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AmeriHome tapping securitization market to fund Ginnie Mae MSRs

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Move over, PennyMac. Another mortgage servicer is tapping the securitization market to fund the growth of its portfolio.

AmeriHome Mortgage has launched an offering of $655 million of notes that will be backed by the rights to service mortgages that have been purchased and securitized by Ginnie Mae. The transaction, AmeriHome GMSR Issuer Trust, consists of $155 million of fixed-rate, five-year notes and $500 million of two-year variable funding notes.

The structure is similar to that of a deal launched last week by PennyMac, which pioneered this type of transaction. AmeriHome will sell to the securitization trust participation certificates representing a portion of the servicing fees that it receives on Ginnie Mae loans. (The other portion of the fees goes to Cenlar, the subservicer.)

However, the term notes that AmeriHome is issuing are provisionally rated BBB by Kroll Bond Rating — one notch higher than PennyMac’s offering, which is rated BBB-.

Like PennyMac’s deal, the advance rate on the term notes is 60%, and investors receive only interest, and no principal, until maturity, unless the value of the collateral falls below a certain level. In that case, AmeriHome is obliged to pay down the principal of the variable rate notes until the advance rate moves back up to 60%.

If the rated notes are not repaid by the stated maturity date, the note rate is increased by 0.75% — also in line with PennyMac’s most recent transaction.

The trust may issue additional term notes and variable funding notes in the future without the consent of any existing noteholders.

Credit Suisse First Boston Mortgage Capital and affiliates are the administrative agent and the holders of the variable-rate funding notes, which serve as a line of credit, allowing AmeriHome to purchase additional collateral for the trust.

With a portfolio of servicing rights on $23 billion of Ginnie Mae mortgages, AmeriHome is smaller player in this market than PennyMac. For this reason, Kroll views the risk that Ginnie Mae could terminate AmeriHome’s servicing rights as “somewhat higher” than that of PennyMac, though the risk to both servicers is “remote.”

Termination of AmeriHome’s contract would be the effective equivalent of a prepayment of all mortgage loans subject to the contract and would cause the securitization trust’s borrowing base to be reduced to zero. In such a circumstance, the noteholders would be fully dependent on AmeriHome to comply repay all principal of and interest on the notes.

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