Select Portfolio Servicing, a unit of Credit Suisse, is markting $600 million of notes backed by the repayment rights to money it has advanced to mortgage bondholders when homeowners fall behind on payments.
SPS Servicer Advance Receivables Trust Series 2016-T1 and 2016-T2 will each issue four classes of fixed-rate notes totaling $300 million. The T1 series has a Class A tranche of $266.79 million. The T2 series has $263.8 million in Class A notes. Both Class A notes tranches have a preliminary ‘AAA' rating from Standard & Poor’s.
The T2 series is to be redeemed when the deal is expected to close on Nov. 15. Credit enhancement consists of overcollateralization, a reserve fund and subordination. The notes accrue interest at their respective coupon rates, but the advance receivables do not accrue interest, according to S&P.
The principal assets in the SSART pool are servicer advance receiveables representing the reimbursement rights for principal and interest, escrow and corporate servicer advances made by SPS under designated servicing agreements when homeowners fall behind on mortgage payments.
The series’ noteholders will be paid from proceeds SPS receives when the receivables are reimbursed. During the revolving period, the issuer can use collections from the receivables or draw on variable funding notes. SSART can also issue multiple series of notes tied to one collateral pool; as a servicer or subservicer, depositor SPS Advance Funding is required to transfer new receives from a designated servicing agreement.
Select Portfolio Servicing is a residential mortgage servicer. As a master issuer, the SPS Servicer Advance Receivables trust can issue multiple series of notes backed by a single collateral pool. With SPS as the servicer or subservice, the depositor (SPS Advance Funding) is required to transfer new receivables from a DSA to the issuer until the notes are paid off.