Bayview Asset Management is marketing another $182.98 million of bonds backed by re-performing mortgages acquired last year from former subprime HELOC lender CitiFinancial Credit Corp.

The 3,431 loans collateralizing Bayview Koitere Fund 2017-SPL3 include a mix of fixed- and variable rate loans now being managed by Bayview’s special servicing unit.

The senior tranche of notes to be issued in the transaction carry triple-A ratings from DBRS and Fitch Ratings. They carry a coupon of 4%, and will have credit enhancement from 34.8% subordination of five other classes of junior notes.

The transaction is the third collateralization of Bayview-serviced mortgages that were originated by CitiFinancial prior to the financial crisis. The loans in the pool are older vintage mortgages with an average age of 11 years on lower-valuation properties (an average of $97,500), with the highest concentration in North Carolina (9.1%), Pennsylvania (7.7%) and Virginia (6.7%).

That level is half of the typical $150,000 property valuation of other Fitch-rated RMBS deals, which has prompted Fitch to increase loss expectations on its standard RMBS loss model to the Class A notes.

The lower value homes present a higher risk of loss severities, in part because they are too old to be covered by federal ability-to-repay/qualified mortgage standards; also, the average borrower FICO score of 646 indicates homeowners with blemished credit histories. Another risk factor is Bayview will not advance principal and interest payments to investors in the event of a default on any loans used as collateral.

But both DBRS and Fitch stated the loans have a recent clean history of timely payments (96.4% for the past two years) and also have a moderate average loan-to-value ratio of 80% that shows higher levels of homeowner equity than comparable recent re-performing residential mortgage-backed securitizations.

The deal sponsor, Koitere Fund, L.P., will retain a 5% vertical interest in each class of the securities to be issued.

Bayview, which is controlled by The Blackstone Group, has issued two previous RPL transactions since December backed by former CitiFinancial-originated mortgages: the $226 million Bayview Opportunity Master Fund IVb Trust 2016-SPL2 and the $214.3 million Bayview Opportunity Master Fund Iva Trust 2016-SPL1.

Bayview this month also collateralized GSE credit-risk transfer securities from Fannie Mae and Freddie Mac, its second CRT deal of 2017.

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