A collateral pool of 2,144 home equity agreement contracts will secure about $205.7 million in mortgage-backed bonds from the Unlock HEA Trust, series 2024-2.
Slated to close on September 26, the deal counts Barclays Capital, Jeffries and TCBI Securities are initial purchasers on the deal, according to DBRS Morningstar. Barclays and Jefferies & Co. are also managers, according to Asset Securitization Report's deal database. The deal will repay noteholders sequentially and the notes benefit from subordination as a form of credit enhancement, according to the database.
DBRS noted that the pool consists of first, second or third liens on single-family detached, multifamily, condominium and townhouse properties, DBRS said. Two hundred, twenty of the contracts are first-lien contracts, representing 12.66% of the pool balance in current exercise value. Also 1,629 second-lien contracts are in the pool (74.20%), and the remaining 295 contracts are third-lien contracts, representing 13.1% of the pool.
On an unadjusted basis, the pool has a loan-to-value (LTV) ratio of 38.40%. At the cutoff date, the pool had 17.7% in weighted average (WA) contract-to-value, and a WA loan plus contract-to-value of (LCTV), or 56.10%, according to DBRS.
On a cumulative basis, the BBB-rated class A notes have an 86.0% advance rate, or the percentage of a home's equity that a lender is willing to extend as a loan. Classes B and C have 91.8% and 100% cumulative advance rates, respectively.
A trigger event will happen if the reserve fund is less than 50% of the reserve fund target amount, or if the payment date where the outstanding HEA valuation is less than 80% of the starting home valuation as of the deal's cutoff date.
Unlock HEA will issue notes with a stated maturity date of October 2039. DBRS assigns ratings of BBB to the class A and B notes; and BB to the class C notes.
