Angel Oak Mortgage Fund EU B is sponsoring a securitization of revenue from a pool of 609 residential mortgages and will sell the $321.9 million in RMBS to investors.
The pool has what Kroll Bond Rating Agency calls a meaningful concentration of non-prime loans, which include non-qualified mortgages (non-QM), which compose most of the pool, 66.1%, or exempt, which accounts for 33.9% from the ability-to-repay/qualified mortgage rule, the rating agency said.
About nine tranches of class A, M and B notes will come to market, according to KBRA and Fitch Ratings, which also assessed the notes. All the notes have a final scheduled maturity date of December 2070, the rating agencies said.
On a weighted average (WA) basis, the collateral mortgages have a slightly higher leverage level than previous transaction, with an original loan-to-value (LTV) ratio of 71.9%, compared to 70.7% on the AOMT, series 2025-11, KBRA said. The mortgages have a balance of $528,681, the rating agency said.
The A1 through A3 certificates will pay a fixed rate of interest and are capped at the net weighted average (WA) rate according to their distribution dates, Fitch said. Asset Securitization Report's deal database finds that the A1A and A1B notes, rated AAA from KBRA and Fitch, are expected to pay investors a coupon of 5.15%.
Further down the deal structure, AA-rated notes are expected to pay coupons of 5.4%, and BBB/BBB- notes from KBRA and Fitch, respectively, are expected to pay coupons of 6.15%.
AOMT 2025-12 will repay investors through a modified sequential structure, which is frequently seen on non-QM RMBS deals, according to Fitch. The transaction will pay principal to the class A notes on a pro rata basis, shutting out the subordinate bonds from any principal payments until the outstanding balance on the senior notes are reduced to zero, Fitch said.
The deal's capital structure includes several elements to boost the notes' credit, according to the rating agencies, including excess spread. AOMT, 2025-12, also includes a 180-day stop-advance feature which prohibits the servicer, master servicer or the paying agency from forwarding any interest and principal on loans that are 180 days delinquent or more.
Traditional, full-documentation underwriting accounted for just 9.8% of the collateral pool, according to KBRA. Alternative documentation and debt service coverage ratio (DSCR) accounts for a large majority of the loans in the pool, 86.9%, according to KBRA.
KBRA assigns A to the class A3 notes; and BB- and B- to the B1 and B2 notes, respectively. Fitch assigns A to the A3 notes and BBB- to the class M1 notes.
