Debt service coverage ratios are moving close to 1.0 but performance remains strong due to tight underwriting of borrowers.

New ratings methodology and additional historical data on home equity investments should boost investor demand for the product in 2025.

Genesis Capital has issued more than $1 billion in rated residential transition loan securitizations since Morningstar DBRS started rating the securitizations in March.

Morningstar DBRS created rating criteria for securitizations of home equity investments in mid-2023. Since then, issuance has blossomed, and the sky’s the limit, according to industry participants.

The housing environment and new rating methodology have led to an improving securitization market for business purpose loans.

Home price appreciation and increased borrower pay-downs led to upgrades for a handful of MBS backed by home equity loans.

Rithm Capital closed a $500.0 million MBS backed by rated residential transition loans through its Genesis Capital shelf. The deal is the second RTL securitization to receive a rating from Morningstar DBRS.

Despite growing delinquencies, Morningstar DBRS has provided a stable outlook for the securitization markets involving non-QM loans and HEI agreements.

Unison offers its first HEA securitization; NP rebrands; Finance of America launches new reverse-mortgage product; Sherman Bridge debuts investment-property lender marketplace; Arc Home appoints new president and future CEO; UWM expands DSCR eligibility requirements.

The issuance, sized at $342.0 million, received preliminary AAA ratings from Fitch Ratings and Kroll Bond Rating Agency.