DBRS Morningstar Confirms All Ratings on RMF Buyout Issuance Trust 2020-HB1

DBRS, Inc. (DBRS Morningstar) confirmed all ratings on the Asset-Backed Notes, Series 2020-HB1 issued by RMF Buyout Issuance Trust 2020-HB1 as follows:

-- Class A1 at AAA (sf)
-- Class A2 at AAA (sf)
-- Class AB at AAA (sf)
-- Class M1 at AA (sf)
-- Class M2 at A (sf)
-- Class M3 at BBB (sf)
-- Class M4 at BB (high) (sf)

Class AB is an exchangeable note. This class can be exchanged for combinations of exchange notes as specified in the offering documents.

These rating actions reflect asset performance and credit-support levels that are consistent with the current ratings.

DBRS Morningstar’s rating actions are based on the following analytical considerations:

-- Key performance measures, as reflected in credit enhancement increases since deal inception, and running total cumulative loss percentages.

-- In connection with the economic stress assumed under its moderate scenario (see “Baseline Macroeconomic Scenarios for Rated Sovereigns” published on September 8, 2021), DBRS Morningstar advances the mortality curve of all the reverse mortgage (RM) borrowers by four years, advances all foreclosure timelines to a AAA scenario timeline, and applies an immediate 10% valuation haircut to all loans.

-- The pools backing the reviewed residential mortgage-backed security transactions consist of RM collateral.

RM LOANS
Lenders typically offer RM loans to people who are at least 62 years old. Through RM loans, borrowers have access to home equity through a lump sum amount or a stream of payments without periodically repaying principal or interest, allowing the loan balance to accumulate over a period of time until a maturity event occurs. Loan repayment is required if (1) the borrower dies, (2) the borrower sells the related residence, (3) the borrower no longer occupies the related residence for a period (usually a year), (4) it is no longer the borrower’s primary residence, (5) a tax or insurance default occurs, or (6) the borrower fails to properly maintain the related residence. In addition, borrowers must be current on any homeowner’s association dues if applicable. RMs are typically nonrecourse; borrowers do not have to provide additional assets in cases where the outstanding loan amount exceeds the property’s value (the crossover point). As a result, liquidation proceeds will fall below the loan amount in cases where the outstanding balance reaches the crossover point, contributing to higher loss severities for these loans.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Notes:
The principal methodology is the U.S. Reverse Mortgage Securitization Ratings Methodology (May 8, 2020), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on these credits or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

DBRS, Inc.
140 Broadway, 43rd Floor
New York, NY 10005 USA
Tel. +1 212 806-3277