Chimera Investment is bringing $287.6 million in mortgage-backed securities (MBS), secured by non-conforming loans extended to nonprime borrowers through debt service coverage ratio (DSCR) underwriting.
CIM Trust 2025-|1, will issue the notes through 11 tranches of classes A, M and B notes, according to Fitch Ratings. All the tranches have a final maturity date of October 2069.
The capital structure will repay investors through a modified sequential payment structure, according to Fitch. Senior notes will distribute principal on a pro rata basis, while the subordinate tranches are completely shut out from such payments until all senior classes are reduced to zero. Should a cumulative loss or a delinquency trigger event occur within a repayment period, the trust will pay principal sequentially to classes A1, A2 and A3 until the balances are reduced to zero.
Shellpoint Mortgage Servicing, the servicer, will provide four months of advances on delinquent principal and interest, but there is a stop-advance provision that limits external liquidity to the bonds should significant and prolonged delinquencies occur, Fitch said.
There is also a step-up coupon feature that calls for the fixed rates on classes A1, A2 and A3 to increase by 100 basis points, subject to the net weighted average coupon (WAC) after four years.
The deal has 1,429 underlying mortgages in the pool, and all are business purpose investor properties underwritten based on DSCR derived from rental income. Only 1% of the underlying pool of loans are adjustable rate, while 97% are fully amortizing and 3% have an interest-only feature. The loans have an average balance of $201,311, Fitch said.
On a weighted average (WA) basis, the loans have a model FICO score of 748 and an original debt-to-income ratio of 65.0%. Purchases account for 56.4% of the pool, and cashouts account for 35.8% of the pool balance.
Fitch assigns AAA to the A1 notes; AA to the A2 notes; A to the A3 notes and BBB- to the M1 notes.
