Servicing Single-Family Rental Securitizations

by Midland EVP Stacey M. Berger

Berger explains the significance of the SFR market in the October 2014 issue of Mortgage Banking Magazine.

There are emerging opportunities for servicers in the single-family rental securitization space. Complexity is the name of the game.

The single-family residential (SFR) rental market has rapidly evolved with the acquisition, ownership and management of very large portfolios of properties by institutional investors. Securitization has developed into an efficient new source of capital markets financing to support this institutional ownership.

These SFR rental securitization transactions are secured by the revenues generated from the rental income from the collateral properties as well as by their residual value. These transactions are unique in that the structures and documentation are primarily based on commercial mortgage-backed securities (CMBS), but the value of the underlying collateral is similar to residential mortgage securitizations.

The servicing of SFR rental securitization transactions is an important consideration for sponsors, issuers, rating agencies and investors, and creates new challenges for the master and special servicers. This article describes the responsibilities of the servicers and the issues associated with the administration and management of securitized transactions in this emerging market.

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