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REO-to-rental model becomes ‘hottest’ emerging asset class

Panelists at the American Securitization Forum in Las Vegas offered a securitization market outlook for 2013, noting that overall assets types are expected to perform well this year.

However, the one asset class that is going to make its mark as the “hottest emerging asset class” is the REO-to-rental model, said Thomas Hiner, a partner with the firm of Hunton & Williams

Rental demand is expected to increase by 6.6 million units through 2016, ()

Many factors will spur rental housing growth, including the large supply of housing inventory that is now transitioning into the rental space. In addition, large institutional grade investors are interested in the single-family rental sector, said Jim Warren, () of FirstService Residential Realty()


Still, these are minor challenges that can be resolved if handled properly, Warren assured. 

Another asset class in the securitization market that is expected to improve is the nonagency residential mortgage-backed securities space. 


Still, the non-agency RMBS sector is projected to issue between $14 billion and $18 billion in RMBS for the year, with prime jumbos being the main contributor.

More issuance in 2013 will partly be a result of two distinctive factors: continued housing improvements and new capital rules, said Gagan Singh, executive vice president and chief investment officer for PNC Bank (PNC).

While two issuers have dominated the nonagency RMBS sector — Redwood Trust (RWT) and Credit Suisse (CS)— smaller issuers, including non-bank investors, are expected to significantly participate in these assets in 2013, said Peter Sack, managing ()securitized products at Credit Suisse. 



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