Mariner Investment Group has launched offering of private-label resident mortgage bonds, but it’s hard to characterize the collateral.

The majority of the borrowers in the $254 million transaction meet many of the criteria for prime, with high FICO scores (weighted average 753), significant liquid cash reserves, high residual income and sizeable equity in their properties (weighted average cumulative loan-to-value ratio of 67.6%).

However, the collateral pool includes large number of loans to borrowers qualified using alternative documentation (21.5% of the pool), such as 12 and 24 months' bank statements or with prior credit derogatory events (9.1% of the pool), such as bankruptcies, short sales and foreclosures. At least compared with recent transactions rated by Moody’s Investors Service or DBRS.

Not exactly squeaky clean.

And while most loans (93.4%) are fixed-rate for their full term or pay variable rates for an initial five years (5.9%), approximately 6.1% have a feature rarely seen these days: they pay only interest, and no principal, for 120 months.

The mortgage loans were originally acquired from various originators by GMRF Mortgage Acquisition Co., a wholly owned subsidiary of Galton Mortgage Recovery Master Fund III, which is a fund controlled by Mariner. The largest loan sellers include L.P Priority Financial Network (17.6%); Parkside Lending, (16.2%); RPM Mortgage (15.3%); Oaktree Funding Corp. (14.9%); and PHH Mortgage Corp.

The loans will be serviced by New Penn Financial, doing business as Shellpoint Mortgage Servicing.

Among other risks, this transaction has a high concentration of loans in California, 76.5%, making it more sensitive to a deterioration in economic conditions or the occurrence of a natural disaster in that region.

Both Moody’s and DBRS assigned triple-A ratings to the senior tranches of the deal, which benefit from 13.5% credit enhancement.

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