Sam Dunlap on why the single-family rental (SFR) securitisation market will not likely outperform non-agency RMBS

Read article


Diversification does not guarantee a profit or protect from loss in a declining market.

Single-family rental (SFR): Securitizations backed by pools of single-family rental properties. The deals are secured by a single loan made to the borrower, a subsidiary of the sponsor. The collateral for the loan includes mortgages on the properties and a pledge of 100% of the equity of the borrower.


Non-agency RMBS (NA RMBS): Mortgage-backed securities sponsored by private companies other than government sponsored enterprises such as Fannie Mae or Freddie Mac. Securities are structured into tranches with the higher rated securities receiving payments first and the lower rated securities taking losses first.


Commercial mortgage-backed securities (CMBS): CMBS are backed by pools of individual commercial mortgages. The payments from all of the individual commercial mortgages are distributed to the holder of the commercial mortgage security. Securities are structured into tranches with the higher rated securities receiving payments first and the lower rated securities taking losses first.