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EverBank returning to RMBS market after 5-yr hiatus

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EverBank is readying its first offering of residential mortgage bonds since being acquired by TIAA.

The $381 million transaction, EverBank Mortgage Loan Trust 2018-1, is backed by loans with high-quality credit attributes such as low loan-to-value (LTV) ratios, strong borrower credit and full documentation. In addition, the pool of collateral consists exclusively of fixed-rate, fully amortizing mortgages on primary residences.

These borrowers have relatively high income and reserves, on average. All the mortgages qualify for a safe harbor under the Qualified Mortgage and ability-to-repay rules.

Moreover, EverBank will provide traditional lifetime representations and warranties - without sunset - to the securitization trust.

Although EverBank issued two post-crisis prime jumbo RMBS transactions in 2013, it has limited performance history securitizing loans under TIAA, something that DBRS sees as a potential risk factor. However, the rating agency takes comfort from the “stellar” performance of the lender’s prime jumbo loans EverBank made from 2012 to 2016 that were not securitized. Delinquencies and losses have been minimal.

DBRS calculates the weighted average original combined LTV (CLTV) to be 74.2% , which suggests that borrowers have considerable equity in their homes. Approximately 1.1% of the pool has piggybacks, and these loans represent a WA original CLTV of 67.7%. There are no second liens included in this pool.

The pool is on average three months seasoned, with 1.7% of the pool aged over six months and a maximum age of ten months. “Although some loans are relatively seasoned, the payment histories are clean on all loans,” the presale report states. None of the loans were modified.

Another plus: The collateral is also much less concentrated in California, one of the nation’s largest high-cost housing markets, than many other prime jumbo securitizations. Just 29.5% of the pool is in the Golden State, and the top three states representing 47.4%. Likewise, the average original loan size of $696,235, while elevated, is not considered significant for a non-conforming pool, given that the maximum conforming loan limit for high-cost areas is as high as $679,650 for single-family homes.

DBRS expects to assign an AAA to the senior tranches of notes to be issued, which benefit from 10.3% credit enhancement.

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