Winston & Strawn Partner Claudine Chen-Young Moderates Panel at the IMN ABS East Conference

Winston & Strawn Partner Claudine Chen-Young moderated the “Single-Family Rental Sector Update” panel during the IMN ABS East Conference 2023. Winston was a sponsor of the event. 

Key Takeaways

1. SFR
   1. Lease growth is decelerating and the deceleration is expected to continue in the near term.
   2. Net Operating Income should be watched as rent growth is normalizing, but operating expenses are increasing.
      1. Property taxes have increased materially due to the rising home prices. As these taxes can be 40 to 50% of the operating expenses, it is something to keep an eye on in for the remainder of 2023 and 2024 as housing prices continue to rise and some states complete their property tax assessments.
      2. Property insurance costs have materially increased in states like Florida.
   3. Despite increasing operating expenses, property valuations aren’t restricted to cash flow metrics as properties are seen trading 20% above broker price opinions. Thus, if expenses can’t be controlled, Asset Managers may be able to liquidate properties getting values 20-50% over BPOs.
2. Home Equity Investment
   1. HEI has become an attractive option in this high interest rate environment for certain homeowners that have a lot of equity, which has been boosted from the increased home prices, to take the HEI capital to pay down debt and improve financial health.
   2. DBRS and other rating agencies have built ratings methodologies for this product to permit rated securitizations backed by this asset by this asset and all eyes are on HEI as a new compelling emerging product for sponsors and investors.

Our seasoned team of residential mortgage attorneys represent originators, servicers, lenders, and fund investors in a broad range of transactions spanning from purchases and sales, to warehouse financings and securitizations. Underlying assets include conforming and non-conforming loans, servicing rights (agency and non-agency), servicing advance receivables, excess servicing strips, non-qualified mortgages, residential transition loans, single and multifamily rental, and early buyout loans. We routinely provide guidance regarding new programs and investment structures, drawing on years of experience as external and in-house counsel. We represented the issuer in the industry’s first securitization of mortgage servicing rights, and have helped market leaders establish financing, sale, and securitization programs for new and existing products.