In the largest issuance of the residential mortgage-backed securities (RMBS) in the platform’s recent memory, Home Partners of America 2021-2 Trust (HPA 2021-2) is preparing to raise $2.2 billion from the capital markets.

Deal sizes have ranged between $203 million floated in the HPA 2020-1 to $423 million on the 2018-1 deal, according to Finsight. On the HPA 2021-2, Bank of America is acting as lead manager for an RMBS deal backed by a single loan secured by first-priority mortgages on a pool of 6,148 single-family rental homes, and 299 townhouses, according to a DBRS Morningstar pre-sale report.

The balance on DBRS’ rated certificates is $2.1 billion. HPA 2021-2 uses a sequential capital structure. The four senior classes will receive interest and principal payments up to the principal distribution amount, until the senior notes are paid in full, plus any unreimbursed applied real loss amounts. Four subordinate classes of notes, which provide credit support to the senior classes, are also on the deal.

DBRS expects to assign a ‘AAA’ rating on the $894.6 million class A notes through a ‘A’ rating on the $163 million class D notes. The subordinate classes are likely to be rated ‘BBB’ on the $207.9 million on the class E1 notes, and ‘B’ on the $151.2 million on the class G certificates.

The HPA 2021-2 trust has several mechanisms that expose the underlying collateral to changes, some of which could affect cashflow to the trust, according to DBRS. For one, Home Partners Holdings, operates a Right to Purchase (RTP) Program that allows certain individuals to rent homes in approved communities with the opportunity to purchase the home over the first three to five years of their leases. DBRS notes that 1,735 properties out of the 6,148 properties in the pool are leased under the program. Of the properties in the RTP program, brokers’ opinions on the home prices currently exceed rental prices by about $46.8 million.

Under Home Partners Holdings’ RTP program, contractual rents are usually higher than market rents.

The transaction also includes an excess collateral release feature that allows the borrower to transfer or release any property without a repayment of the loan or payment of any yield maintenance premium, under certain conditions.





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