The BINOM Securitization Trust 2022-INV1 is preparing to issue about $448.9 million in residential mortgage-backed securities (RMBS), secured by a pool comprised entirely of investor loans, numbering 1,741.
The collateral pool includes 164 cross-collateralized loans, which back 858 properties. All of the loans are exempt from the qualified mortgage (QM) and Ability to Repay rules. The pool also consists heavily of cash-out refinancing (68.1%), and loans with two or more borrowers account for 34.1% of the pool, according to a pre-sale report from S&P Global Ratings
BREDS IV Residential Holdco is sponsoring the deal, called BINOM Securitization Trust 2022-INV1. LendingOne is the largest originator in the pool, accounting for 31.38% of the loans in the collateral pool. Some 61 other originators account for the remaining 68.62% of the pool by balance, S&P said.
Aside from being destined for business investment purposes, the loans in BINOM 2022-INV are first-lien, fixed- and adjustable-rate, fully amortizing and interest-only residential mortgage loans, according to the rating agency. The proceeds finance a range of property types as well, but are primarily single-family (62.0%), condominiums, and two- to four-family homes to prime and nonprime borrowers.
On average, the loans have a balance of $257,838, and on a weighted average (WA) basis the collateral has a current cumulative loan-to-value (CLTV) ratio of 70.9%, and borrowers have FICO scores of 740.
The certificates are almost entirely fixed rate (94.9%), while just 5.1% are adjustable-rate mortgages (ARMs), according to S&P.
The rating agency believes that a lot of factors, including those previously mentioned, weaken BINOM 2022-INV1. Drilling deeper into the purpose for the loans, which is a cash-out finance, some 157 have cash-out amounts greater than $200,000, S&P said. It added that it applied a 1.25x adjustment factor to the loss estimates for the cash-out refinance loans. Also, some 281 of the mortgages, or 15.21% of the pool by balance, were made to borrowers with current used FICO scores below 700.
BINOM's issued notes will benefit from subordination and excess spread.
S&P expects to assign ratings of 'AAA' through 'A' to the fixed-rate tranches; 'BBB' on the mezzanine tranche; and 'BB' and 'B' on the subordinate tranches.
