A pool of 934 residential mortgages, primarily fixed-rate and non-prime, will secure $556.3 million in residential mortgage-backed securities (RMBS), from sponsor Loan Funding Structure V.
The transaction, BRAVO Residential Funding Trust, series 2026-NQM6, is expected to close on June 30, according to Asset Securitization Report's deal database.
BRAVO's class A notes include first cash flow and last cash flow tranches, the A-1FCF and A-1LCF tranches, according to analysts at Fitch Ratings. Usually, securitization deals pay down the first cash flow piece first, then paying the last cash flow tranche until it is paid down.
Barclays Capital is the lead underwriter on the deal.
Overall, the deal will repay notes on a hybrid pro rata basis for the senior notes and sequentially for the mezzanine and subordinate notes, the rating agency said.
All the notes have a stated final maturity date of May 2066, according to Fitch.
Morningstar DBRS notes that all the class A tranches, the senior notes, offer credit enhancement levels of 23.95%, except the A-1A class, which benefits from a credit enhancement level of 32.95%.
Also, the A-1FCF, A-1LCF, A-1F, A-1IO, A-1A, A-1B, A-2 and A-3 classes of notes can pay stepped-up interest rates of 100 basis points, if they are still outstanding on or after the June 2030 payment date, Fitch said.
Arc Home accounted for the largest portion of loans originated, 37.5%, DBRS said. Citadel follows, accounting for 17.6% of the pool. Meanwhile, Shellpoint Mortgage Servicing will service 78.2% of the mortgage pool, and Citadel servicing the remaining 21.8%, DBRS said.
On average, the loans have a balance of $595,634, and on a weighted average (WA) basis have a cumulative loan-to-value (LTV) ratio of 70.6%. The loans also have a WA debt-to-income ratio of 33.9%.
Half the borrowers are self-employed, and 21.5% of the mortgages have multiple borrowers, Fitch noted. Borrowers have $334,051 in liquid reserves.
Fitch assigns ratings of AAA to the A1 tranches; AA to the A2 notes; A to the A3 notes; BBB- to the M1 notes; and BB- and B- to the B2 notes.
Ratings from DBRS range from (P) AAA (sf) on all the A1 notes to (P) B (high) (sf) on the B2 notes.
