets are in referred status.
Finally, 5.9% of the assets are REO properties and were acquired through foreclosure or deed-in-lieu of foreclosure on the associated loan. If the value of the related mortgaged property is greater than the loan amount, some of these loans may be settled by the borrower or their estate.