$92 Million RMBS to be Sold

Wednesday, 28 July 2010 19:04

Bank of America Merrill Lynch will sell a $92 million bond backed by troubled reverse mortgages insured by the federal government. 760 HECMs support this bond and the borrowers are all in distress, including foreclosure. Wall Street is trying to revive a private issuer market, so the residential mortgage-backed security has come around. In the past two months, Wall Street dealers have securitized distressed home loans, and the liquidation value has supported the bonds.

BofA’s issue will have an interest rate of 4% and about 21% of collateral will be set aside for credit enhancement or investor protection from loss. If proceeds from the sale of a property with a reverse mortgage cannot pay off the balance, a claim will be filed on the FHA insurane.

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$92 Million RMBS to be Sold