The Mello Warehouse Securitization Trust is preparing to issue $300 million in notes secured by a previous three-year revolving warehouse facility, which also gets its funding from the Mello Warehouse Securitization Notes, series 2025-1.
With an expected closing date of April 11, the deal will issue notes through six tranches of class A through F notes, with no mezzanine classes, according to Morningstar | DBRS. Notes are expected to have a final stated maturity date in May 2059.
DBRS says loanDepot.com originated the loans and is sponsoring the deal. The collateral consists of a revolving pool of first-lien mortgages, which are a mix of fixed- or adjustable-rate mortgages that fit government-sponsored entity criteria, specifically Fannie Mae, Freddie Mac and Ginnie Mae, the rating agency said.
Notes, to be repaid on a senior-subordinate basis, are priced against the Secured Overnight Financing Rate, although coupon ranges were not clear at press time.
DBRS assigns ratings of AAA, AA and A to the class A, B and C notes, respectively. Classes D, E and F received ratings of BBB, B and B, respectively.
Under the current terms, the transaction, MWST 2025-1, is the repo buyer, and will enter a master repurchase agreement with loanDepot, the repo seller and collateral agent. The Repo Seller will repurchase all purchased mortgage loans no later than 30 days following the related purchase date, according to DBRS. The Repo Buyer will automatically purchase the loans unless certain specific conditions are met.
At a minimum, the underlying loans have a weighted average (WA) FICO score of 720, and a loan-to-value ratio of no higher than 85.0%.
US Bank will be on the transaction as the standby servicer, while U.S. Bank Trust company is the indenture trustee, DBRS said.
Among the deal's positive credit characteristics, Clayton Services will regularly perform third-party due diligence on randomly selected samples of purchased mortgage loans, DBRS said.
So-called wet loans can be included in the transaction, DBRS said. These are mortgages with required loan documents that haven't been delivered to the Mortgage Loan Custodian. That means the servicer will have limited ability to take any action on those loans until the mortgage loan custodian has the complete mortgage file and dry documents, DBRS.
