04B Park Capital Securitization is preparing to sponsor a mortgage-backed securities (MBS) deal that will sell $528 million in securities to investors through the HOMES 2025-AFC1 Trust.
The transaction will sell the securities through about 12 tranches of notes, which will repay investors through a hybrid pro rata, sequential structure. The deal will pay principal to A1A, A1B, A2 and A3 noteholders on a pro rata basis, if they pass a cumulative loss and delinquency trigger test, according to S&P Global Ratings.
After that, the trust will repay subordinate noteholders sequentially, S&P said.
In payment periods when the cumulative net loss or delinquency trigger test fails, the trust will use principal remittances to pay any unpaid interest and interest carryforward amounts and then principal. HOMES 2025-AFC1 will also use excess monthly cash flow to cover realized losses in that current period and reimburse any losses that were previously applied.
The portfolio is composed of 743 first-lien, fixed- and adjustable-rate, fully amortizing mortgages to borrowers with prime and non-prime credit. Most of the mortgages, 70.3% are for home purchases, while 21.9% of the loans are intended for cash-out refinancings.
Only 23.5% of the loans were underwritten with full documentation, while alternative and bank statements account for 51.5%, and 25.05% of the loans were underwritten through debt service coverage ration (DSCR) documentation, S&P said.
The top five property markets account for 39.7% of the pool balance, and four of the top five markets are in California.
The A1A notes benefit from 35.05% in credit enhancement, S&P said. The A1B and A1 notes benefit from 25.0% in credit enhancement. After that credit enhancement levels range from 18.9% on the A2 notes through 1.5% on the B2 notes.
AmWest Funding originated the loans and services them, while Deutsche Bank National Trust is the transaction's custodian.
S&P assigns AAA to the three A1 tranches; AA to the A2 notes; A to the A3 notes; BBB to the M1 notes; BB to the B1 tranche; and B to the B2 tranche.
