MBS

The three senior classes should repay investors with coupons of 6.73%, 7.13% and 7.64% on classes A1, A2 and A3, while are expected to issue floating-rate notes.

The marketplace has a large appetite to acquire risk-adjusted rental product. Investors see tailwinds leading to a revitalization of SFR capital markets by yearend.

JPMMT 2023-4, as the deal is known, has a cross-collateralization structure that divides the collateral into two groups that determine the repayment of principal and interest. This is similar to previous JPMMT transactions.

The non-qualified mortgage pool consists mostly of loans underwritten to less than full documentation, some 96%. Also 47% of the loans were underwritten to a bank statement program for verifying income.

While the mortgages from this Community Development Financial Institution lack income verification, the borrowers' credit is actually near prime, according to DBRS Morningstar.

The investor segment will have to be mindful as it gains ground, executives said Tuesday, noting that the sector takes experience, skill and savvy awareness of risks.

Compared with several previous Verus Securitization deals dating back to Verus 2022-8, the current transaction has the highest concentration of ARMs, at 33.9%.

Low interest rates on 2021 and 2022 mortgages might mean low prepayment rates, exposing investors to duration risk on supported mortgage-backed securities.

Home price overvaluations over 10% are easing in some markets, analysts say, but RMBS investors are still cautiously tightening liquidity amid uncertainty.

After a selloff toward the end of 2022 when it sought to reduce liquidity risk, the company resumed purchases of whole loans last quarter.