Invictus Capital Partners, through its affiliate VMC Asset Pooler, is capitalizing its latest pool of non-prime, primarily fixed residential mortgages by sponsoring a $579 million residential mortgage-backed securities (RMBS) deal.
The Verus Securitization Trust 2025-8, which is expected to close on September 16, will sell notes through twelve tranches of class A, M and B notes, said Kroll Bond Rating Agency.
The transaction's senior notes will repay investors on a pro rata basis, while the mezzanine and subordinate notes will repay the notes sequentially, according to KBRA. Alternative documentation accounts for a vast majority of the mortgages, with about 73.9%, underwritten through debt service coverage ratio (DSCR) and 12- to 23 months of profit and loss and bank statements, KBRA said.
Credit enhancement on the notes, which includes 1.5% in excess spreads, range from 37.05% on the A1A tranche to 2.00% on the B2 notes, KBRA said.
The deal structure also includes a provision that stops the master servicer, Cooper Master Servicing or the paying agent, Citibank, from advancing interest and principal on loans that are delinquent by 90 days or longer. This condition applies to the first-lien priority loans in the pool, which account for 95% of the pool.
Slightly more than half of the mortgaged properties, 53.2%, are owner-occupied, and a significant amount, 42.0%, are investment properties. Various originators contributed to the pool, although none of them account for more than 10% of the pool balance, according to KBRA.
Almost all the 1,165 loans in the collateral pool are first lien, and they have an average balance of $497,073. To the collateral pool's credit, the mortgages only have modest leverage, at 71.4%, and KBRA notes that the level of equity shores up the pool against potential declines in home prices.
As for underlying borrowers, 51.5% of them are self-employed, with a non-zero weighted average (WA) annual income of $697,125, and liquid reserves of $560,179. Also, the mortgages have a WA original score of 737.
KBRA assigns ratings of AAA on the A1; AA+ to the A2 notes; A to the A3 notes; BBB+ to the M1 class; BB+ to the B1 class and B+ to the B2 tranche.
