A portfolio comprised entirely of investor loans on a variety of residential properties, financed by mortgages exempt from ability-to-repay (ATR) rules, is driving the Barclays Mortgage Loan Trust, 2022-INV1. The transaction is set to issue about $329.4 million in mortgage-backed securities (MBS).
Sutton Funding, a New York City-based financing company, is sponsoring the transaction, which is slated to close on May 17, according to S&P Global Ratings. Barclays Capital is expected to act as the initial note purchaser, with Fay Servicing and Shellpoint Mortgage acting as servicer on the deal. Nationstar Mortgage is the master servicer.
The Barclays Mortgage 2022-INV1, will issue notes through a senior-subordinate structure that will benefit from excess cash flow, the rating agency said. It expects to assign ratings ranging from ‘AAA’ on the $189.9 million, A-1 class to ‘B-’ on the $16.8 million B-2 class.
While all of the loans are exempt from ATR rules, virtually all of the portfolio, or 92.2% of the pool, were underwritten using alternative documentation, such as personal and business bank statements, or profit and loss statements. Another 1,020 property-focused investor loans, and 18 of the loans, or 3.3% of the pool, were underwritten using rental income and debt service coverage ratio (DSCR). Further, four property loans, or 2.7% of the deal, relied heavily on FICO scores and loan-to-value (LTV) ratios for underwriting, according to S&P.
On average, the loans in the pool have a balance of $314,038, typically extended to borrowers financing properties such as unattached single-family homes, planned unit developments and townhouses. These make up 63.8% of the collateral pool. Two- to four-family homes comprise 28.7% of the pool.
On a weighted average (WA) basis, the loans have an original cumulative LTV ratio of 70.5%, a FICO score of 736, seasoning of four months, and a debt-to-income ratio of 28.0%.
About 45.2% of the loans were used to purchase properties, while 43.6% were used for cash-out financing, according to S&P. Just 5.8% of the loans were extended to foreign borrowers, the rating agency said.
