Provident Funding Mortgage Trust is preparing to sell $365.2 million in residential mortgage-backed securities (RMBS), through the series 2025-1, backed by a pool of conforming, agency eligible home loans.
Three of the 15 tranches of class A and B notes are super senior, which benefit from 15.0% of credit enhancement, according to Kroll Bond Rating Agency. PFMT 2025-1's coupons are expected to pay 5% or 5.5% on the A1 through A16 tranches, most of which are rated Aaa/AAA from Moody's Ratings and KBRA, respectively, according to Asset Securitization Report's deal database.
BofA Securities is the structuring lead manager, while Jefferies and Santander Investment Securities, were co-leads on the deal, which is expected to close on February 20, according to KBRA.
PFMT 2025-1 will repay investors on a senior-subordinate, shifting interest payment structure, with a final maturity date of February 2055.
To keep note repayment on track, credit enhancement comes from subordination, and the senior notes benefit from a lockout period when the subordinate classes do not receive any unscheduled principal payments, while scheduled principal is paid out pro rata.
The current transaction is secured by a pool of loans with a weighted average (WA) FICO score of 779, and a slightly lower loan-to-value (LTV) ratio of 69.8%, so in that way it is a lot like the PFMT 2024-1 deal in its basic details, according to KBRA.
A larger percentage of the home loans in the PFMT 2025-1 deal, however, are for purchases (77.4%), a significant uptick from the PFMT 2024-1, where 67.0% of the loan proceeds went toward buying a home. Slightly more than a quarter of the pool, 21.1%, were for refinances. A tiny portion of the pool, 1.5%, were for cash-out refinances, the rating agency said.
Aside from the triple-A rated notes, KBRA assigns AA+ to the A-14 and AX1, and AX14 classes of notes; AA- to the B1 notes; A- to the B2 notes; BBB- to the B3 notes; BB to the B4 notes; and B to the B5 notes.
Moody's assigns Aaa to the A1 through A12 classes of notes; and the A15 through AX12 notes and the A16 notes; Aa1 to the A13 and A14 notes; Aa1 to the AX14 notes; Aa3 to the B1 notes; A2 to the B2 notes; Baa2 to the B3 notes; Ba2 to the B4 notes and B2 to the B5 tranche.
