Angel Oak Mortgage Trust 2023-7 (AOMT 2023-7) is issuing seven RMBS certificates supported by 755 loans with a balance of $397.17 million. This represents AOMT's seventh transaction in 2023.
The certificates are secured by mortgage loans mainly originated by Angel Oak Mortgage Solutions, Angel Oak Prime Bridge, and Angel Oak Home Loans, Fitch Ratings says. Of the loans, 64.1% are designated as non-qualified mortgage loans and 35.9% are investment properties not subject to the Ability to Repay Rule.
The 755 loans comprising the collateral are seasoned at 23 months in aggregate, according to Fitch, and 21 months per the transaction documents. The borrowers have a relatively strong credit profile, with a 733 non-zero FICO and a 43.4% debt to income (DTI) ratio (both as determined by Fitch). They also have relatively moderate leverage, with an original combined loan to value (CLTV) ratio of 71.2%, as determined by Fitch, which translates to a Fitch-calculated sustainable LTV of 70.9%.
Fitch views the home price values of the pool as 8.6% above a long-term sustainable level. Overall, Fitch feels that home prices are more overvalued than they were last quarter.
The largest concentration of loans is in California (40.9%), followed by Florida and Texas.
According to Asset Securitization Report's deal database, the transaction will close on December 29, 2023. Angel Oak Mortgage Trust will issue seven tranches of notes, including two notes, A-IO-S and R, which are unvalued.
The class A-1, A-2 and A-3 certificates are fixed rate, are capped at the net weighted average coupon (WAC) and have a step-up feature. The class M-1 and B-X certificates are based on the net WAC. The waterfall will prioritize payment to the A-1, A-2 and/or A-3 cap carryover amounts prior to paying class B-X interest or principal if there are cap carryover shortfalls on class A-1, A-2 and/or A-3 certificates.
The sellers are Third Mortgage Trust, Angel Oak Mortgage Fund TRS, Maple Mortgage Trust II, Maple Mortgage Trust I, Conifer Mortgage Trust III, Conifer Mortgage Trust IV, and Greenleaf Income Trust II. Select Portfolio Servicing is the servicer and Computershare Trust Company is the master servicer. The trustee is Wilmington Savings Fund Society, FSB, and the custodian is U.S. Bank National Association.
AOMT 2023-7 is similar to previous Fitch-rated AOMT transactions, but there are several differences, Fitch says. The transaction has a relatively similar FICO, LTV, and debt-to-income (DTI) profile to that of AOMT 2023-6. However, it has more seasoning than AOMT 2023-6 (seasoning of 22.7 months versus 14.4 months, as determined by Fitch), and it has a slightly lower combined LTV (71.2% versus 73.5%) and a lower sustainable LTV due to Fitch's updated home price view (70.9% versus 77.1%).
The Fitch-calculated FICO is slightly lower than it was for AOMT 2023-6 (733 versus 735), and it has less fully documented loans, according to Fitch (5.9% versus 7.0%), and more no documentation loans (32.3% versus 27.6%).
Fitch has assigned a final rating of AAA to the class A-1 notes, AA to the A-2 notes, A to the A-3 notes, and BBB+ to the M-1 notes. It didn't rate the class B-X, A-IO-S, and R notes.
