Loan Funding Structure VI is preparing to sponsor a $344.5 million residential mortgage-backed securities backed by a pool of with fixed- and hybrid adjustable-rate mortgages, primarily non-qualified mortgages and exempt from ability-to-repay or qualified mortgages.
BRAVO Residential Funding Trust 2025-NQM10 will sell the notes through about nine tranches of notes, composed of classes A, M and B, according to Kroll Bond Rating Agency. Certain loan and borrower characteristics lean the pool towards non-prime quality, driven mainly by the debt service coverage ratio (DSCR) and bank statement documentation methods used to originate the loans.
BRAVO 2025-NQM10's senior notes will repay investors on a pro rata basis, while the mezzanine and subordinate notes will repay investors sequentially, according to KBRA. The capital structure includes a pre-existing servicing advance account, excess servicing and a subordinate piece of excess cashflow.
Barclays Capital leads several institutions as initial purchaser on the deal, including Morgan Stanley, Santander U.S. Capital Markets, BofA Securities and Cantor Fitzgerald.
The A1 tranche contains the bulk of the outstanding notes, $251.4 million, and is divided into the 1A and 1B sub-tranches, with enhancement of 37.0% on the A1A piece and 27.0% on the A1B. After that credit enhancement ranges from 21.2% on the A2 notes to 1.20% on the B2 notes.
The pool of 708 loans includes what KBRA calls a meaningful concentration of investor loans, 44.6%, while the rest are owner occupied loans and 51.7%, and 3% for second homes. On average, the loans have a balance of $468,584, and the pool appears to be diversified, with the aggregate top 5 balances represent 5.5% of the pool, KBRA said.
Borrowers had an original FICO score of 738, on a weighted average (WA) basis, with an original loan-to-value ratio of 70.7%, the rating agency said.
Most borrowers in the pool, 56.4%, are self-employed, and they have a WA annual income of $2.8 million, with liquid reserves of $307,472, KBRA said.
KBRA assigns AAA to the A1 notes; and after that ratings ranged from AA+ on the A2 notes to B+ on the B2 notes.
