FirstKey Mortgage is offering up a $517.2 million bond sale secured by a portfolio of seasoned performing and re-performing mortgages that include a large portion of junior-lien obligations and home-equity lines of credit (HELOCs) it has acquired in the secondary market.
According to presale reports from DBRS Morningstar and Fitch Ratings, the HELOCs (accounting for 25.9% of the pool) are open-draw lines in which borrowers have tapped about 60% of the available credit lines. A majority of the aggregate balance of the 13,733 loans (or 54% of the pool by balance) are for junior-lien obligations, as well.
Town Point HE Trust 2021-HE1 includes 10 classes of senior and subordinate notes, including a $339.3 million Class A1 tranche with preliminary AAA ratings from DBRS Morningstar and Fitch.
The collateral breakdown features 1,641 first-lien open HELOCS in which borrowers have tapped $55.9 million of a total credit limit of $99.9 million, and 2,736 junior-lien open HELOCs with $78.1 million of $125.1 million in credit lines have been tapped.
The 1,459 closed-end, first-lien RPL loans in the pool total $103.2 million, with 7,897 junior-lien mortgage loans totaling $280 million – or 54.1% of the pool balance.
Almost none of the loans are treated as qualified mortgages under the Consumer Financial Protection Bureau's ability-to-repay standard due to their age status or HELOC structure.
First- and junior-lien HELOCs, approximately 25.9% of the pool, have characteristics somewhat comparable to those included in a previous Towd Point HELOC securitization from 2019, according to DBRS.
The portfolio is well-seasoned at 138 months, and has a 29.5% concentration of previously modified loans (nearly all of which were modified more than two years prior).
