The Angel Oak Real Estate Investment Trust III, is sponsoring a $394.5 million mortgage-backed securities (MBS) deal in which Angel Oak is acting as the loan aggregator, a return to a role that it had not played in recent securitizations from the AOMT platform.
Collateralized by 747 mortgages— and mostly non-prime ones a that—the deal assembled loans including those from Angel Oak entities collectively known as Angel Oak Originators, which represented 43% of the pool. Multiple other originators contributed to the pool, but none represented more than 16% by percentage of the pool balance, according to Kroll Bond Rating Agency, which expects to assign ratings to the notes.
After Angel Oak, Impac contributed 15.7%, the largest contributor outside of Angel Oak, and other originators’ contributions were in the single digits.
Morgan Stanley and Barclays Capital lead the group of initial note purchasers, which includes Deutsche Bank, Goldman Sachs and Robert Baird & Co. A modified sequential structure will issue the notes, which will also benefit from excess spread.
The deal is slated to close on May 10, KBRA said, which expects to assign ratings ranging from ‘AAA’ to ‘A-’ on the senior pro-rata notes.
Select Portfolio Servicing will service the notes, and Wells Fargo Bank has been tapped as master servicer, according to KBRA.
Most of the non-prime loans, 60.8%, were underwritten to documentation that relied heavily on bank statements, KBRA said. Some 33.6% of the mortgage loans, by percentage of pool balance, were on houses to be used as investment properties. Debt service coverage ratio underwriting, which takes into account the ratio of the investment properties’ expected income relative to debt service payments, accounted for 21.7% of the pool balance.
The mortgages had an average balance of $528,230, with a weighted average coupon of 4.6%.
On a weighted average (WA) basis, the mortgages have a KBRA credit score of 740, an original loan-to-value (LTV) ratio of 68.5% and just 0.2% of the mortgages in the pool have known junior liens on them.
About 68.3% of the borrowers in the pool are self-employed, and they have a WA DTI of 32.2%, according to KBRA.
