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Fourth securitization of proprietary reverse mortgages is completely paid off

In a solid sign of a promising market, investors pocket their principal and interest in full

A securitized pool of proprietary reverse mortgages paid off completely last week, becoming the fourth pool to close out.

According to a report from New View Advisors, Structured Asset Securities Corporation Reverse Mortgage Loan Trust Series 2006-RM1 – or SASCO 2006-RM1 – was the fourth pool of proprietary, non-agency reverse mortgages ever created.

Previous pools created in 1999 and 2002 as part of Lehman Brothers’ SASCO RM securitization program were paid off in 2014, while a 2005 pool was paid off in 2016. Now, just one pool – created in 2007 – remains.

New View Advisors said the successful conclusion of another Lehman pool is welcome news for those investing in today’s proprietary market, which has ramped up in the last year after a long hiatus.

“Reverse mortgage lenders are fast approaching the record of pre-crisis proprietary loan origination. Production peaked in 2007 at about $100 million per month, but ground to a halt with the mortgage crisis, crashing home prices, and the virtual destruction of the non-agency securitization market,” New View said.

The success of the SASCO-RM program has aided in this revival by “reinforcing the relative value story of proprietary reverse mortgages,” New View said, adding that proprietary reverse securities have stable prepayments that provide substantial credit protection.

“The transaction’s successful payoff continues a winning streak of nearly 20 years, including the darkest years of the mortgage crisis, in which no proprietary reverse mortgage bond has suffered a principal loss or write-down,” New View said.

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