RMBS

ACHM 2025-HE1 will repay notes using a pro-rata, sequential pay structure that must satisfy an overcollateralization test, and cumulative loss and delinquency triggers.

The bonds are tied to rights to collect mortgage payments, known as mortgage servicing rights, and it's only the second such deal that's non-recourse.

Almost the entire pool of mortgages will fund primary residences and were underwritten using full documentation.

Money-market funds with cash to invest are doing more repo — extending overnight credit to owners of Treasuries, causing the rates on the loans to decline.

Aside from that, three collateral performance trigger events—delinquency, default and extension rate—that can force an early amortization are structured into the deal.

Full documentation accounts for a little over a third of the pool, but otherwise FICO scores are high, as are weighted average liquid reserves.

Excess cash flow will pay timely interest and protect against realized losses in the rated certificates before being paid out to the class X notes.

Servicers—Citadel, NewRez and Selene Finance—will not advance any delinquent principal and interest. Eventually, that should reduce loss severities to the deal.

Investment properties are the primary properties backing the collateral pool, at 80.3%, while second homes account for 19.7% of the pool.