A varied pool of first-lien mortgages, extended to prime and non-prime borrowers, will secure $398.4 million in residential mortgage-backed securities (RMBS) through the HOMES 2025-AFC3 Trust.
Sponsored by 04B Park Capital Securitization, the deal will sell the securitization notes through about nine tranches of class A, M and B notes, which will be repaid through a hybrid sequential and pro rata structure, according to analysts at S&P Global Ratings and Fitch Ratings. The class A and mezzanine notes are fixed, S&P and Fitch said.
Asset Securitization Report's deal database notes that both A1 tranches are expected to pay a coupon of 5.366%. Fitch and S&P both assign AAA ratings to the tranches, according to the database. The A2, A3 and M1 notes are expected to pay a coupon of 5.62%, 5.97% and 6.32%, respectively.
The deal is expected to close on September 18, with Nomura Securities International as the manager.
From the beginning principal will be paid pro rata among the senior classes. S&P adds that there is no credit enhancement minimum that would switch the senior classes' payment priority from pro rata to sequential. The subordinate classes will always pay principal sequentially, but their repayments start after all the senior classes have been retired, S&P said.
All the notes have an August 2060 legal final maturity, according to Fitch, which added that the A1A, A1B, A2 and A3 benefit from credit enhancement levels of 35.7%, 25.7%, 16.6%, and 6.3%, respectively.
Classes M1, B1 and B2 benefit from enhancement levels of 3.70%, 2.00% and 1.00%, respectively.
A pool of 964 non-prime mortgages will secure the RMBS, but all the mortgages went through a third-party due diligence review, Fitch said. The results were stronger than the industry average, with all the loans receiving an 'A' for property; only 1.5% receiving a 'B' for credit and 0.5% graded 'B' for compliance.
Most of the loans, 54.8%, are non-QM, financing single-family properties (88.2%), most of which are primary residences, 59.3%.
On average, the mortgages have a balance of $413,313, and on a weighted average basis, they had an original loan-to-value ratio of 66.5%.
