A pool of mortgages, a majority of which are designated as non-qualified, will secure $228.2 million in residential mortgage-backed securities (RMBS) from Angel Oak Mortgage Trust, series 2026-5.
Known as AOMT 2026-5, the deal will issue the $228.2 million through a series of 10 class A, M and B notes, which all have a final scheduled maturity of July 2071, according to Fitch Ratings' analysts.
Most of the A1 tranches, which included a first-cash flow and a last-cash flow tranche are expected to pay a coupon of 5.83%, except for the A-1 last-cash flow tranche, which is expected to pay 5.93%, KBRA said.
Otherwise, the A2, A3 and M1 tranches are expected to pay coupons of 6.03%, 6.42% and 6.25%, respectively, according to KBRA.
Credit enhancement levels includes 25.80% on all the A1 tranches, except 35.80% on the A1A notes. Classes A2 through B2 will benefit from credit enhancement levels of 19.30% through 0.90%, KBRA said.
Angel Oak Mortgage originated 71.2% of the pool, which contains 458 performing, fixed- and adjustable-rate mortgages. While other originators contributed to the pool of first-lien loans, none accounted for less than 10%, Fitch and KBRA said.
Non-QM mortgages account for 59% of the pool, while ability-to-repay/qualified mortgages accounted for 41.0% of the pool, according to KBRA.
Also, all the underlying mortgages were subjected to third-party due diligence, the rating agencies said.
The deal has a modified sequential structure, wherein the class A certificates will receive principal on a pro-rata basis before any principal is paid to the more subordinate classes, KBRA said. Select Portfolio Servicing, Computer share Trust—the servicer and master servicer, respectively,—or paying agent on the deal are also prohibited from forwarding any interest and principal on loans that are delinquent by 180 days or more.
On average, the loans have an average balance of $524,549, with a weighted average coupon (WAC) of 7.00%. Only 10.6% of the collateral loans have an interest-only period, according to KBRA.
Also on a WA basis, the borrowers have an original credit score of 753. Leverage is modest, with an original loan-to-value ratio of 70.8%. On a non-zero WA basis, the collateral pool's underlying borrowers have an annual income of $998,784, and liquid reserves of $332,353. Also on a non-zero WA basis, the borrowers have a debt service coverage ratio (DSCR) of 1.25%, KBRA said.
KBRA assigns ratings of AAA on the A1 notes; and AA and A to classes A2 and A3; classes M1, B1 and B2 are expected to be rated BBB, BB- and B-, respectively.
Fitch assigns AAA to the A1 notes; AA and A to classes A2 and A3, respectively; and BBB- to the M1 notes.
