EFMT Sponsor is preparing to tap the securitization market to raise $290.1 million in securities backed by closed-end, second-lien mortgages.
EFMT 2025-CES2 will sell the notes to investors through about nine tranches of classes A, M and B notes, according to ratings analysts at Kroll Bond Rating Agency. Fitch Ratings, which also assessed the notes, says they all have a legal final maturity date of February 2050.
The rating agencies – and Asset Securitization Report – say that the A1A and A1B senior tranches, which are rated AAA from both Fitch and KBRA will pay coupons of 5.33% and 5.43%, respectively. Fitch says the A1A and A1B notes benefit from credit enhancement levels of 20.0% and 10.7%, respectively. KBRA also noted that super senior and A1B senior notes will repay investors on a pro-rata basis.
After those senior notes, the A2 through XS tranches will be repaid sequentially, and all notes are fixed-rate, the rating agencies said.
NewRez and loanDepot.com originated most of the loans in the pool, comprised of 3,582 loans, and they account for 73.8% and 12.9% of the pool, respectively. Almost the entire collateral pool is composed of fully amortizing, fixed-rate mortgages, with mostly terms of 20, 30, 15 and 10 years.
Because the entire pool is composed of second-lien loans, Fitch assumed 100% loss severity, and no recovery. KBRA, however, also noted that 78.2% of the pool was considered safe-harbor mortgages.
Barclays Capital, Citigroup Global Markets and Goldman Sachs are initial purchasers and managers, according to KBRA and the ASR database.
On average, the mortgages have a $81,009 balance, KBRA said. On a weighted average (WA) basis, they have an original FICO score of 732, and an original cumulative loan-to-value (LTV) ratio of 63.6%, KBRA said.
Also on a WA basis, the mortgages had a debt-to-income (DTI) ratio of 31.0% borrowers had a non-zero annual income of $149,211, and liquid reserves of $93,387.
KBRA assigns AAA to the A1A through A1 notes; AA+ to the A2 notes; A+ to the A3 notes; BBB+ to the M1 notes; BB+ to the B1 notes and B+ to the B2 notes. Fitch, meanwhile, assigned AAA ratings to A1A and A1B notes; and AA and A to the A2 and A3 notes; M1 notes get a BBB rating; and BB and B to the B1 and B2 notes.
