Non-prime mortgages, which have modest leverage, will secure $509.6 million in residential mortgage-backed securities (RMBS), from EFMT 2026-NQM3.
With a closing date scheduled for about one week from now, the deal will sell notes through a series of A, M and B tranches, which have a final maturity date of March 2071, according to Kroll Bond Rating Agency.
The A1 notes, rated 'AAA' from Fitch Ratings and Kroll Bond Rating Agency, will pay coupons ranging from 4.85% on the A1FCF to 1.63% on the A1IO, according to Asset Securitization Report's deal database.
Otherwise, coupons range from 5.13% on the A2 tranche, rated AA- on the A2 notes from both Fitch and KBRA to 5.5% B1A tranche, rated BB-/BB+ from Fitch and KBRA, according to the database.
LendSure, an EFMT affiliate, originated just over one third of the loans in the pool, while American Heritage Lending and The Loan Store represent 14.8% and 11.1% of the pool, respectively. But 33 other lenders accounted for the largest portion, 43.5%, KBRA.
The A1 notes have credit enhancement of 27.25%, except the A1A tranche, which benefits from a level of 37.25%, KBRA said.
Barclays Capital leads a group of initial purchasers that includes BofA Securities, J.P. Morgan Securities, and Mizuho Securities.
Originators used alternative income documentation, primarily, (81.8%) to underwrite the loans, including twelve- to 23-month bank statements (38.4%) and debt service coverage ratio (35.7%), the rating agency said. All the loans underwent a third-party due diligence from 13 independent firms, KBRA.
Cornerstone is the primary servicer and PennyMac Loan Services and Rocket Mortgage, servicing 3.1% and 2.9%, respectively.
The collateral has modest leverage, with a cumulative loan-to-value (CLTV) ratio of 73.1%, on a rated average basis.
The deal structure includes a 90-day stop advance, preventing the servicer or servicing administrator, from advancing any principal or interest on loans that are delinquent by 90 days or more, KBRA said.
EFMT 2026-NQM3 will repay the notes on a combined pro-rata and sequential basis for the senior and subordinate notes, respectively, the rating agency said.
On average, the loans have a balance of $427,501, KBRA said. On a weighted average (WA) basis, the loans have a coupon of 7.17%, and in aggregate the balance of the top five loans account for 3.1% of the pool. Loans with an interest-only period account for 7.5% of the pool, KBRA.
Borrowers have a non-zero, weighted average (WA) annual income of $768,027, liquid reserves of $378,783 and a FICO score of 743.
