MBS

Alternative asset manager Canyon Partners is committing $250 million to buy new mortgage bonds created by A&D Mortgage LLC, a partnership that will help the mortgage finance company substantially increase the pace of its bond sales. 

Brookfield Asset Management and a private equity partner reached a friendly deal to take over First National Financial Corp., a mortgage company backed by Canadian billionaire Stephen Smith, for about C$2.9 billion ($2.1 billion).

On a cumulative basis, advance rates on the notes range from 95.4% on the A1 notes to 121.8% on the class M5 notes.

The transaction's pool of 365 fixed-rate mortgages, all first lien, breaks down to mostly non-agency loans (61.4%). The rest, 38.6%, are agency eligible.

The funding round will help Button Finance, which leverages AI to underwrite home equity financing, expand its range of products to more borrowers.

A range of investment residential properties, including single-family homes, condominiums and multi-unit properties, will secure the debt.

Moderate leverage is one example of cleaner credit, as the current collateral pool's original loan-to-value (LTV) ratio is 69.1%, down from 71.7% on the 2024-NQM1 series.

Originators applied bank statement, full documentation and profit and loss documentation in their underwriting.

The deal is composed of 11,547 seasoned performing and reperforming loans that are first and second lien. Loan servicing includes a 180-day chargeoff feature.

Second-lien loans make up virtually the entire pool, which carries some risk of poor recovery rates. Yet 78% of the pool is also considered safe-harbor mortgages.

Now the structured mortgage securities are cheap enough that CLO investors are watching them more closely, according to strategists and investors.

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.

Small-balance commercial mortgages, SBA 504 and investor loans, all first-lien, make up the collateral pool.

Lenders and developers are now working their contacts in Washington to try to protect Ginnie Mae.

Stability in mortgage rates may be key to unlocking pent-up demand during the upcoming spring homebuying season, but with loans still expensive and prices continuing to rise, affordability remains a hurdle.

The proposal is one of several that aims to address difficulties managing early buyouts from mortgage-backed securities pools.

Private-label securitization volume increased 75% this year versus 2023; conditions are right for that to continue, KBRA said.

This is the first RTL transaction for Roc360 Real Estate Income Trust, the deal's sponsor, in three years. Also, it is Roc360's first rated RTL transaction.

In the non-prime pool, owner-occupied properties account for most of the assets, at 55.1%; the amount of investor properties represents 41.6% of the deal.

Fed policymakers, in their new projections for their benchmark rate, have a median estimate of 3.4% for the end of next year — reflecting a potential further 1.5 percentage points.