Home equity contracts secure $250 million in ABS
A pool of 2,664 home equity investment agreements representing first, second and third liens on residential properties will secure $250 million in securitized bonds, being offered to investors through the HTAP Issuer Trust, 2026-1.
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The underlying contracts have origination maturity terms of up to 10 years, according to analysts at Morningstar DBRS, adding that the bonds have a stated maturity date of October 2044.
Nomura Securities International is the initial purchaser deal on the deal, which is expected to close on October 22, according to DBRS.
The deal comes to market amid the home equity sector’s rapid expansion. In a recent note recapping the ABS East conference presented by FT Live and Fixed Income Investor Network (FIIN) earlier this week, according to Kroll Bond Rating Agency. Homeowners’ accumulations of more than $35 trillion in accumulated U.S. homeowner equity, plus their reluctance to refinance their low-rate mortgages is driving the boon in home equity financing, according to KBRA.
As far as HEI are concerned, KBRA analysts said industry professionals said they would support clearer regulatory oversight.
“More consistent licensing and consumer protection requirements could help establish the product within the broader housing financing market,” analysts wrote.
HTAP 2026-1 will issue the notes through four tranches of classes A, B, C and D notes, DBRS said, which assigned ratings of (P) A (low) (sf), (P) BBB (low) (sf), and (P) BB (sf) to classes A, B and C, respectively.
Class A, B and C notes are expected to offer rates of 6.87%, 7.87% and 7.87%, respectively, the rating agency said.
Noteholders will be repaid sequentially, DBRS said. The senior/subordinate structure confers subordination to the notes, giving the deal “relevant credit enhancement,” according to the rating agency, with levels representing 34.2%, 22.5% and 13.6% of note balances, DBRS said.
Hometap Equity Partners originated the deal, and BSI Financial Services is on the deal as backup servicer, the rating agency said. All contracts in the asset pool were originated in 2025 and 2026.
